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IC ICSI WIRC Seminar Indore – Jan 4, 2014

Investors’ Protection – Companies Act, 2013 & Penal Provisions under Listing Agreement Recent SEBI announcements. IC ICSI WIRC Seminar Indore – Jan 4, 2014. New Companies Act, 2013 – Investors’ Protection.

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IC ICSI WIRC Seminar Indore – Jan 4, 2014

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  1. Investors’ Protection – Companies Act, 2013&Penal Provisions under Listing AgreementRecent SEBI announcements ICICSI WIRC Seminar Indore – Jan 4, 2014

  2. New Companies Act, 2013 – Investors’ Protection The Companies Bill 2012, which has finally been passed by the Government isn't just old candy in a new wrapper, several new concepts and amendments in the age old Companies Act, 1956 have been introduced changing the compliance scenario in the corporate world in various ways to protect the interest of all investors by giving impetus to growth and bring transparency.

  3. Definitions – Section 2 of the New Act • Definition of ‘abridged prospectus’ • Section 2 (1) defining the abridged prospectus has now given power to SEBI to specify content of abridged prospectus. Earlier it was with the Central Government. • 2. New definitions provided – not in the earlier Act like – CEO. CFO, GDR, Independent Director, Indian Depository Receipt (IDR), promoter, related party, voting rights, whole time director (WTD), ‘Key Managerial Personnel – to cover CEO, CFO, Company Secretary and WTD, • 3. The New Act has broadened the concept of ‘officer who is in default’ • Clause (vii) of Section 2(60) now states that ‘officer who is in default’ to include • “ In respect of the issue or transfer of any shares of a company, the • share transfer agents, registrars and merchant bankers to the issue or transfer;” • By covering CEO, CFO as Key Managerial Personnel – they are also brought under this section of officer in default.

  4. Chapter II – Incorporation of Company • Sub clause (c) of Section 7 (1) states that at the time of incorporation, an affidavit from each of the subscriber to the Memorandum and from person named as First Directors stating that he is not convicted of any offence in connection with the promotion, formation or management of any Company, or found guilty of any fraud under the company law during preceding five years. • Sub section 5 further states that “ If any person furnishes any false or incorrect particulars of any information or suppresses any material information, of which he is aware in any of the documents filed with the Registrar in relation to the registration of a company, he shall be liable for action under Section 447”. • Section 12 (3) (c) requires every company to print Corporate Identity Number (CIN) on its business letters, billheads, letter paper and in all its notices and other official publication. • Section 13 (8) states that a Company which has raised money from public through prospectus and still has any unutilized amount out of money so raised, shall not change its object for which it raised money through Prospectus unless a special resolution is passed and details of such resolution to be published in newspaper and on its website. Further, dissenting shareholders to be given opportunity to exit by the promoters and controlling shareholders as per SEBI regulations.

  5. Chapter III – Prospectus and allotment of securities • Many changes are made in this Chapter to align with best practices to be followed in offer of securities. SEBI is ensuring the same though its regulations but new changes in the Act have brought more clarity and these changes are for the benefit of investors. Some of these changes listed under are : • Power of SEBI extended to administer sections of listed company or a company intending to get listed, to cover provisions related to Share Capital • The content in the Prospectus has now been made more detailed • Variation in terms of contract or Objects referred in the prospectus – special resolution, notice in the news papers and exit opportunity to dissenting shareholders • Money raised through prospectus can not be used for buying, trading or dealing in equity shares of any other listed company • Section 37 now allows any person, group of persons or association who is affected by misleading statement or any inclusion or omission of any matter in the Prospectus, to file a suit or take any action under Section 34, Section 35 and Section 36 of the Act. • Section 42 (6) requires to complete allotment of securities under private placement within 60 days .

  6. Chapter IV – Share Capital and Debentures • Section 47 dealing with voting rights now restricts right of preference share holders – only on the resolution which affects rights of preference shareholders. For common matter – rights of equity and preference shareholders shall be in same proportion to their holding of capital. Preference Shareholders get right to vote on all matters when dividend are in arrears for a period of two years or more. • As per Section 48 in case share capital is divided into different classes of shares, variation of their rights by one class of shareholders affects the rights of any other class of shareholders, then 3/4th consent of such other class of shareholders is needed. • Section 52 on use of share premium account – Sub section (3) now allows certain companies to use the same for in paying up unissued equity shares to be issued to members as bonus shares, writing off expenses of or commission paid or discount on any issue of equity shares or for the purchase of its own shares or other securities under Section 68 (Is it good for investors ?) • Section 56 – many changes on transfer and transmission of securities • Listed and non listed companies no distinction – instrument of transfer to be delivered in 60 days • Time period for allotment reduced from 3 months to 2 months, transfer and transmission 2 months to 1 month, allotment of debentures from 6 to 3 months • Punishment increased for the Company, officer in default and Depositories and Depository Participants in case of any fraud

