| Govt willing to review Cos Act |
|
New Delhi, 21 June With stakeholders seeking changes in the new Companies Act, government on Saturday indicated its willingness to review the rules to address the difficulties in implementing them. Government officials and stakeholders, including the representatives of industry associations, held discussions on various issues related to the new Companies Act, whose many provisions came into force from April 1. A host of issues including those related to independent directors, financial reporting & auditing, related party transactions and Corporate Social Responsibility ( CSR) were discussed. Among others, industry representatives sought changes in rules pertaining to related party transactions and independent directors. Industry groups — Confederation of Indian Industry, Ficci, Assocham and PHDCCI — emphasised upon the need to ensure progression and development of business, and avoid unintended negative outcomes. "The law fortunately delegates considerable power to the government to make rules, through which many of the issues highlighted by the industry can be addressed," Corporate Affairs Secretary Naved Masood was quoted as saying in the statement issued by CII. On the basis of suggestions received, Masood said the ministry would identify major areas of correction and review the rules, wherever required, in order to facilitate smooth implementation of the new law. Besides, he also clarified that the legislation itself is open to amendments where the difficulties are serious enough to warrant such a course of action, according to the CII statement. |
| New Esop rules to ensure trusts are long- term investors |
|
Mumbai, 21 June The Securities and Exchange Board of India's ( Sebi's) has changed the rules governing entities such as employee welfare trusts, ensuring they don't take short- term market positions. Secondary market transactions will now require shareholders' approval through a special resolution. They can only take delivery- based transactions, thus disallowing them from intra- day positions. In fact, shares bought from the secondary market have to be held for at least six months. Sebi has also limited the proportion of assets such schemes can hold in the form of shares to 10 per cent. Sector officials said the regulator was increasingly concerned about the misuse of shares held under employee benefit schemes and their exposure in the derivatives market. It is said to feel gains through such speculative trades were not in keeping with the spirit of such employee trusts. There were also concerns that these trusts might be used to support the company's share price. Daksha Bakshi, executive director, Khaitan & Company, said the moves aimed to ensure companies didn't resort to misuse through secondary market activity, even as these allowed firms to fund employee benefit schemes. " General employee benefit schemes are expected to be funded through income from the assets held, rather than proceeds from the sale of these shares. The restrictions on the use of derivatives and provisions disallowing trading are to restrict any ability to indulge in doing anything towards supporting the company's share price," she said. "In principle, these trusts are meant for holding a pool of shares to be allocated to the employees and not meant for any speculative trading. Whilst derivative trading by such trusts might not necessarily be for speculation, to prevent any potential market abuse, several measures have been prescribed by Sebi, including the one whereby derivative dealing by such trusts in company securities is prohibited." said Tejesh Chitlangi, partner, IC Legal. Sebi has given five years to bring down the proportion of own shares in the scheme to 10 per cent. The regulator has also allowed for a transition period to comply with other parts of the new regulations, including reclassifying such shares separately from promoter and public, and bringing down the level of shares acquired from the secondary market. ESOP SCHEME |Certain limits on secondary market acquisitions |No derivative trades allowed for Esop Trusts |Special shareholder resolution needed for secondary market transactions |Only delivery- based transaction to be undertaken by these trusts |Shares acquired through such transactions to be held for at least 6 months |
| Sebi presses for uniformity in taxes on corporate bonds |
|
New Delhi, 21 June Ahead of the Budget, the Securities and Exchange Board of India ( Sebi) has asked the government to do away with tax anomalies in corporate debt to attract investors, particularly in infrastructure papers. The market regulator has also sought the status of pass- through certificates for the proposed real estate investment trusts ( Reits). Withholding tax on corporate bonds varies from five per cent to 20 per cent. " Those have to be reconciled. The government has to come out with adetailed middle- to longterm policy on this," Sebi Chairman U K Sinha told reporters on the sidelines of an event organised by Skoch Consultancy Services here on Saturday. He added withholding taxes for foreign institutional investors in infrastructure bonds were different from those of others and, therefore, had to be revised. Sinha said there was aproblem in terms of widening the investor base, as different sectoral regulators had their own requirements pertaining to their regulated entities. "The matter is under consideration in the forum of regulators and the government. I am hopeful some progress will be made," Sinha said. "We have come out with a discussion paper on real estate investment trusts and are hoping to get it implemented soon. Our rules are ready; we have taken up with the government that these must be given passthrough certificate status, as far as tax is concerned," Sinha said. In the case of pass- through certificates, only investors in such funds are taxed; no tax is imposed at the fund level. On e- voting facility for shareholders, Sinha said listed companies had to follow Sebi norms. Recently, the corporate affairs ministry had extended the deadline for companies to mandatorily have e- voting facility under the new Companies Act till December. Sebi mandates all listed companies to provide this facility for all resolutions to be passed at general meetings. "It is a settled principle that if there are two provisions, the provisions of Sebi regulations will prevail, as far as listed companies are concerned," Sinha said. Responding to a query on the low interest of sovereign wealth funds in government securities, Sinha said the situation had to be looked at for some more time. " I would say you should wait for some more time because there has been a change of government and people outside India are waiting for new policies," he said. He added the government should replace an ordinance that provided Sebi regulatory jurisdiction over all unregulated entities taking deposits of at least ₹ 100 crore with an Act in this regard. Sebi Chairman U K Sinha ( right) with Ashish Kumar Chauhan, managing director and chief executive of BSE, at the 36th Skoch Summit, in New Delhi on Saturday. PHOTO: DALIP KUMAR |
Company Secretary
Chennai
93810 11200
― Stephen Richards, Think Your way to Success: Let Your Dreams Run Free
This mail and its attachments (if any) are confidential information intended for persons to whom the email is planned for delivery by the sender. If you have received this mail in error please notify the sender of the error by forwarding the email and its attachments (if any) and then deleting the mail received in error and the relevant email trail in this connection without making any copies or taking any prints.
__._,_.___
No comments:
Post a Comment