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Legislative and Regulatory Update
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[No.42]
March 03, 2003 |
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SEBI
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Secondary Market Division
Circular No. SMD/Policy/Listing/Cir-7/03 Dated 17.02.2003 : SEBI had appointed a Committee on Delisting of Shares to inter-alia examine and review the present conditions for delisting of securities of companies listed on the recognized stock exchanges and suggest norms and procedures in connection therewith. The Report of the Committee was considered and accepted by SEBI Board, pursuant to which Securities and Exchange Board of India
(Delisting of Securities) Guidelines 2003,
have been issued.
Circular No. SMD/Policy/Listing/Cir-6/03 Dated 06.02.2003 : It has been decided to further shorten the settlement cycle from the existing T+3 rolling settlement to T+2
w.e.f. April 01, 2003. In view of the shortening of the settlement cycle, the activity schedule has been revised which shall be adhered to by the stock exchanges. The activity schedule has been finalised through a consultative process with various market participants viz. stock exchanges, broker associations, custodians, depositories, depository participants etc.
Circular No. LGL/Cir-2/2003 Dated 19.02.2003 : SEBI has been receiving several references for approval of amendments to Bye Laws / Rules / Regulations of various Stock Exchanges and Depositories. It is observed that in many cases the Exchanges and Depositories are not giving objective / purpose behind such amendments. It is also not being stated as to whether such amendments necessitate further amendments to Bye Laws / Rules / Regulations. This is causing delay in disposing of the references. Therefore, in order to facilitate speedy approval of Bye Laws / Rules / Regulations and amendments thereto all the Stock Exchanges and Depositories
have been requested to give specified information while seeking approval to Bye Laws / Rules / Regulations and amendments thereto for SEBI’s approval.
Regulations
Notification No. SO203(E) Dated 19.02.2003 : In regulation 27, after sub-regulation (2), the proviso, regarding the rating by Credit Rating Agencies of a security issued by its associate having a common independent director with it or rating committee, has been added. An Explanation has also been added after the proviso which specifies the meaning of independent director.
Depositories and Custodian
Circular No. D&CC/FITTC/CIR-18/2003 Dated 12.02.2003 : This has reference to circular No. D&CC/FITTC/CIR-15/2002 dated December 27, 2002 directing issuer companies to appoint a common agency for share registry work by February 01, 2003. Since then SEBI has received a large number of representations from Chambers of Commerce, professional bodies, issuer companies and other market participants requesting an extension of time to comply with the above requirement and also to complete the process of transfer of records. SEBI has considered these requests and has decided to extend the time upto March 31, 2003 for compliance with the circular No.D&CC/FITTC/CIR-15/2002 dated December 27, 2002.
Foreign Institutional Investors
Circular No. FIITC/FII/7/2003 Dated 11.02.2003 : It has been clarified that, trading by FIIs and their sub-accounts in derivatives contracts till these are not resulting into settlement by physical delivery of underlying stocks shall not attract the investment limit of 10% or 5% of the total issued capital of the company as prescribed in Regulations 15(5) and (6) of the
SEBI(FII) Regulations, 1995 .
Press Release
Press Release No. PR 47/2003 Dated 20.02.2003 : SEBI had advertised in news papers for the post of Executive Directors following due procedures, with the approval of the SEBI Board. The applications were scrutinized in accordance with the eligibility criteria set out in the advertisement. The eligible applicants were called for an interview before a sub committee of Board of
SEBI. The selection has been made and letters have been issued with the approval of the full SEBI Board which consists of four Members, and after obtaining written police verification report and vigilance clearance report.
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Department of Company Affairs
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Circular No. 12/2003 Dated 21.02.2003 : Upon consultations with the institutes of ICAI &
ICWAI, a view emerged that providing depreciation on Unit of Production Method will not be in tune with the basic concept of depreciation as efflux of time necessarily involves loss of value of an asset. Besides, this method may not be suitable as it cannot be said that in the year in which no production takes place, no depreciation would be charged. Adopting unit of production method for charging depreciation may result in extending the life of the asset beyond the “specified period” underlying the rates of depreciation notified under Schedule-XIV to the Companies Act. In view of the above facts, this Department has clarified that companies may depreciate the assets on “Straight Line Method” or “Written Down Value” but may not follow “Unit of Production Method”.
