The Body Snatchers

Jack Finney has written this science fiction novel way back in 1955 and it has apparently been adapted into a movie four times already. The plot starts very well and is exciting. Dr. Miles Bennell comes across an unusual case which does not involve his speciality but for which he agrees to visit since it is from an old flame. People start acting weirdly in a small town off California. The phenomenon grows over. He then brings in his friend a psychologist to have a look over the case. His friend reasons it be a case of mass delusion which has happened before also. But apparently things take a turn for worse and then he and his flame is on the run from apparently alien like pods which impregnate humans and make them worthless. The start of the novel is quite good, but it drags on towards the middle and latter part of the novel. Finney's narration is quite good. Goodreads rating 2.5/5 

10K run in Santacruz

Yesterday, i.e. 22nd April, 2018, MRR organised its first Skechers 10K run. The event was hosted by Skechers at their newly opened showroom at Linking road in Santacruz. The run started from their showroom and went down Linking Road towards Bandra, turned right at the H.P. petrol pump, onto Turner Road, all the way down to Carter Road, facing the Arabian Sea, towards the CCD where we took a right turn to go into the Pali Hill Road. This was an incline for about a mile or so at the inner roads of Pali. There was a lot of tree cover and shade in this particular part of the route. We descended from Pali hill towards the Police Commissioner's office again onto Carter Road, this time we took a right to keep going towards Khar Danda, where our nostrils were assailed by the smell of fish and dry fish. For a vegetarian like me, that smell almost turned the insides of my stomach. Thankfully it passed and we kept going towards Linking Road and then a left to the store again. 

This run will be held once a month. 

Investment limits of foreign govt. in Indian scrips

SEBI circular dated 10th April, 2018 on this subject. Gist of the circular follows:

1.  SEBI has been monitoring investment by foreign Governments and their related entities viz. foreign central banks, sovereign wealth funds and foreign Governmental agencies registered as foreign portfolio investors (hereinafter referred to as FPIs) in India. Since various stakeholders have been seeking guidance on clubbing of investment limits to be applied to foreign Government/ its related entities, the following clarifications are issued:  

a. What is the investment limit for foreign Government/ foreign Government related entities registered as Foreign Portfolio Investors (FPI)?

Reply:  The purchase of equity shares of each company by a single FPI or an investor group shall be below ten percent of the total paid up capital of the company. [Ref. Regulation 21(7) of FPI Regulations].

b. What is an investor group?

Reply:  In case, same set of beneficial owners are constituents of two or more FPIs and such investor(s) have a common beneficial ownership of more than 50% in those FPIs, all such FPIs will be treated as forming part of an investor group and the investment limits of all such entities shall be clubbed at the investment limit as applicable to a single foreign portfolio investor. [Ref. Regulation 23(3) of FPI Regulations and FAQ 58].

c. How to ascertain whether an FPI is forming part of any investor group?

Reply:  The designated depository participant engaged by an applicant seeking registration as FPI shall ascertain at the time of granting registration and whenever applicable, whether the applicant forms part of any investor group. [Ref. Regulation 32(2)(a) of FPI Regulations].

Further, at para 2.2 in the Form A of first schedule, the applicant seeking registration as FPI is required to furnish information regarding foreign investor group. Accordingly, it is the prime responsibility and obligation of the FPI to disclose the information with regard to investor group.

d. How is the beneficial ownership of foreign Government entities/ its related entities determined for the purpose of clubbing of investment limit?

Reply: The beneficial owner (BO) of foreign Government entities/ its related entities shall be determined in accordance with Rule 9 of Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (hereinafter referred to as PMLA Rules).The said PMLA Rules provide for identification of BO on the basis of two methodologies namely (a) controlling ownership interest (also termed as ownership or entitlement) and (b) control in respect of entities having company or trust structure. In respect of partnership firms and unincorporated associations, ownership or entitlement is basis for identification of BO.

e. Whether two or more foreign Government related entities from the same jurisdiction will individually be permitted to acquire equity shares in an  Indian company up to the prescribed limit of 10%?

Reply:   In case the same set of beneficial owner(s) invest through multiple entities, such entities shall be treated as part of same investor group and the investment limits of all such entities shall be clubbed as applicable to a single FPI. [Ref. Regulation 23(3) of FPI Regulations].

