FDI Policy

RBI has issued a circular dated 28th June 2012 wherein it has made some changes in the FDI policy in the form of bringing in uniformity in sector classification in the FDI. A Copy of the said circular can be found here
The Annex A and B of Schedule I is the most important document of the FDI Policy as it gives the sectoral classification. I would have thought the RBI should have been more specific while issuing circulars and given exact changes made in the FDI policy.

RBI goes digital

At last RBI is going digital - i mean they are now implementing an online tracking system for the applications submitted to them under various provisions of FEMA - this will bring in the much needed transparency as well reduce unnecessary visits to their office to seek status of the applications. Details of their online system can be found here

Details of unpaid/ unclaimed dividend

MCA has come out with a notification dated 10th May 2012 here that every company shall within a period of 90 days after holding the annual general meeting file on the mca portal an e-form 5INV which shall give details of all the unpaid/ unclaimed dividends until the completion of the relevant 7 year period. The details shall be names & last known addresses of the shareholders, nature of amount (i.e. dividend, debenture, fixed deposit, interest etc), amount of unclaimed dividend, due date of transfer to IEPF etc. A proviso has been added that information for the year ended 31st March 2011 to be filed by 31st July 2012. On the basis of this information at the mca portal, shareholders can find out how much, if any, of their dividends they have not claimed and thereafter make application to the companies to claim that amount. Obviously it would apply only upto 7 years from the date of transfer to unclaimed account, after which it needs to be transferred to the IEPF.

Filing of event based forms

MCA had issued a circular dated 1/6/2011 wherein companies who were in default of filing their annual filings such as balance-sheet, annual return were debarred from filing any event related filings such as appointment of director, registration/ satisfaction of charges etc. This was a kind of arm twisting done by the MCA in order to ensure compliance by the companies. It worked!! Now looking at some general difficulties faced by stakeholders who have lent monies to the companies MCA has relaxed its stringent provisions by allowing filing of modification of charges under SARFEASI Act and satisfaction of charges. So it seems that where SARFEASI Act is not involved i.e. in general cases of modification of charges, this relaxation does not apply. How the form delineates that the charge is under SARFEASI or not remains to be seen. I suspect they will bring about changes in the form itself to provide for that. Copy of MCA circular can be seen here

Unauthenticated market related news or rumours

SEBI has sought to regulate/ control/ plug, (call it whatever), unregulated market related news or rumours that wreaks havoc on the stock markets and distorts the price and that too emanating from the market intermediaries through their employees using social media like blogs, messengers, chats etc. The first of such circulars issued here on march 23, 2011 lamented on the general lack of supervision at broker houses and gave a general guidance on steps to be taken such as laying down internal code of conduct, blocking access to blogs, chats, forums etc., having a log book for restricted access to such sites in office network, and that any market related news, rumours in his personal mail should be forwarded only after it has been seen and approved by the company's Compliance Officer. If an employee fails to do so, he shall be held in violation of the relevant SEBI Acts, rules etc. and be liable for necesary actions etc.

Subsequently SEBI brought in an addendum on March 24, 2011 here that even the Compliance Officer would be held liable for breach of duty with respect to the employee taking approval from the Compliance Officer for forwarding market related news/ rumours in his personal mail/ blog etc. It is not clear on what grounds the Compliance Officer would be held liable - for not putting in place necessary systems for securing approvals for forwarding mails or for approving the forwarding of mails which has related in distortion in market prices.

Recently SEBI brought in a faqs on the same subject, here which gives more clarifications on steps to be taken by the intermediaries. For eg. it clarifies that opinions/ views expressed by intermediaries would not amount to unrelated market news provided there is a demonstrable and rational basis to the opinions. Employees to receive formal trainings, intermediaries should define the scope of permitted and prohibited conduct when using tools such as e-mails, blogs etc. and periodic monitoring to be carried out by the compliance officer. Employees are required to clearly and unequivocably state in their communication to clients where it is an unrelated market news or rumours that it is so.

SEBI has therefore laid down guidelines on the circulation of news/ rumours in the social media such as blogger, facebook, twitter etc. A few days ago, there was a news report here that a CFO has been fired after his tweets moved the company's stocks. Probably that will be next logical step in the SEBI regulation ladder i.e. ensuring that company insiders do not use social media tools such as facebook, twitter irresponsibly. Nowadays tweets spread like wildfire and therefore it will not be in the interest of a company insider to say that tweets have a restricted audience. Retweets/ share ensure that audience is in the thousands.

Bank Finance to NBFCs having exposure to gold

Bank Finance to NBFCs having predominant exposure to gold lending has been cut from 10% of the bank's capital funds to 7.5%. NBFCs who have more than 50% of their exposure in gold loans will now be able to avail bank finance only upto the above limits. However, where the NBFCs' additional exposure is to the infrastructure sector, then bank funds can go upto 12.5% of their capital funds. Banks are also mandated to have internal sub-limits for on-lending to NBFCs having predominant exposure to gold loans. A copy of the RBI circular to this effect can be found here

Fathers and Sons

This is a brilliant book dealing with the love of fathers towards their sons. Arcady and Bazarov return to Arcady's father's house in rural hinterland of mid-19th century. They are idealistic and have developed a nihilistic approach in life where Arcady is in awe of Bazarov. Arcady's father Nicholas and Paul are old timers who have modernised by freeing serfs and Nicholas loves his son but is upset when both Arcady and Bazarov decide to leave their home to go to a neighbour where they visit Anna Sergeyevna who is a widow where surprisingly Bazarov falls madly in love with Anna who is older to him and Arcady has a crush on Anna but slowly moves towards Katya, Anna's sister. Falling in love was like an anathema to Bazarov due to his nihilistic leanings, so both of them come back to Arcady's house. In between Bazarov visits his old parents Vassily Ivanich and Arina Vlassyevna his father and mother. His parents are old and they are deliriously excited to have Bazarov back and shower him with blessings and love which Bazarov likes in the beginning but starts detesting later on, again his nihilistic leanings throwing him against his own parents. The interplay between Bazarov and his parents and their emotions which Bazarov so cruelly crushes is where "Fathers and Sons" achieves greatness. Turgenev has written beautifully and movingly and it would be difficult not to get emotionally involved in this father-son interlude. Love of a father towards his offspring is greater than any idealism that this world produces in mid-19th century or even now in the early 21st century and this is what makes Turgenev's book timeless. "He has abandoned us, he has abandoned us" quivered Vassily Ivanich when Bazarov leaves his home  - this was an absolutely gut wrenching part of the book. After Anna rejects his love due to her strong independence, Bazarov returns to Arcady's house and falls in love again with Nicholas's young mistress whom he kisses which is seen by Paul who detests Bazarov for his arrogance and his anti-authority views. Bazarov is forced to leave Arcady's house due to a gun duel with Paul. What happens to Bazarov, Arcady and their old parents - this book is highly recommended - a Russian classic - my rating 5/5