Notification No. SO207(E) Dated 19.02.2003 : The Central Government has made the Rajasthan State Mineral Development Corporation Limited and the Rajasthan States Mines and Minerals Limited (Amalgamation) Order, 2003 to provide for the amalgamation of the Rajasthan State Mineral Development Corporation Limited and the Rajasthan States Mines and Minerals Limited from 19.02.2003.
Circular No. 10/2003 Dated 13.02.2003 : With reference to Department’s Circular No. 17/2002 (No.17/36/2002-CL.V) dated 5th July, 2002 on the subject, para 4 of the said Circular has been substituted by the following, namely,
“4. The above format of TDS may be printed on the reverse side of the counterfoil duly signed by persons responsible for deduction of tax.”
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CBEC Excise Tariff
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Circular No. 11/695/2003 Dated 24.02.2003 : With reference to clauses (1) and (2) of Board’s Circular No.572/9/2001-CX dated 22.02.2001 which interalia provides that in cases where the Department has filed Special Leave Petition/Civil Application along with stay application against the adverse order of High
Court/CEGAT as the case may be, no unilateral action should be taken by the Commissioners to release goods/order refund and decision in such cases where stay order is not forthcoming, should be taken only in consultation with the Board. In this connection, a number of references from field formations have been received.
Considering the above Board has decided to permit jurisdictional Commissioners to take decision in such cases on merits at their level to grant refund or release goods without seeking permission/clearance from the Board. However, in the matters concerning Supreme Court, the jurisdictional Commissioners should continue to pursue with the Board for early disposal of stay application.
Circular No. 10/694/2003 Dated 19.02.2003 : In view of Ministry's stand to appeal against the CEGAT decision in the case of Jaldoot Material Handling Pvt. Ltd. and also the Judgement in the case of Gujrat Industrial Trucks Ltd. Vs. CCE Baroda, it is clarified that the correct classification of the Hand Pallet Trucks/Trolley is under Heading 87.16. However, since in the case of Jaldoot Material Handling Pvt. Ltd. the CEGAT has taken a different view, for this particular party protective demands should only be raised and kept alive till the decision of the Apex Court.. In respect of other parties demands can be raised under the normal period prescribed under section 11A of the Central Excise Act, 1944 and adjudicated.
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RBI
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Circular No. A.P. (DIR Series) Circular No.81 Dated 27.02.2003 : The Government of India have extended a line of credit of an amount of USD 10 million (US Dollar Ten Million only) to the Government of the Lao People’s Democratic Republic under a credit agreement entered into between the two Governments on November 6, 2002. The credit will be available to the Government of the Lao People’s Democratic Republic, (Lao
PDR), for importing from India capital goods of Indian manufacture including original spare parts and accessories purchased along with the capital goods and included in the original contract as also consultancy services and consumer durables as mentioned.
Circular No. A.P. (DIR Series) Circular No.80 Dated 18.02.2003 : Export-Import Bank of India
(Exim Bank) has concluded an agreement with Vneshtorgbank, Russia (Bank for Foreign Trade, Russia) on July 3, 2002 making available to the latter, a line of credit (LOC) up to an aggregate sum of USD 25 million (US Dollar Twenty five Million only). The credit has become effective from November 14, 2002 and is available for financing exports from India of eligible goods (listed in the Annexure) and related services to buyers in the borrower’s country i.e. Russian Federation. The eligible goods will include initial spares, drawings and designs, together with services related thereto.
Circular No. A.P. (DIR Series) Circular No.79 Dated 17.02.2003 : With reference to A.P. (DIR Series) Circular No.31 dated October 18, 2002 annexing thereto particulars of the Nodal Officers of Reserve Bank nominated at Regional Offices for dealing with applications for release of exchange for private travel exceeding USD 5,000 and subsequent A.P. (DIR Series) Circular No.51 dated November 18, 2002 enhancing the said limit to USD 10,000, it has since been decided to nominate Nodal Officers at Jammu, Srinagar and Nagpur Offices.
