Capital Markets Update

Not to mix too many things...
All Capital markets updates will be available at
http://dungarchand.blogspot.com/search/label/Capital%20Markets
unless the same is relevant to CA Profession.

Yours truly,
Dungar Chand U Jain
Madurai

IPO investing is no more a lottery; make sure you see value when investing in them

Coal India changes nothing

Do not draw the wrong conclusions from the Coal India IPO

The recently listed Coal India scrip has been a far bigger success than anyone had envisaged. However, it is important that investors do not draw the wrong conclusions from this. Unlike most issues in recent years, Coal India has had a robust subscription from retail investors. Given the state of the markets, it is also very likely that the stock will register good returns when it starts trading.

However, investors should not use Coal India as a guide to whether to invest in other IPOs to follow, whether from the public sector or from the private sector. The basics of IPO investing have not changed because of Coal India. Whether you make money from a particular IPO or not remains a toss-up that depends on how the general market outlook will be and how generous the promoters are.

To take a less charitable view, it depends on how scared the promoters and the investment bankers are of the issue bombing. For investors, the best combination is that of promoters and investment bankers who are afraid that the issue may not do well along with a robust market at the time of the stock listing. This will ensure a reasonable price coupled with a strong opening. In Coal India's case, this is exactly what has happened. The issue was probably priced reasonably because there was some nervousness about its massive size.

Going forward, this may not be the case. If there's an 'IPO season' up ahead, then investment-worthy issues will have to be selected carefully. The success of the Coal India IPO will doubtlessly encourage other issues to be priced to the hilt. Anyhow, none of this changes the basics of IPO investing, as it applies to individual investors. By and large, it doesn't make sense for individual investors to invest in IPOs. In India, we have this idea that IPOs are somehow especially suited for retail investors. This is an outdated concept that actually makes little sense, as I've written earlier.

There is nothing about IPOs that makes them especially suited for the casual retail investor. If anything, compared to listed stocks, IPOs are actually less suitable for such investors. The reason is simple. IPOs are lesser-known entities. The balance of power (in the sense of information) lies with the seller. The companies have not been in the public eye at all. Invariably, the promoter has spent the preceding months carefully building up an image to ensure that the investing public has a positive image. Unlike listed stocks, the financials haven't been scrutinised by analysts quarter after quarter for years. And of course, the price is the promoter's gambit, rather than one that has been through the price discovery cauldron of the market.

In the case of the government's offers for sale, this is even truer. In this case, while the promoter may not have been able to organise any elaborate window-dressing of the company, the money is not going to the company and is therefore not making any contribution to the improvement of the company's fortunes.

No matter how much of a sure bet an IPO appears to be, investors must approach it with caution. In the old days, it was possible that an IPO could go up by a huge margin on listing and never again be available at the original issue price. Such lottery tickets simply don't happen any more, least of all in a booming market. Each IPO should be evaluated on its own merit, and then most of them should be rejected.

-- Dhirendra Kumar
-- Value Research

Introduction of Pre-Open Session‏

18th October, Monday onwards the Markets will open with a Pre-Open session.

This session is meant for smooth discovery of the market open price and will be from 9.00 am to 9.15 am. Normal market sessions will be from 9.15 am to 3.30 pm.


NSE presentation download / Link for further details and clarifications:
https://docs.google.com/fileview?id=0B-0hzoMM8_XZYTJhZTRlOGEtZTU3MC00N2RiLTkzOGUtZjIzMDA2YWJkMGIz&hl=en

E-books on Stock Market

All About Stocks
Download Link : https://docs.google.com/fileview?id=0B-0hzoMM8_XZNDRhOGE5NjItZjgwZC00NDAxLWE5YjEtMjA5YmQ0YzNiNmQ0&hl=en

Demystifying Derivatives
- Courtesy: Sharekhan
Download Link : https://docs.google.com/fileview?id=0B-0hzoMM8_XZZTQxZWZlZWItMDViMy00ZWY0LTllM2ItM2QwM2UxMzczZmEx&hl=en

Removal of ELSS from 80C in DTC Unfortunate

For many retail investors, ELSS funds are the first step in starting to invest in mutual funds. Unfortunately, the new Direct Tax Code has closed off this gateway to equities.


