BOARD MEETING ON 27.06.2019 – Decisions pertaining to the following:-
· Framework for Issuance of Differential Voting Rights (DVR) Shares
· Amendments to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015-payment relating to royalty and brand usage
· Disclosure of Encumbrances
· Review of Risk Management Framework of Liquid Funds, Investment Norms and Valuation of Money Market and Debt Securities by Mutual Fund
· Amendments to SEBI (PIT) Regulations
[**Note to be shared by our Team today]
Sebi tightens disclosure norms for pledged shares, approves DVR framework for tech startups
The Securities and Exchange Board of India (Sebi) on Thursday tightened disclosure norms for promoter share pledges, imposed royalty payment rules on companies and lowered sectoral cap on liquid mutual funds.
The markets regulator’s board, which met in Mumbai on Thursday, also approved a framework for issuance of shares with differential voting rights (DVRs) for tech startups keen on listing on Indian bourses.
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Sebi says MF-promoter pacts do not hold, tightens rules to protect debt fund investors
Sebi Chairman Ajay Tyagi on Thursday said the market watchdog does not recognise standstill agreements between promoters and mutual funds.
Talking to media after the Sebi board meet in Mumbai, Tyagi said mutual funds are not banks, as their main activity is investing, and not lending.
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RBI concerned over high level of promoter pledging
The practice of share pledging by promoters suggests they are unable to access funding through other means, and the increasing frequency of this type of financing is a reflection of the poor health of companies, the central bank said in its financial stability report (FSR).
“High level of pledging by promoters is seen as a warning signal, indicating the company’s poor health and probably a situation where the company is unable to access funding through other options,” said RBI in its report. “Further, the increased pledging activity is risky for any company as debt repayment will leave no room for the company’s growth.”
Crises at NBFCs, HFCs big threat to markets: RBI
The Reserve Bank of India’s Financial Stability Report warned that the non-banking finance companies (NBFCs) and mortgage firms in dire straits pose a serious threat.
According to the report that was issued on Thursday, the contagion from the malaise gripping shadow lenders, along with a looming global trade war and instability stemming from US actions, is among the biggest threats to the markets.
RBI also called for tighter supervision of NBFCs and mortgage lenders.
Govt may tighten disclosure norms for CSR spending
India Inc may soon have to make higher disclosures on their corporate social responsibility (CSR) spending, a government official said.
A high-level panel on CSR is likely to propose increased disclosures to bring transparency in spending on these activities.
All companies with a net worth of Rs 500 crore or more, turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more are required to spend 2% of their average profit of the previous three years on CSR activities every year.
“There is a view that disclosures need to be enhanced,” the official told ET, adding that this was needed to facilitate a “social audit”, or an examination of CSR spending.
IBC & RESTRUCTURING RELATED NEWS
Promoters can take part in liquidation process if lenders okay IBC exit
Promoters can take part in liquidation process once their companies are out of the purview of the Insolvency and Bankruptcy Code (IBC), a senior government official told Business Standard.
Section 29A of the IBC does not allow non-performing asset (NPA) holders, including promoters, to take part in the resolution process. However, taking creditors on board, even defaulting promoters can enter into settlement of dues under Section 230 of Companies Act. Section 230 of the Companies Act gives promoters’ power to make arrangements with creditors and other members. Such a provision would, however, apply only after the company’s insolvency resolution application has been withdrawn by the support of 90 per cent of the lenders under Section 12A of IBC, which allows debtors another chance to retain control over a firm even after a case is admitted to the National Company Law Tribunal.
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Revival of Jet Airways possible only under IBC: Govt
The revival of Jet Airways is now possible only under Insolvency and Bankruptcy Code (IBC), the Centre on Thursday said in the first official confirmation that hopes of recovery of India’s once second largest airliner have all but ended.
This is the first case of bankruptcy in the aviation sector. The grounded airline came to the brink of closure as the lender’s consortium led by State Bank of India refused to infuse the committed interim fund of Rs 750 crore, as promoters, who were supposed to bring the rest of Rs 1,500 crore, could not bring in full amount of their share, Minister of State for Civil Aviation Hardeep Singh Puri informed the Lok Sabha.
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Customs cannot sale goods in possession after moratorium under IBC
NCLAT has held that on passing of order of Moratorium by NCLT, it is not open to Customs authorities to issue an e-auction notice of assets belonging to corporate debtor since same cannot be sold during period of moratorium.
Tribunal in Commr. v. Ram Swarup Industries upheld NCLT order restricting Customs from selling assets of corporate debtor. It observed that no step was taken by Customs for sale of goods in terms of s.48 of Customs Act on non-clearance of goods within 30 days and ownership of goods in custody was still with Corporate Debtor.
Tribunal observed that ownership of the rights of the machineries was with the Corporate Debtor and not of a third party, and hence explanation below Section 18(1)(g) of IBC is not applicable.