Notification No. DBOD No. BP.BC. 74 /21.04.018/2002-03 Dated 27.02.2003 : In partial modification of the guidelines, it has been decided that banks may recognise income on accrual basis in respect of the three categories of projects under implementation which are classified as 'standard' in terms of the guidelines contained in Circular No. DBOD. BP. BC. 108/ 21.04.048/ 2001-02 dated 28 May 2002.
Notification No. DBOD No. BP.BC. 73 /21.04.018/2002-03 Dated 26.02.2003 : With reference to circular DBOD No. Fol. BC.114/16.01.001-93 dated April 28, 1993, in terms of which banks are required to reconcile the entries outstanding in their inter branch accounts within a period of six months. With this end in view and in keeping with the best banking practices, it has been decided to further reduce the time period allowed to banks for making provision against the net debit balance in the inter-branch account from one year to six months from the year ending March 31, 2004.
Notification No. DBOD.No. BP.BC. 72 /21.04.018/2001-02 Dated 25.02.2003 : The draft guidelines on consolidated accounting and other quantitative methods to facilitate consolidated supervision were prepared on the basis of the Working Group’s recommendations and were issued to banks vide letter
DBOD.No. BP.2388 /21.04.018/2001-02 dated June 24, 2002, seeking their comments. On the basis of the feedback received from banks and the deliberations with the officials of banks and FIs the draft guidelines have been revised. It has been decided to implement them with suitable changes, wherever considered necessary. Accordingly, the guidelines to be followed by banks to aid consolidated supervision have been formulated to enable smooth implementation.
Notification No. DBOD. BP. BC. 71 / 21.04.103 / 2002- 03 Dated 19.02.2003 : With
reference to paragraphs 123 and 124 of the
Statement on Monetary and Credit Policy for the year 2002-03 enclosed to
Governor's letter MPD. No. 214/ 07.01.279/ 2001-02 dated April 29, 2002, it has
been indicated therein that with a view to moving further in complying with the
Core Principles for Effective Banking Supervision drawn up by the Basle
Committee on Banking Supervision, RBI would be issuing guidelines on country
risk management and provisioning therefor, in consultation with banks. The
guidelines have since been finalised by RBI and have been published.
Notification No. IDMC/PDRS / 3432 /10.02.01/2002-03 Dated 21.02.2003 : With reference to paragraph 96 of the 'Mid-term review of Monetary and Credit Policy for the year 2002-2003' wherein the proposal to extend eligibility for ready forward (Repo) contracts to select categories of gilt account holders, with adequate safeguards to ensure Delivery Vs Payment (DVP) and transparency was announced, instructions have been issued which will come into effect from March 3, 2003.
Press Release No. 879/2002-03 Dated 21.02.2003 : In addition to participants, such as, banks, primary Dealers holding Subsidiary General Ledger (SGL) accounts with RBI, who are currently eligible to enter into Ready Forward (repo) contracts, Reserve Bank of India have now permitted certain other entities to enter into repos in Government Securities including treasury bills. To be operationalised from March 3, 2003, this facility will be available to any scheduled bank, primary dealer, non-banking financial company registered with the Reserve Bank of India (other than Government Companies as defined in section 617 of the Companies Act, 1956), any mutual fund registered with the Securities and Exchange Board of India, any housing finance company registered with the National Housing Bank and any insurance company registered with the Insurance Regulatory Development Authority. These entities will be able to enter into ready forward contracts through their gilt accounts maintained with the custodians under the Constituent Subsidiary General Ledger
(CSGL) facility.
Press Release No. 849/2002-03 Dated 12.02.2003 : The Reserve Bank of India, in exercise of the powers conferred on it under Section 45 IA of the Reserve Bank of India Act, 1934, has cancelled on February 8, 2003 the certificate of registration issued to IndusInd Leasing Ltd., SCO: 44, Sector 41-D, Chandigarh, for carrying on the business of a Non-Banking Financial Institution.