  7. Chapter IV – Share Capital and Debentures ……Continue • 5. Section 58 (3) restricts the power of making appeal in case of refusal of transfer to transferee only contrary to the previous Act, wherein it was extended to both transferor or the transferee • 6. Bonus shares - Section 63 (3) clarifies that bonus shares can not be issued in lie of dividend • 7. Further issue of shares - Section 62 (1) (b) allows further issue of shares to employees by way of ESOP subject to approval of shareholders by way of special resolution (Is it good?) • 8. Reduction of share capital - Section 66 (1) proviso states that no reduction of capital will be allowed if the Company is in arrears for payment of deposits or interest payable thereon • 9. Buy back of odd lot through stock exchanges is now dispensed with. (Is it good ?) • 10. Section 70 (2) prohibits buy back in certain cases of default, but if the default is remedied and a period of three years has lapsed, then it is allowed. • Power to nominate – Section 72 now extends this to all securities instead of only shares and debentures • Chapter V – Deposits : Entire concept rewritten. More investors protection if to raise deposits from public. Powers given to RBI. The scope of the Act mainly for deposits from shareholders/members. • Chapter VI – Registration of Charges • (No significant changes relating to investors)

  8. Chapter VII – Management and Administration • 1. Section 93 requires (in addition to compliance done with Stock Exchanges) every listed company to file a return in the prescribed form with the Registrar with respect to change in the number of shares held by promoters and top ten shareholders of such company within 15 days of such change. • Section 94 (1) allows to keep registers and copies of return at any other place in India in which more than one-tenth of the total numbers of members reside, if approved by special resolution and prior intimation to the Registrar. • Section 96(1) requires first AGM to be held within 9 months instead of 18 months earlier. Further Sec 96(2) clarifies that AGM to be held between 9.00 am to 6.00 pm • Section 101 now allows notice of general meeting can be sent through electronic mode and notice must be sent 21 days clear days. Notice can not be convened by way of advertisement in newspaper. • Section 102 requires that in explanatory statement to notice of special business, it should specify the nature of concern or interest if any of every director, Manager if any, other KMP and relative of them. Sub section 4 further states if default is made in terms of non disclosure or insufficient disclosure, then such person to hold such benefit in trust for the Company and shall be liable to compensate the Company to the extent of such profit or benefit.

  9. Chapter VII – Management and Administration …………Cont. • Section 103 now mandates larger quorum for meetings of members in case of a Public Company • Section 118 (1) requires every Company to maintain minutes of every meeting of any class of shareholders or creditors and every resolution passed by postal ballot. • Section 118 (10) further stipulates that every company shall observe secretarial standards wrt to General and Board meetings specified by ICSI and approved as such by the Central Government. • A new Section 121 requires every listed company to prepare a Report on each AGM and file with the Registrar within 30 days of the conclusions of AGM.

  10. Chapter VIII – Declaration and Payment of Dividend • Section 123 (3) restricts interim dividend payment when the Company has incurred loss during the current financial year till last immediate quarter, such interim dividend can not be declared at a rate higher than the average dividends declared by the Company during previous three financial years. • Sub section (6) further restricts payment of dividend if a company fails to comply with the provisions of Section 73 [Acceptance of Deposits] and Section 74 [Repayment of Deposits]. Earlier condition of default in the redemption of preference shares is now dropped. • Section 124 deals with unpaid dividend. Subsection (2) of Section 124 requires every company to prepare a statement containing the names, last know address and unpaid dividend to be paid to each person on its website and also on any other website approved by the Central Government. • Section 124(6) states that all shares in respect of which unpaid or unclaimed dividend has been transferred, shall also be transferred by the company in the name of Investor Education and Protection Fund (IEPF). • Section 125 dealing with IEPF has covered new categories of amount that would be credited and purposes for which IEPF may be utilized.