Accordingly, the combined holding of all foreign Government/ its related entities from the same jurisdiction shall be below ten percent of the total paid up capital of the company.

However, in cases where Government of India enters into agreements or treaties with other sovereign Governments and where such agreements or treaties specifically recognize certain entities to be distinct and separate, SEBI may, during the validity of such agreements or treaties, recognize them as such, subject to conditions as may be specified by it. [Ref. Regulation 21(9) of FPI Regulations].

 f. How will the investment by a Foreign Government Agency be treated?
  
 Reply: Foreign Government Agency is an arm/ department/ body corporate of Government or is set up by a statute or is majority (i.e. 50% or more) owned by the Government of a foreign country and has been included under “Category I Foreign portfolio investors”. [Ref. Regulation 5(a) of FPI Regulations].

The investment by foreign Government agencies shall be clubbed with the investment by the foreign Government/ its related entities for the purpose of calculation of 10% limit for FPI investments in a single company, if they form part of an investor group.

g. Whether any investment by World bank group entity viz. IBRD, IDA, MIGA and IFC should be clubbed with the investment from a foreign Government having ownership in such World bank group entity?

Reply: Government of India, vide letter No. 10/06/2010-ECB dated January 06, 2016 has exempted World Bank Group viz.  IBRD, IDA, MIGA and IFC from clubbing of the investment limits for the purpose of application of 10% limit for FPI investments in a single company.

h. Where Provinces/States of some countries with federal structure have set up their separate investment funds with distinct beneficial ownership constituted with objectives suitable for their respective provinces, such funds not only have separate source of financing but also have no management, administrative or statutory commonality. Kindly inform whether investments by these foreign Government entities shall be clubbed?  

Reply:  The investment by foreign Government/ its related entities from provinces/ states of countries with federal structure shall not be clubbed if the said foreign entities have different BO identified in accordance with PMLA Rules.  

i. How will the foreign Government/ its related entities know the available limit for investment, to avoid breach of the limit?

Reply:  The custodian of securities reports the holdings of FPIs/ investor groups to depositories who monitor the investment limits. As such, NSDL is in ready possession of aggregate holdings of FPIs/ investor groups in any particular scrip. [Ref. Regulation 26(2)(d) of FPI Regulations].To this effect, SEBI, vide communication dated November 02, 2017 has already advised DDPs/ custodians of securities to approach NSDL to get information regarding aggregate percentage holdings of the group entities on whose behalf they are acting in any particular company before making investment decisions. SEBI has no objection to the said arrangement for sharing of data.

j. What if the investment by foreign Government/ its related entities cause breach of the permissible limit?

Reply:  The FPIs investing in breach of the prescribed limit shall divest their holdings within 5 trading days from the date of settlement of the trades causing the breach. Alternatively, the investment by such FPIs shall be considered as investment under Foreign Direct Investment (FDI) at the FPI’s option. However, the FPIs need to immediately inform of such option to SEBI & RBI, since they cannot hold equity investments in a particular company under FPI and FDI route, simultaneously.     2. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 
 

issue of share certificates

MCA has vide its notification dated 10th April, 2018 amended the Rule 5(3) of the Companies (Share Capital & Debentures) Rules, 2014. The said Rule pertains to issue of share certificates. Rule 5(3) pertains to the manner of issue of the share certificates.

The earlier Rule 5(3) mandated that the share certificates should be issued under the common seal of the company. Since the mandatory requirement of common seal was done away with, therefore the MCA has made the change in this sub-Rule as well. Now the Rule 5(3) reads as under:

⁶[(3) Every certificate shall specify the shares to which it relates and the amount paid-up thereon and shall be signed by two directors or by a director and the company secretary, wherever the company has appointed company secretary:

Provided that in case the company has a common seal it shall be affixed in the presence of persons required to sign the certificate.

Explanation. - For the purposes of this sub-rule, it is hereby clarified that,-  

(a) in case of an One Person Company, it shall be sufficient ifthe certificate is signed by a director and the company secretary or any other person authorised by the Board for the purpose. 