Removal of ELSS from 80C Unfortunate

For savers and investors, who were living in dread of new Direct Tax Code (DTC) completely transforming their tax-planning approach, the new law must come as a relief. There are two main reasons for this. One, generally, the basic structure and the approach to taxation is very much the same. And two, specifically, long-term capital gains on equity and equity-backed mutual funds remain untaxed.

The retention of the zero-tax rate on long-term equity gains is probably the fundamental difference between the DTC as it was proposed originally and the shape it has finally taken. However, on a relative basis, long-term capital gains are now more attractive by a smaller margin than earlier. Since short-term gains are now taxed effectively at half the rate of the income tax slab the investor is in, they can be no more than 15 per cent and potentially as low as 5 per cent. The basic bias of the tax laws for shorter-term gains remains intact.

For mutual fund investors, there are two big changes. One, the tax saving funds — the so-called equity-linked savings schemes (ELLS) — funds will be history after the act comes into force. What used to be the section 80C deductions are now applicable to much smaller range of investments. This is unfortunate — ELSS funds were important in being tax-saving investment, which brings the benefits of equity returns. ELSS funds also have another benefit. For many retail investors, they tend to be gateway products in which the investor gets the first taste of equity investing and mutual funds. The tax-savings attract people to these funds and the three year lock-in generally ensures that investors get good returns. This experience converts many of these investors to investing in equity mutual funds. Under the DTC, 80C-type benefits are limited only to term insurance, Provident Fund (PF), Public Provident Fund (PPF) and the New Pension System (NPS). Of these, only th e NPS offers some equity exposur -- only up to 50 per cent and with a lock-in to retirement age.

The other change is the imposition of tax on dividends distributed by mutual funds. In theory, this has been imposed on unit-linked insurance plans (ULIPs) as well but that’s just a characteristically fake attempt to show that the government is treating mutual funds and ULIPs similarly. In reality, ULIPs don’t actually pay dividends so this measure hits only mutual fund investors. Worse, this tax will be a disproportionately harder hit on older investors, who rely on mutual funds to provide regular income. Amongst fund companies, I would expect it to be a disproportionately harder hit on someone like UTI Mutual Fund, which has historically been stronger among this class of investors. For investors who understand the mechanics of fund dividend, it would be a better strategy now to derive regular income from redemptions rather than dividends. As long as they avoid short-term capital gains tax by not redeeming within one year of investing, they will find it better to simply redeem a regular income. Fund companies already offer a facility for this called systematic withdrawal plan (SWP).

Incidentally, the new tax code has added art and paintings to the list of assets which qualify as investments. These will now be available for a reduction of capital gains tax by becoming eligible for indexation of acquisition cost. Given the impossibility of nailing down an unambiguous valuation for all but a handful of art, I fully expect this to become a handy loophole for creating capital losses and gains by the art-owning classes. One can also look forward to a recurrence of the plague of art funds that were floated 2006 and 2007.

-- DhirendraKumar
-- Value Research

RBI REVIEW OF MONETARY POLICY 2010-11 - FIRST QUARTER

RBI FIRST QUARTER REVIEW OF MONETARY POLICY 2010-11



Download Link :
https://docs.google.com/fileview?id=0B-0hzoMM8_XZNWZmZDAyZjktMzZlNS00ZGZhLThhMDItYjJmZmIyNzU2NGY0&hl=en

Cheque this out

The acceptance of third-party cheques for investments leave investors vulnerable to fraud

Last week, there was a news report of an employee of a mutual fund distributor embezzling a large sum of money from a mutual fund investor. From what we understand of the procedure for investing in a fund, this should not have been possible. All fund investments are made through cheques (or bank transfer) by the investor directly into the account of the fund scheme, where the money is supposed to be invested. However, this person (the employee of the fund distributor) exploited the fact that the accompanying investment form can be forged. Instead of submitting the form filled by the investor, he filled in a form in his own name. Soon after investing, he redeemed the money and made off with it.

Luckily, as fund redemptions are compulsorily made through a bank account, this particular case is likely to be resolved and the perpetrator traced. However, it does raise the question as to why rules allow third party investments to be made at all. Not just in mutual funds, but also in other investments (including bank fixed deposits), a cheque written by one party can be used to make an investment in another party’s name. This facility is used to gift investments and make investments in minors’ name. However, it clearly leaves a loophole that can be exploited. In the past, there had been cases of fraudulently depositing other’s cash in one’s own account, but this is the first time I have heard of a something like this being done on transactions through cheques.

