A. Notification of Amendments to SEBI (Investment Advisers), Regulation, 2013

Introduced by: SEBI Press Release PR No. 37/2020, Dated 03.07.2020

What are the announcements in press release regarding notifications of Amendments to SEBI (Investment Advisers) Regulation 2013

Purpose of the Amendment

To strengthen the regulatory framework for investment advisers

What are the Key changes?

1. Segregation of Advisory and Distribution Activities

√ Segregation of advisory & Distribution activities at client level to avoid conflict of interest.

√ An Individual shall have the option to register as an Investment advisor or provide distribution services as a distributor.

√ A non-individual investment adviser shall have client level segregation at group level for investment  advisory  and  distribution  services and  maintain  an  arm’s  length relationship between its activities by providing advisory services through  a separately identifiable department or division.

2. Implementation Services

Investment Advisers are allowed to provide implementation services (Execution) through direct schemes/ products in the securities market. However, no consideration can be received directly or indirectly, at investment adviser’s group or family level for these services.

3. Agreement between Investment Adviser and client

Mandatory agreement to be entered between Investment Adviser and the client for ensuring greater transparency with reference to advisory activities.

4. Fees

The fee charged by the Investment Adviser for providing Investment Advice from a client shall be in the manner as specified by SEBI.

5. Eligibility Criteria for IAs

Enhanced eligibility criteria for registration as an Investment Adviser including net worth of Rs.50 lakhs for non-individuals and Rs. 5 lakhs for individuals.

Individual investment adviser or a principal officer of a non-individual investment adviser to have enhanced professional or post-graduate qualification in relevant subjects and relevant experience of five years while grandfathering existing Individual Investment Advisers from complying with the enhanced qualification and experience as specified by SEBI.

Individuals registered as investment advisers whose number of clients exceed 150 in total, shall apply for registration with SEBI as non-individual investment adviser.

B. Securities And Exchange Board Of India (Issue Of Capital And Disclosure Requirements) (Third Amendment) Regulations, 2020

Relevant date: 01.07.2020

Relevant Notification: By SEBI Notification No. No. SEBI/LAD-NRO/GN/2020/21, Dated 01.07.2020

Relevant Section: Section 30 of the SEBI Act, 1992

In exercise of the powers conferred under section 30 of the Securities and Exchange Board of India Act, 1992, the Board hereby makes the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Third Amendment) Regulations, 2020, to further amend the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.

What is new?

A new Regulation has Inserted

Regulation 164B- Optional Pricing in Preferential Issue

 In case of frequently traded shares, the price of the equity shares to be allotted pursuant to the preferential issue shall be determined by regulation 164 or regulation 164B, as opted for.

Price of the shares

The price of the equity shares to be allotted pursuant to the preferential issue shall not be less than the higher of the following:

Higher of the followings
a the average of the weekly high and low of the volume weighted average price of the related equity shares quoted on the recognised stock exchange during the 12 weeks preceding the relevant date; or
b the average of the weekly high and low of the volume weighted average prices of the related equity shares quoted on a recognised stock exchange during the 2 weeks preceding the relevant date.

Lock In period

Specified securities allotted on a preferential basis using the pricing method determined under sub-regulation (2) shall be locked-in for a period of three years.

For what time period the pricing method availed

The pricing method determined at sub-regulation (2) shall be availed in case of allotment by preferential issue made between July 01, 2020 or from the date of notification of this regulation, whichever is later and December 31, 2020.

All allotments arising out of the same shareholders approval shall follow the same pricing method.

C. Securities And Exchange Board Of India (Substantial Acquisition Of Shares And Takeovers) (Third Amendment) Regulations, 2020

Relevant Notification: By SEBI Notification No. SEBI/LAD-NRO /GN/ 2020/20 dated 01.07.2020

Relevant Section: Section 30 of the SEBI Act, 1992

In exercise of the powers conferred under section 30 of the Securities and Exchange Board of India Act, 1992 the Board hereby makes the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2020 Regulations to further amend the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

What is new?

Regulation 17 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

In regulation 17, in sub-regulation (1), the following new proviso shall be inserted after the existing proviso, namely, –

“Provided further that in case of indirect acquisitions where public announcement has been made in terms of clause (e) of sub-regulation (2) of regulation 13 of these regulations, an amount equivalent to hundred per cent of the consideration payable in the open offer shall be deposited in the escrow account.”

In regulation 17, in sub-regulation (3), in clause (c), the following new proviso shall be inserted after the existing proviso, namely,

“Provided further that the deposit of securities shall not be permitted in respect of indirect acquisitions where public announcement has been made in terms of clause (e) of sub-regulation (2) of regulation 13 of these regulations.”

Regulation 18 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

In regulation 18, after sub-regulation (11), the following new sub-regulation shall be inserted, namely,-

“(11A) Without prejudice to sub-regulation 11, in case the acquirer is unable to make payment to the shareholders who have accepted the open offer within such period, the acquirer shall pay interest for the period of delay to all such shareholders whose shares have been accepted in the open offer, at the rate of ten per cent per annum

Provided that in case the delay was not attributable to any act of omission or commission of the acquirer, or due to the reasons or circumstances beyond the control of acquirer, the Board may grant waiver from the payment of interest.

Provided further that the payment of interest would be without prejudice to the Board taking any action under regulation 32 of these regulation or under the Act.”

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