(b) a director shall be deemed to have signed the share certificate ifhis signature is printed thereon as facsimile signature by means of any machine, equipment or other mechanical means such as engraving in metal or lithography or digitally signed, but not by means of rubber stamp, provided that the director shall be personally responsible for permitting the affixation of his signature thus and the safe custody of any machine, equipment or other material used for the purpose.] 

The language used in the amended Rule 5(3) is much better than that in its erstwhile avatar. 

The Red Fox

The Red Fox by Anthony Hyde is his debut novel and set in the Cold war era. An ex girlfriend calls for help in locating her missing father and the search leads the protagonist to Canada, France and Soviet Union. Starts off well, but just when we thought we are coming to the end of the suspense, it meanders off to Soviet Union and further adventures. Anthony has managed to keep the suspense intact until the end, the very last paragraph.  Goodreads rating 2/5

Monitoring of Foreign investment limits in listed Indian companies

SEBI circular dated 5th April, 2018

1. Foreign Investment in India is regulated in terms of clause (b) of sub-section 3 of section 6 and section 47 of the Foreign Exchange Management Act, 1999 (FEMA) read with Foreign Exchange Management (Transfer or Issue of a Security by a Person resident Outside India) Regulations, 2017 issued vide Notification No. FEMA 20(R)/2017-RB dated November 7, 2017. FEMA prescribes the various foreign investment limits in listed Indian companies. These include the aggregate FPI limit, the aggregate NRI limit and the sectoral cap. The RBI Master Direction (FED Master Direction No. 11/2017-18) dated January 04, 2018 provides a compilation of the instructions issued on Foreign Investment in India and its related aspects under FEMA.    

2. As per FEMA, the onus of compliance with the various foreign investment limits rests on the Indian company. In order to facilitate the listed Indian companies to ensure compliance with the various foreign investment limits, SEBI in consultation with RBI has decided to put in place a new system for monitoring the foreign investment limits. The architecture of the new system has been explained in Annexure A. 

3. The depositories (NSDL and CDSL) shall put in place the necessary infrastructure and IT systems for operationalizing the monitoring mechanism described at Annexure A. The Stock Exchanges (BSE, NSE and MSEI) shall also put in place the necessary infrastructure and IT systems for disseminating information on the available investment headroom in respect of listed Indian companies. 

4. The depositories shall issue the necessary circulars and guidelines for collecting data on foreign investment from listed companies. The system for collecting this data from the companies shall go live on the date of the issuance of this circular. The companies shall provide the necessary data (details of which have been mentioned in Annexure A) to the depositories latest by April 30, 2018. 

5. The new system for monitoring foreign investment limits in listed Indian companies shall be made operational on May 01, 2018. The existing mechanism for monitoring the foreign investment limits shall be done away with once the new system is operationalized. RBI shall issue the necessary guidelines in this regard. 

This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992. 

Prohibition in dealing in virtual currencies

RBI has vide its notification dated 6th April, 2018 clamped down on dealing in virtual currencies like bitcoins etc. Gist of the notification is given below:

Reserve Bank has repeatedly through its public notices on December 24, 2013, February 01, 2017 and December 05, 2017, cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in dealing with such virtual currencies.

2. In view of the associated risks, it has been decided that, with immediate effect, entities regulated by the Reserve Bank shall not deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs. Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs.

3. Regulated entities which already provide such services shall exit the relationship within three months from the date of this circular.

4. These instructions are issued in exercise of powers conferred by section 35A read with section 36(1)(a) of Banking Regulation Act, 1949, section 35A read with section 36(1)(a) and section 56 of the Banking Regulation Act, 1949, section 45JA and 45L of the Reserve Bank of India Act, 1934 and Section 10(2) read with Section 18 of Payment and Settlement Systems Act, 2007.

Copy of the notification can be found here

GST on railway catering

PIB Press release dated 6th April, 2018

With a view to remove any doubt or uncertainty in the matter and bring uniformity in the rate of GST applicable to supply of food and drinks made available in trains, platforms or stations, it has been clarified with the approval of the competent authority that the GST rate on supply of food and drinks by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms (static units), will be 5% without input tax credit. The copy of letter F.No. 354/03/2018-TRU dated 31.03.2018 (Order No. 2/2018 – GST) issued to the Railway Board is available atwww.cbec.gov.in .