  11. Chapter IX – Accounts of Companies • Section 2(40) has defined the term ‘financial statement’ which in addition to P&L, B/ S covers Cash Flow Statement and Statement showing changes in equity. • Section 129 (3) requires every company having one or more subsidiaries, to prepare a consolidated financial statement of the Company and all its subsidiaries to be laid before AGM. A salient features of the financial statement of the subsidiaries to be provided. The term subsidiary to include ‘associate’ and JV company. • New Section 130 now enables to re-open or recast books of accounts and financial statements based on application of the Central Government, I T dept, SEBI or other statutory body or authority or any person concerned and an order is made by a court of competent jurisdiction or the Tribunal. • Same way new Section 131 enables the Board of Directors to prepare revised financial statements or a revised Board Report in respect of any of the three preceding financial years after obtaining approval of the Tribunal. • Section 134(3) lists various items to be part of the report by Board of Directors – this shall include, a statement on declaration given by independent directors (IDs), particulars of loans, guarantees or investments under Section 186, particulars of contracts or arrangements with related parties, formal evaluation of Board’s performance for Listed Co., nomination and remuneration committee for Listed Co. etc

  12. Chapter IX – Accounts:(National Financial Reporting Authority) Constitution of National Financial Reporting Authority (NFRA) • Section 132 (1) states that the Central Government may, by notification, constitute National Financial Reporting Authority to provide for matters relating to accounting and auditing standards under this Act. 2 . Section 132 (2) - Important functions of the NFRA • Make recommendations to the Central Government on the formulation and laying down of accounting and auditing policies and standards for adoption by companies or class of companies or their auditors, as the case may be. • Monitor and enforce the compliance with accounting standards and auditing standards in such manner as may be prescribed. • Oversee the quality of service of the professions associated with ensuring compliance with such standards, and suggest measures required for improvement in quality of service and such other related matters as may be prescribed.

  13. Chapter IX : Accounts - NFRA and CSR • Section 132 (4) : Powers of the NFRA • Has power to investigate either suo moto or on a reference made to it by the Central Government, for such class of bodies corporate or persons in such manner as may be prescribed into the matters of professional misconduct committed by - Any member or - Firm of Chartered Accountants registered under Chartered Accountants Act, 1949 • Have the same powers as are vested in a civil court under code of Civil Procedure, 1908 • Section 133 • The Central Government may prescribe the standards of accounting or any addendum thereto, as recommended by ICAI in consultation with and after examination of the recommendations made by the NFRA. • Section 135 – Corporate Social Responsibility • Section 136 (1) – mandates every listed company to place its financial statements including Consolidated Financial Statements, separate audited accounts in respect of each of its subsidiary on its website

  14. Chapter X – Audit and Auditors • Section 139 (2) – No listed company to appoint an individual as auditor for more than one term of five consecutive years and an audit firm as auditor for more than two term of five consecutive years. Five years cooling period from completion of the term. • Section 140 – Removal and resignation of auditor • Section 141 – Eligibility , qualification and disqualification of auditor • Any association direct or through relative or partner with the subsidiary, holding company, associate company disqualifies • Indebtedness to subsidiary, holding or associate company • Guarantee given , security provided in connection with indebtedness of any third person • Section 143 – Powers and duties of auditor. Sub section (14) states that these provisions are applicable to cost accountants and company secretary in practice • New Section 144 specifies auditor not to render certain services

  15. Chapter XI – Appointment and Qualification of Directors • Section 149 (3) requires every listed company to have at least 1/3 rd directors as Independent Directors (ID). • Section 149 (5) gives definition of ID and several disqualification • Section 149 (7) – Code of conduct is defined for ID • Section 149 (8) – No stock option to ID and scope of remuneration is defined • Section 149 (9 & 10) – Five year term for ID, 2 consecutive terms, cooling period of 3 years for re-appointment and not to engage with the company during the cooling period of 3 years • Section 149 (12) – Retirement by rotation not applicable to ID • Section 151 provides a listed company may have one director elected by small shareholders . Small shareholder – a shareholder holding shares of nominal value of not more than Rs. 20,000 • Section 166 (New provision) – Duties of directors are defined first time • Section 168 (New provision) – Resignation of Director , to be placed in next general meeting of the company