Customs department’s plea that that the imported goods were not ‘assets’ of the ‘Corporate Debtor’, when customs duty leviable is yet to be discharged and the said goods are yet to be cleared for home consumption, was hence rejected by the NCLAT.
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IBC delayed is IBC denied
The Insolvency and Bankruptcy Code (IBC) single-handedly streamlined the resolution process for non-performing assets (NPAs) in a time-bound process, facilitating the speedy redistribution of assets and businesses that otherwise would languish in long-drawn court processes and red tape. Increasingly, however, loopholes are being found and deviations sought. This must be tackled immediately to ensure that the 180-270 days ceiling for resolutions is not bypassed in any way.
With IBC and the National Company Law Tribunal (NCLT) established, it is of critical importance that they don’t go the way of how most court cases devolve into decades-long uncertainty.
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MSME & STARTUPS RELATED NEWS
Govt asks banks to appoint GM-level officer to address MSME sector woes
In a bid to promote MSME sector, the government Thursday asked banks to appoint a general manager-level official to resolve the problems being faced by micro and medium enterprises which contribute significantly towards employment generation and exports.
The MSME sector has been a focus of the Narendra Modi government as it plays a critical role in promoting economic growth.
Taking forward the agenda of the Modi 2.0 government, Finance Minister Nirmala Sitharaman has asked officials to focus on inclusive growth with an objective of achieving the target of $5 trillion economy by 2024.
Panel Discussion: Not just financial nuances, managerial capabilities of MSMEs also matter
MSMEs are the growth engine fuelling the Indian economy. As per an industry survey, it was estimated that MSME firms created up to 14.9 million new jobs per annum over the past four years.
However, despite it being a crucial contributor to GDP and churning out several jobs, the sector has not had it easy. Enabling a conducive business environment that fosters MSME growth has become even more imperative in the present scenario to steer the economy forward.
Gadkari proposes an e-commerce platform for MSMEs
The government is considering a proposal to set up an e-commerce platform for Micro, small and Medium enterprises (MSMEs) to be marketed across the world, Nitin Garkari said.
He said that people from across the world should be able to reach the micro and small entrepreneurs of the country through the platform. He said that his ministry has already started working towards a vision for the MSME sector.
Radical transformations to reorient MSMEs in the offing: Arun Kumar Panda, Secretary, MSME
“The Indian economy is poised to become $5 trillion economy by 2025 and MSME Ministry’s vision is to ensure that, in this, at least a contribution worth $2 trillion must come from the MSME sector, says Arun Kumar Panda, Secretary, M/o Micro, Small & Medium Enterprises.
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MSMEs key component of India’s $5-trillion economy quest: Arun Kumar Panda, MSME Secretary
Underlining the importance of Skill upgradation among MSMEs to bring them at par with globally required standards, Arun Kumar Panda, Secretary, Ministry of Micro, Small & Medium Enterprises, while speaking to ET on the occasion of the World MSME day, reiterated the Government’s resolve in bringing more MSME players into the formal fold. “Besides numerous benefits, getting formalised paves the way for timely, adequate and most importantly, cheaper access to credit, which is a major concern for MSMEs, Panda said.
New roster in Supreme Court: Top five judges to hear PIL matters
With the Supreme Court all set to work in its full strength of 31 judges from July 1 after summer vacation, Chief Justice of India Ranjan Gogoi has notified a new roster of work which said top five judges of the apex court will be hearing Public Interest Litigation (PIL) matters.
On May 24, when the Supreme Court was on vacation, four new judges were administered the oath of office by the CJI taking the overall number of judges to 31 — the full sanctioned strength of the top court since 2008.
Earlier, fresh PIL matters were notified to be heard only by the CJI and the second senior-most judge after the CJI.
Commerce and Industry minister reviews draft National Logistics Policy
Union Minister of Commerce and Industry & Railways, Piyush Goyal, reviewed the draft National Logistics Policy and the proposed action plan for implementation of the policy prepared by the Department of Logistics, Ministry of Commerce and Industry. The draft National Logistics Policy has been prepared in consultation with the Ministries of Railways, Road Transport and Highways, Shipping and Civil Aviation. Forty-six Partnering Government Agencies (PGAs) inputs were analysed in detail for consideration in the Policy.
Reduce licenses, simplify registration processes: DPIIT says in draft national policy on ease of doing business
Aiming to break India into top 50 in the global Ease of Doing Business ranking, the Department for Promotion of Industry and Internal Trade (DPIIT) has proposed a series of reforms including reduction in licenses, simpler registration processes and removal of renewal requirements.
The proposals are part of a draft cabinet note on a national policy on ease of doing business that the department has circulated.
View: RBI needs to overcome its fear of legitimate cryptocurrency usage
Slumping bond sales indicate waning trust in India shadow banks
SEBI has come challenging the April 30 order of the National Company Law Tribunal, New Delhi directing the market regulator to de-attach the properties
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