However, as there is never just one cockroach in a kitchen, one can safely assume that such crimes must be taking place at a certain rate on all types of deposits and investments where they are possible. Perhaps there was just something about this particular case that it got picked up by the media and has been noticed widely. In India, there is an enormous number of people vulnerable to such embezzlements of their hard-earned earnings that plugging such an obvious loophole is an imperative.

Fortunately, what has to be done is quite straightforward. Fund companies, banks, insurance companies and anyone else who accepts a third-party cheque for any kind of investment or deposit should immediately stop doing so. The ultimate beneficiary must be the same party whose bank account the cheque was drawn upon. For legitimate third-party investments for gifts and those in the names of minors, they should require a separate written permission. This is the only solution that will work. After the above case came to light, there were a number of suggestions that third-party investments should be permitted but the name of the investor should just be put on the back of the cheque. However, this won’t work. Put yourself in the shoes of the criminal.

You are an unscrupulous agent who is approaching an old lady who knows nothing about how things work. Why would you even tell her that her name is supposed to be on the back of the cheque? You would simply tell her that the rules require a signature on the back also and later, you would just add your own name above that signature.

Making investments and creating savings and related paperwork may look easy to many of us, but for a vast majority of Indians, it is a difficult exercise which they can’t accomplish without the help of someone they trust. Therefore, it is very important that we make it as difficult as possible to prevent that trust from being abused.

-- Dhirendra Kumar

-- Value Research

Facility for holding Mutual Fund Units in dematerialised form

NSDL has introduced facility to hold existing mutual fund units in demat accounts. You can use your existing demat account for converting your mutual fund units into dematerialised form. You can now have a single Transaction Statement for shares, debentures and mutual fund units. For further information, please visit our website at the following link:
https://nsdl.co.in/nsdlnews/hold-mutual-fund-units.php

Respective/Concerned Depository Participant may be contacted for availing this facility.

ASBA Process - FAQs

ASBA Process - FAQs

1. What is “ASBA”?


ASBA means “Application Supported by Blocked Amount”. ASBA is an application containing an authorization to block the application money in the bank account, for subscribing to an issue. If an investor is applying through ASBA, his application money shall be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.

..... ..... .....
Download Link :
https://docs.google.com/fileview?id=0B-0hzoMM8_XZNWM5MTY0YmEtYjE4MS00MmNlLWFiYWYtYzJjNjE5YTMwYjU2&hl=en

New IPO guidelines of SEBI

SEBI had issued new guidelines for new IPOs. The new guidelines of Applications Supported by Blocked Amount (ASBA) allows investors to apply for an IPO, keeping the application money in their bank accounts till the finalisation of the allotment.

Under the new Sebi guidelines through applications supported by blocked amount' (ASBA). The investors will have to fill up an application form with their name, PAN number and DPID details to any of the five designated banks--State Bank of India (SBI), HDFC Bank, ICICI Bank, Corporation Bank and Union Bank--to block the application money in a bank account,"

The new system will help retail investors whose IPO application money is often blocked for weeks even when they are not allotted shares.

The investors would benefit because they won't have to pay anything upfront. So the cash won't be required to be paid immediately. Of course, the funds would be blocked with the bank. The time and costs involved in waiting to get the refunds and then crediting them to the account would be eliminated altogether.

This process will also do away with the IPO refund process. This will also shorten the time between a public issue and its listing, since listing happens only after refunds are done.

Investors Thrown to Insurers' Mercy

The government has issued an ordinance, handing ULIPs to IRDA finally and effectively ending ending hope of changing their anti-investor nature

Over the last couple of days, you may have heard and read in the media that the ULIP battle is over and the government has changed the relevant laws to ensure that IRDA continues to regulate ULIPs. Don't believe this for one moment-nothing is over. All that has happened is that the government has decided to throw investor to the wolves. Investors will now themselves have to take the full responsibility of discovering the truth about this most toxic of all asset types and keeping their money safe from it. Given the enormous financial clout and the marketing hype of the insurance industry (not to speak of their tame regulator), expect no more than some cosmetic changes which enable insurers to give a fig-leaf of a PR spin that if there were any problems with ULIPs, they have been fixed.