  16. Chapter XII – Meeting of Board and its Powers • Section 177 dealing with audit committee , sub section (9) states that every listed company or such class or classes of companies as may be prescribed shall establish a vigil mechanism for directors and employees to report geniune concerns. Sub section (10) further provides for adequate safeguards against victimization of persons who use such mechanism and direct access to chairperson of the Audit Committee • Section 178 (1) – Every listed companies to constitute the Nomination and Remuneration Committee consisting of 3 or more non-executive directors out of which not less than one half shall be IDs • Section 178 (2) states that Nomination Committee shall identify persons who are qualified to become directors and who may be appointed in senior management and recommend to the Board their appointment. The Committee to also recommend to the Board a policy relating the remuneration for the director, KMP and other employees • Sub section (5) – Stakeholders Relationship Committee when > 1000 holders • Sub Section (7) - Chairperson of each committees to attend AGM

  17. New Committees – Corporate Governance enhanced • Stakeholders Relationship Committee - Section 178 (5) • The Board of Directors of a company which consists of more than one thousand shareholders, debenture-holders, deposit-holders and any other security holders at any time during a financial year shall constitute a Stakeholders Relationship Committee consisting of a chairperson who shall be a non-executive director and such other members as may be decided by the Board. • CSR Committee - Section 135 • Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director

  18. Chapter XII – Certain dealings by the Board Section 186 (4) mandates companies to disclose to the members in financial statements the full particulars of loans given, investment made or guarantee given or security provided and the purpose for which it is to be utilized by the recipient of the loan or guarantee or security Entities registered under Section 12 of SEBI Act 1992 like stock broker, sub broker, share transfer agent, banker to issue, merchant banker, underwriter etc – as per Sub Section (6) , these entities can not take inter-corporate loan or deposit exceeding the prescribed limit and such company to furnish the details of loans or deposits in its financial statement Section 186(1) – No investment more than two layers of investment companies Section 188 (1) – New transactions covered under related party transactions for which prior approval of Board needed. Also to be disclosed the Board’s report to shareholders along with justification for entering into such transactions New Provision Section 194 – Prohibition on forward dealing in securities of company by Director or KMP New Provision Section 195 – Prohibition of Insider Trading by Director or KMP

  19. Chapter XIII – Managerial Remuneration & Secretarial Audit • Section 197 (12) has mandated every listed company to disclose in the Board’s report, the ratio of remuneration of each director to the median employees’ remuneration and such other details as may be prescribed. • 2. Section 204 (1) prescribes every listed company and a company belonging to other class of companies as may be prescribed shall annex with its Board report a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed. • 3. Sub section (2) further states that it shall be the duty of the Company to give all assistance and facilities to the Company Secretary in Practice, for auditing the secretarial and related records of the company. • 4. As per sub-section (3) the Board report shall also contain full explanation against any qualification or other remarks made by the Company Secretary in practice. • Section 205 which is also a new provision prescribes functions of Company Secretary. • Chapter XIV onwards not considered except Chapter XV on Compromise, Arrangements and Amalgamation (Is it good?) • Section 230(4) states that only persons holding not less than 10% of shareholding or having outstanding debt not less than 5% of total debt shall be eligible to raise any opposition to an arrangement or compromise. • In case of merger of Listed co to Unlisted co, unlisted company can continue to be unlisted

  20. Penal Provisions under Listing Agreement SEBI has recently come out with following two circulars 1. September 30, 2013 : Standard Operating Procedure for suspension and revocation of trading of shares of listed entities. 2. November 18, 2013 :Compliance with provisions of Equity Listing Agreement - Monitoring by Stock Exchanges

  21. SEBI Circular 30th September 2013 – Effective enforcement • Amendment to Bye-laws of recognized stock exchange with respect to non compliance of certain listing conditions and adopting standard Operating Procedure for suspension and revocation of trading of shares of listed entities for such non compliances • 1. Uniform fine structure for non-compliance of certain clauses of the listing agreement. • 2. Standard Operating Procedure (SOP) for suspension and revocation of suspension of trading in the shares of such listed entities.

  22. Circular - 30th September 2013 ……Effective enforcement • 1. Stock Exchange to bring in place appropriate system to enforce the liabilities of listed entities and their promoters/promoter group as disclosed to the concerned stock exchange under the clause 35 of the Listing agreement • 2. During the process of the suspension of the trading/revocation of trading as provided in the SOP, the concerned recognized stock exchange shall intimate the details of the concerned non-compliant entity and its promoter /promoter group to the depositories. On receipt of such intimation, the depositories shall freeze or unfreeze, as the case may be, the entire shareholding of the promoter and promoter group in such entity. • 3. The recognized stock exchanges shall disclose on its website the action/s taken against the listed entities for non-compliance/s of the listing conditions; including the details of respective requirement, amount of fine, period of suspension, freezing of shares, etc.