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DGFT
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Trade Notice No. 21/2002 Dated 19.02.2003 : The following guidelines have been issued for the benefit of the applicants who would be applying for supplementary DEPB. These guidelines are in addition to the guidelines issued by DGFT vide Public Notice No.63 for facilitating smooth processing of applications.
1. Applicants are required to submit their application in respect of relevant Advance licensing/FAS counters from 10.30 a.m. 12.30 p.m.
2. The applicants are required to file the application in manual mode as per the guidelines and in the prescribed application format as contained in Annexure to Public Notice No.63 dated 17/2/2003.
Trade Notice No. 20/2002 Dated 19.02.2003 : It has been decided that Procedure as given below shall be followed by the applicants for licensing under paragraph 4.7 of Handbook of Procedures, Vol.1, 2002-2007:-
The exporters desirous of obtaining the licence under para 4.7 shall submit their application, in 7 sets, in the prescribed proforma, i.e., Appendix 10 B to the Handbook of Procedures Vol.1, 2002-2007, complete in all respect along with Check Sheet as annexed to this notice. After scrutinising the application and if no deficiency is found by the Licensing Authority, the licence would be issued within the prescribed time limit (3 working days). In terms of para 4.7.4 of Handbook of Procedures Vol. 1 the Licensing Authority shall forward 5 complete sets of application with prescribed documents, technical details (as per Check Sheet), and copy of the licence to ALC, New Delhi.
Public Notice No. 64/2002-07 Dated 19.02.2003 : Amendments have been made in the provisions pertaining to newcomers, amendments/ additions in agencies under Appendix 28 A and 35B.
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Department of Commerce
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Notification No. 14/52/2002-DGAD Dated 19.02.2003 : Anti-Dumping Investigations have been initiated concerning Import of Methylene Chloride Originating in or Exported from Korea RP.
Notification No. 14/1/2003-DGAD Dated 11.02.2003 : Final Findings regarding Anti-Dumping Investigation Concerning Imports of Sodium Tripoly Phosphate (STPP) Originating in or Exported from People's Republic of China and Chinese Taipei (Taiwan), have been initiated.
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Department of Industrial policy
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Notification No. SO214(E) and No. SO213(E) Dated 21.02.2003 : Oil India Ltd., Assam and Cairn Energy India Pty Limited, Chennai have been exempted from the provisions of sub-rule (2) of rule 31 of the Explosives Rules, 1983 for Import of Explosives Specified.
Notification No. SO191(E) and No. SO189(E) Dated 17.02.2003 : The Central Government after consulting the Bureau of Indian Standards has made the following orders,
1. Cement (Quality Control) Order, 2003
2. Electrical Wires, Cables, Appliance and Protection Device and Accessories (Quality Control) Order, 2003
Notification No. SO190(E) Dated 17.02.2003 : The Central Government has rescinded the Cement (Quality Control) Order, 1955, issued under Ministry of Industry (Department of Industrial Policy & Promotion) Notification No. 641(E) dated 19th July, 1995 with immediate effect.
Notification No. SO.........(E) Dated 17.02.2003 : The Central Government has rescinded the General Service Electric Lamps (Quality Control) Order, 1989 issued under Ministry of Industry (Department of Industrial Development) Notification No.
G.S.R. 463 (E) dated 24th April, 1989 and the Electrical Wires, Cables, Appliances and Accessories (Quality Control) Order, 1993 issued under Ministry of Industry (Department of Industrial Development) Notification No.
G.S.R. 83 (E) dated 24th February, 1993 with immediate effect
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Department of Legal Affairs
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- Government of India (Allocation of Business) (Two Hundred and Sixty - Seventh Amendment) Rules, 2003
Notification No .S.O. (E). Dated 30.01.2003 : 1. Under the heading "Ministry of Commerce and Industry (Vanijya Aur Udyog Mantralaya)", under the sub-heading "B. Department of Industrial Policy and Promotion (Audyogik NitiI Aur Samvardhan Vibhag)", the entry 19 has been deleted.