The core problems with ULIPs remain, and no one will now have any interest in fixing them. Problem number one is high expenses with heavily front-loaded commissions. You may heard insurance apologists (including IRDA) claim that ULIP expenses are now down to three per cent or some such number. Don't believe this for one moment. This figure is a sophisticated piece of subterfuge that is intended to hide the truth. This is the expense level that would be achieved by newer ULIP products if investors stay invested for the entire term of ten or more years. In practice, insurance agents earn so much in the beginning that the entire sales effort (and product design) is arranged to get the investor to quit after three or five years and shift the money to another ULIP.

Instead of going on repeating the theoretical expense number that will supposedly be achieved in the future, IRDA should come up with the real effective expense level that is actually being charged from investors today. This ought to be easy enough to do. The total amount of money that is being managed under ULIPs is known to IRDA, as are the myriad types of expenses that insurers are charging on this money. These two numbers would give the real expenses that are actually being charged from real investors. I doubt whether IRDA will ever reveal this number. To do so would immediately lay bare the truth about whose benefit insurance regulation in India being conducted.

There are some other basic numbers about the ULIP scam that you will never discover, no matter how closely you pore over IRDA's 214-page annual report. One crucial number is the lapse rate of ULIPs. Apparently, this is so because regulations are so arranged that ULIPs don't lapse, they just go into a 'premium-awaited' limbo. This immortality bestowed upon ULIPs by insurance rules is facilitated by the fact that insurance company can keep cancelling units to recover the basic charges, instead of being forced to recognise that the customer has abandoned its product.

Anyhow, none of this is going to change now. Realistically, there was probably never any chance that the government would allow meaningful reform of ULIPs. To do so would mean implicitly admitting that there was something seriously wrong in the way things have been done so far. Now, the regulatory die is cast, once and for all. Next time an insurance agent approaches you with a ULIP pitch, or when you see one of those emotion-stirring ads on TV, consider the fact that these people now have the full backing of the government and the regulations to cause as much harm to your personal finances as they'd like to. As an investor, it's your own battle now.

-- Dhirendra Kumar

-- Value Research

Clarification regarding allowing losses on account of forex derivatives

Instruction No. 03/2010, dated 23-3-2010

1.Foreign Exchange derivative transactions entered into by the corporate sector in India have witnessed a substantial growth in recent years. This combined with extreme volatility in the foreign exchange market in the last financial year is reported to have resulted in substantial losses to an assessee on account of trading in forex-derivatives. A large number of assesses are said to be reporting such losses on 'marked to market' basis either suo motu or in compliance of the Accounting Standard or advisory circular issued by the Institute of Chartered Accountants. The issue whether such losses on account of forex-derivatives can be allowed against the taxable income of an assessee has been considered by the Board. In this connection, I am directed to say that the Assessing Officers may follow the guidelines given below:

'Marked to Market Losses':

2. "Marked to Market" is in substance a methodology of assigning value to a position held in a financial instrument based on its market price on the closing day of the accounting or reporting record. Essentially, 'Marked to Market' is a concept under which financial instruments are valued at market rate so as to report their actual value on the reporting date. This is required from the point of view of transparent accounting practices for the benefit of the shareholders of the company and its other stakeholders. Where companies make such an adjustment through their Trading or Profit/Loss Account, they book a corresponding loss (i.e the difference between the purchase price and the value as on the valuation date) in their accounts. This loss is a notional loss as no sale/conclusion/settlement of contract has taken place and the asset continues to be owned by the company.

A 'Marked to Market' loss may be given different accounting treatment by different assesses. Some may reflect such loss as a balance sheet item without making any corresponding adjustment in the Profit and Loss Account. Other may book the loss in the Profit and Loss Account which may result in the reduction of book profit. In cases where no sale or settlement has actually taken place and the loss on Marked to Market basis has resulted in reduction of book profits, such a notional loss would be contingent in nature and cannot be allowed to be set off against the taxable income. The same should therefore be added back for the purpose of computing the taxable income of an assessee.

3. Treatment of loss from actual transactions in forex-derivatives

In a case where a loss on a forex-derivative transaction arises on actual settlement / conclusion of contract and is not a notional or marked to market book entry, a further question will arise as to whether such a loss is on account of a speculative transaction as contemplated in Section 43(5) of the Income tax Act. For determining whether loss from a transaction in respect of a forex-derivative is a speculation loss or not, the Assessing Officers may refer to Proviso (d) below sub-section (5) of Section 43 inserted by the Finance Act, 2005, with effect from 1.4.2006. It lays down that any 'eligible transaction' in respect of trading in derivatives referred to in clause (ac) of section 2 of the Securities Contracts (Regulation) Act, 1956, that has been carried out in a recognized stock exchange shall not be treated as a speculative transaction. Further, an 'eligible transaction' for this purpose would be one that fulfils the conditions laid down in Explanation to Section 43(5)(d). Any loss in a speculative transaction can be set off only against profit from speculative transactions.