  23. Effective Enforcement – Imposition of Fine • 1. The recognised stock exchange shall impose fine on listed entities for non- compliance with certain clauses of the listing agreement due to non-submission /delay in submission of reports/documents to recognised stock exchange. • 2. The amount of fine realized as per the above structure shall be credited to the "Investor Protection Fund" of the concerned recognised stock exchange. • 3. To Disseminate on website the names of non-compliant listed entities that are liable to pay fine for non-compliance of above clause of Listing Agreement. • 4. If any non-compliant listed entity fails to pay the fine despite receipt of the notice as stated above, the recognised stock exchange may initiate appropriate enforcement action including prosecution.

  24. Effective Enforcement – Imposition of Fine clause wise *Paid up capital as on first day of the financial year in which the non compliance occurs

  25. Creation of a new category "Z" for trading • 1. The recognised stock exchange shall create a new category "Z" for trading of shares of such non- compliant listed entities wherein trades shall take place in 'trade for trade‘ basis. • 2. If a listed entity commits two or more consecutive defaults in compliance of the specified clauses of the listing agreement within 15 days from date of the notice issued under this circular, the concerned recognised stock exchange shall, in addition to imposing fine as specified above, move the scrip of the listed entities to "Z" category. • 3. The recognised stock exchange shall move back the scrip of the listed entity to the normal trading category, if it complies with respective clauses of the listing agreement and completely pays fine prescribed under the circular.

  26. Effective Enforcement – Criteria for Suspension • 1. Failure to comply with clause 31 of listing agreement with respect to submission of Annual Report for 2 consecutive financial years • 2. Failure to comply with clause 35 of listing agreement with respect to submission of shareholding pattern for two consecutive quarters • 3. Failure to comply with clause 41 of listing agreement with respect to submission of financial results for two consecutive quarters • 4. Failure to comply with clause 49 of listing agreement with respect to submission of corporate governance compliance report for two consecutive quarters • 5. Failure to submit information on the reconciliation of shares and capital audit report, for two consecutive quarters • 6. Receipt of the notice of suspension of trading of that entity by any other recognised stock exchange on any or all of the above grounds

  27. Effective Enforcement – SOP for Suspension of Trading 1. Before suspension of trading the concerned recognized stock exchange shall send written intimation to the non-compliant listed entity calling upon it to comply with respective requirement/s and pay the applicable fine within 21 days of the date of the intimation. 2. If the non-compliant listed entity fails to comply with aforesaid requirement/s and pay fine despite the receipt of the intimation of the recognised stock exchange within the time as aforesaid, the concerned recognised stock exchange shall forthwith intimate the depositories to freeze entire shareholding of the promoter and promoter group of the non-compliant entity. Simultaneously, the recognised stock exchange shall give a 21 days (prior to the proposed date of suspension) public notice on its website proposing suspension of trading in the shares . 3. If the non-compliant listed entity complies with respective requirement/s and pays fine five days before the proposed date of suspension, the trading in its shares shall not be suspended on the proposed date and the concerned recognised stock exchange shall intimate to the depositories to unfreeze, after one month from the date of compliance, the shares of the promoter and promoter group of the entity. Simultaneously, the recognised stock exchange shall give a public notice on its website informing compliance by the entity. 4. In case of failure to comply with respective requirement/s and/or pay fine as aforesaid, the recognised stock exchange shall suspend the trading in the shares of a non-compliant listed entity. The entire shareholding of promoter/prompter group of such non-compliant listed entity shall remain frozen till expiry of three months from the date of revocation of suspension.

  28. SOP for Suspension of Trading ……….Continue • While suspending trading in the shares of the non-compliant entity the recognised stock exchange shall send intimation of suspension to other recognised stock exchanges where the shares of the non-compliant entity are listed. On receipt of such intimation the other recognised stock exchanges shall also suspend trading in the shares of the entity. • After 15 days of suspension, trading in the shares of non-compliant entity may be allowed on the "Trade for Trade" basis, on the first trading day of every week for 6 months. In this regard, the recognised stock exchange shall give instruction to its trading members/stock brokers to obtain confirmation from clients before accepting an order for purchase of shares of non-compliant entity on the 'Trade for Trade’basis. Pre issue application processing/Compliance • The recognised stock exchange shall put in place a system to publish caution message "Trading in shares of the company is under 'suspension and trade to trade basis' and trading shall stop completely if the company remains not compliant for six months " on trading terminals.