As the revenue implications of such transaction are large, the Assessing Officers need to examine the statements of accounts and the notes to accounts with a view to find out any reference to any loss on account of forex-derivatives. In some cases, these losses may be camouflaged under the 'financial charges' 'foreign exchange loss' or some similar head which may make it difficult to detect them. In such cases, the Assessing Officers should make a specific query asking the assessee to give a break up of any 'Marked to Market' loss on a forex-derivatives included in the Profit and Loss Account and examine whether such transactions are 'eligible transaction' in terms of Sec.43(5)(d). An adjustment to the taxable income may therefore be made, if necessary, keeping in view the provisions of law referred to above.

Lessons from the NTPC Fiasco

The failure of the NTPC issue holds some useful lessons for the future of public sector issues.

Now that the dust has settled on the government's NTPC follow-on public offer (FPO) fiasco, it's interesting to note that by any sensible measure, the issue was undersubscribed by at least 50 per cent. Going by reports, it seems that about Rs 4,700 crore, out of the Rs 8,300 crore, of subscription was from the State Bank of India (SBI) and Life Insurance Corporation (LIC), and possibly other public sector banks and insurers. Now, the government can pretend whatever it wants to, but everyone knows that the issue was a complete failure and the fig leaf of success was orchestrated by getting the SBI and LIC to subscribe to the NTPC FPO.

It's interesting to note that if these events had happened in a private business group, then it would probably have crossed the borderline of legality. Here's the story: A business group needed to make good heavy losses it had suffered, so it decided to sell its stake in another, unrelated group business. The issue collapsed. It provoked negligible response among the retail public and even the companies' own employees. So the promoters of the group forced a bank and an insurance company they controlled to subscribe to the issue. Basically, this sham FPO amounted to transferring assets from the bank and the insurance company to an unrelated activity owned by the promoters.

I don't know about you, but I would say that this course of action followed by the promoters crossed the borderline of not only ethics, but is probably illegal. The clinching argument (one that demonstrates the promoter’s greed beyond all doubt) would be that the bank and the insurance company were the highest bidders in the issue, and bid several percentage points higher than the ruling market price and the other bidders. Had this been a private business group, then the promoters should rightfully have been behind bars by now. The Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority (IRDA) and various other entities that regulate the players in this drama would have been asking some tough questions from the promoters and their advisors.

There are more ways in which the government's attitude resembles that of an unscrupulous promoter. The way the issue was priced showed that greed got the better of common sense. The entire focus was on squeezing the most money possible out of the investors' pockets. Forgotten were all those grand statements about the public sector being owned by the public. Funnily, even as the issue was open, one heard officials floating conspiracy theories about how bear cartels had hammered the price down from Rs 230 to Rs 200 and how they should be investigated. In reality, the stock had spent most of the previous six months at around 200. Briefly, in December, someone, probably the government's hired bulls, jacked it up to 230, or 240, but failed to sustain it there. Again, these are tactics that would do a shady private promoter proud.

Going forward, it should be clear to anyone who is applying any thought to the issue that unless the disinvestment program is done in a very different spirit, it is going to be an year-long fiasco. As it would deserve to be.

SEBI Circular on Internal Audit for Credit Rating Agencies (CRAs)

DEPUTY GENERAL MANAGER

MARKET INTERMEDIARIES REGULATION AND SUPERVISION DEPARTMENT

SEBI/MIRSD/CRA/Cir-01/2010

January 06, 2010

All Credit Rating Agencies Registered with SEBI

Dear Sirs,

Sub: Internal Audit for Credit Rating Agencies (CRAs)

It has been decided in consultation with the credit rating agencies (CRAs) that the audit envisaged under Regulation 22 of the SEBI (Credit Rating Regulations), 1999 shall include an internal audit to be undertaken in the following manner:

a. It shall be conducted on a half yearly basis.