  29. Effective Enforcement – SOP for revocation of suspension • If the non-compliant listed entity complies with the aforesaid requirement/s and pays applicable fine within three months from the date of suspension, the recognized stock exchange may revoke the suspension of trading of its shares. • If the non-compliant listed entity complies with the aforesaid requirement/s and pays applicable fine after three months from the date of suspension, the recognized stock exchange may revoke the suspension of trading of its shares after a period of three more months from the date of such compliance • The recognised stock exchange shall, 7 days prior to revocation of suspension of trading in shares of the entity, issue public notice on its website • After 3 months from the date of revocation of the suspension, the recognised stock exchange shall send intimation to the depositories to unfreeze the shares of the promoter and promoter group • After revocation of suspension, the trading of shares shall be permitted only in the 'Trade for Trade' basis for a period of three months from the date of revocation and after this period of three months, trading in the shares of the entity shall be shifted back to the normal trading category, after giving prior notice of 7 days to it

  30. November 18, 2013 Circular – Monitoring by Stock Exchanges • Stock Exchanges (SEs) to put in place appropriate framework to effectively monitor the adequacy and accuracy of the disclosures made by listed companies. • SEs to devise the framework in such a way that it detects any non-compliance / violation of the provisions of Securities Contracts (Regulation) Act,1956, Securities and Exchange Board of India Act, 1992, the Rules and Regulations made there under, Listing Agreement, and any other applicable laws. • Treat inadequacy and inaccuracy of disclosure as non-compliance wherever applicable and proceed further as per the Standard Operating Procedure laid down by SEBI vide Circular No.CIR/MRD/DSA/31/2013 dated September 30, 2013; • Submit to SEBI an "Exception Report" in addition to the existing reporting requirements, with the details of companies which do not respond to the clarifications sought by them and/or where the response submitted by the company is not satisfactory in the opinion of the Stock Exchange. • Obtain the details of the promoters / directors and/or Key Managerial Personnel of the listed companies who shall be responsible for ensuring compliance with the provisions of the Listing Agreement and in case of defaults, disclose such details on its website

  31. November 18, 2013 Circular – Parameters for Monitoring • Indicative parameters to be included in the framework for monitoring by the Stock Exchanges in respect of Clause 35, 36, 41 and 49 of the Equity Listing Agreement • The quality and substantive compliance with respect to Clause-35 shall be monitored by comparing with the filings of the previous quarter. Such comparison shall include changes, if any, in the names of the promoters, their shareholding, encumbered shares, persons holding more than the required percentage in public category, and ensure as to whether the requisite disclosures have been made in compliance with SEBI (Prohibition of Insider Trading) Regulations, 1992, SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and any other applicable laws rules and regulations. • The disclosures with respect to Clause-41 (including handling of complaints relating to inadequate disclosures and non-compliances) and Clause 49 shall be monitored for quality and substantive compliance and necessary action should be initiated, if found otherwise • Clause 36 shall be monitored by taking into account the following: Information Verification: SEs to keep themselves informed of the updates in various media including print and mass media with respect to a listed company and while scrutinizing the disclosures made under Clause 36, ensure that any important information has not been omitted to be disclosed by the company. Follow-up on material information: SEs shall follow up with the listed companies at every stage for the updates on material events reported, either suomoto or upon receipt of information from other sources.

  32. November 18, 2013 Circular – Fine and Reporting to SEBI • SE to seek further information/clarification in case of any deficiency from companies, not later than 2 days from the date of the said disclosure • Cos to respond within 5 days and query of SEs and reply received to be placed on website of the Stock Exchange and tagged with the relevant disclosure • The fine shall be levied on the company in terms of the said circular if reply given by the company not satisfactory, to be treated as non-compliance and the date of non-compliance shall be deemed to be the date on which the last reply was received from the company on the query raised. In case the company does not reply to the query raised by the company, the deemed date of non-compliance would be the last date by which company ought to have replied to the last clarification/communication of the Stock Exchange. SOP as per Sept 30, 2013 to be followed for action of such non compliance. • The Exception Report shall be submitted to SEBI within 45 days from the end of each quarter with respect to Clauses 35, 41 and 49 and on a weekly basis with respect to Clause 36. • The Stock Exchanges shall set up a separate monitoring cell with identified personnel to ensure compliance with this circular.

  33. Thank you

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