b. It shall be conducted by Chartered Accountants, Company Secretaries or Cost and Management Accountants who are in practice and who do not have any conflict of interest with the CRA.

c. It shall cover all aspects of CRA operations and procedures, including investor grievance redressal mechanism, compliance with the requirements stipulated in the SEBI Act, Rules and Regulations made

thereunder, and guidelines issued by SEBI from time to time.

d. The report shall state the methodology adopted, deficiencies observed, and consideration of response of the management on the deficiencies.

e. The report shall include a summary of operations and of the audit, covering the size of operations, number of transactions audited and the number of instances where violations / deviations were observed while making observations on the compliance of any regulatory requirement.

f. The report shall comment on the adequacy of systems adopted by the CRA for compliance with the requirements of regulations and guidelines issued by SEBI and investor grievance redressal.

2. The time schedule for the internal audit shall be as under:

a. The CRA shall receive the report of the internal audit within two months from the end of the half-year.

b. The Board of Directors of the CRA shall consider the report and take steps to rectify the deficiencies, if any, and the CRA shall send an Action Taken Report to SEBI within next two months.

3. It is clarified that for the half-year October 2009 - March 2010, the CRA shall receive the report of the internal audit by May 31, 2010. Its Board of Directors shall consider the report and take appropriate measures to rectify the deficiencies and the CRA shall send the Action Taken Report to SEBI by July 31, 2010.

4. This circular is issued in exercise of the powers conferred by Section 11 (1) of the Securities and Exchange Board of India Act, 1992 read with the provisions of Regulations 19(1), 20 and 22 of the SEBI (Credit Rating Agencies) Regulations, 1999 to protect the interest of investors in securities and to promote the development of and to regulate the securities market.

Yours faithfully,

PRASANTA MAHAPATRA

 

Source Link : http://www.icai.org/resource_file/17905Annexure_1.pdf

PAN requirement for transmission of shares in physical form

Circular No. SEBI/MRD/DoP/SE/RTA/Cir-03/2010, dated 7-1-2010

1. The Securities and Exchange Board of India (SEBI) vide circular ref. no. MRD/DoP/Cir-05/2007 dated April 27, 2007 made PAN mandatory for all securities market transactions. Thereafter, vide circular no. MRD/DoP/ Cir-05/2009 dated May 20, 2009 it was clarified that for securities market transactions and off-market/ private transactions involving transfer of shares in physical form of listed companies, it shall be mandatory for the transferee(s) to furnish copy of PAN card to the Company/ RTAs for registration of such transfer of shares.

2. Based on representations/ clarifications sought by market participants and in continuation to the aforesaid circulars, it is hereby clarified that it shall be mandatory to furnish a copy of PAN in the following cases –

2.1. Deletion of name of the deceased shareholder(s), where the shares are held in the name of two or more shareholders.

2.2. Transmission of shares to the legal heir(s), where deceased shareholder was the sole holder of shares.

2.3. Transposition of shares – when there is a change in the order of names in which physical shares are held jointly in the names of two or more shareholders.

3. Incase of mismatch in PAN card details as well as difference in maiden name and current name (in case of married women) of the investors -

3.1. The RTAs can collect the PAN card as submitted by the transferee(s). However, this would be subject to the RTAs verifying the veracity of the claim of such transferee(s) by collecting sufficient documentary evidence in support of the identity of the transferee(s) as provided for at para. 2 in the SEBI circular no. MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004 read with SEBI circular no. MRD/DoP/Cir-08/2007 dated June 25, 2007.

4. All Stock Exchanges are advised to:-

4.1. implement the above by making necessary amendments to the byelaws and Listing Agreement, as applicable;

4.2. bring the provisions of this circular to the notice of the listed companies for necessary compliance and also to put the same on their website for easy access to the investors; and

4.3. communicate to SEBI the status of the implementation of the provisions of this circular and the action taken in this regard in the Monthly Development Report.

5. All Registrars to an Issue and Share Transfer Agents are advised to:-

5.1. take necessary steps to implement the above decision.

5.2. disseminate the provisions of this circular on their website.

6. This circular is issued in exercise of powers conferred under section 11(1) of the Securities and Exchange Board of India Act, 1992, read with section 55A of Companies Act to protect interests of investors in securities and to promote the development of, and to regulate the securities market.

Source: http://www.sebi.gov.in/circulars/2010/mrdcir032010.pdf