2. Under the heading "Ministry of Finance and Company Affairs (Vitta Aur Kampany Karya Mantralaya)", under the sub-heading "A. Department of Economic Affairs (Arthik Karya Vibhag)", after entry 16, the following entry has been inserted, namely,
"16A. Foreign Investment Promotion Board
(FIPB).";
3. After the heading "19. Ministry of Law and Justice (Vidhi aur Nyaya Mantralaya)" and sub-headings relating thereto, the following heading has been inserted, namely,
"20. Ministry of Mines (Khan
Mantralaya)".
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Ministry of Chemicals and Fertilisers
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Notification No. SO184(E) to No. SO187(E) Dated 17.02.2003 : The National Pharmaceutical Pricing Authority, has fixed the ceiling prices exclusive of excise duty and local tax, if any, of the Scheduled formulations specified.
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Department of Health
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Notification No. GSR111(E) Dated 18.02.2003 : The Central Government, has published the Prevention of Food Adulteration (............... Amendment) Rules, 2003 for the information of all persons likely to be affected thereby, and notice has been given that the said draft rules will be taken into consideration on or after the expiry of a period of thirty days from the date on which copies of the Gazette of India
in which this notification is published are made available to the public.
Notification No. GSR109(E) Dated 14.02.2003 : The Central Government has issued Pre-Natal Diagnostic Techniques (Regulation and Prevention of Misuse) Amendment Rules, 2003 to be effective from 14.02.2003.
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Press Information Bureau |
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Dated 21.02.2003 : In view of financial and manpower constraints in Special Protection Group
(SPG), Lok Sabha on Thursday passed Special Protection Group Bill seeking to reduce proximate security to former prime ministers and their spouses to one year after they demitted office and continue it further if needed on the basis of annual threat assessment.
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Supreme Court |
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The plaintiffs filed a suit for partition of their shares in the suit property collectively claiming that they had 7/12th share, defendant No. 1 having 7/24th and defendant Nos. 3 to 5 each having 1/8th share in the suit property and that defendant No. 2 had only right to maintenance.
Defendant No. 6 is the adopted son of defendant No. 2.
The trial court held that the adoption of defendant No. 6 was valid and decreed the suit of the plaintiffs declaring that the plaintiffs 1 and 2 and defendant No. 1 each having 7/48th share, defendant Nos. 3 to 5 having 1/48th share in the suit property. Aggrieved by the decree passed by the trial court, the plaintiffs filed appeal before the District Judge. The learned District
Judge dismissed the appeal. Thereafter, the plaintiffs filed second appeal before the High
Court which was also dismissed. Hence, the appeal was filed in the Supreme
Court. In view of the concurrent findings of fact the learned counsel for the appellants did not question the validity of the adoption of defendant No. 6. However, he urged that Clause (c) of Section 12 of the Hindu Adoption and Maintenance Act, 1956 precluded defendant No. 6 to claim share in the property, already vested in the heirs of Vyankat before his adoption, and that the restriction imposed on the rights of adopted child under Clause (c) of Section 12 is applicable to the interest vested in sole surviving coparcener when the adoption was made subsequent to the death of sole surviving coparcener.
This being the legal position defendant No. 6, having been adopted after the death of Vyankat and after the properties vested in his heirs, is not entitled for share in the suit properties. In this view the impugned judgment and decree of the High Court affirming the decree of both the courts below were set aside and the suit of the plaintiffs-appellants stood decreed.
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Securities Appellate Tribunal |
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The maximum time period provided in the Regulations for completing the offer formalities in respect of an open offer, is 120 days from the date of public announcement. Since no public announcement for acquisition of shares of the Target company
had been made in the present case, which has adversely affected interest of shareholders of Target Company, the Acquirer was directed to pay interest @ 15% per annum to the shareholders for the loss of interest caused to the shareholders from 22.3.98 till the date of actual payment of consideration for the shares to be tendered in the offer directed to be made by the
Acquirer. The Appellants claiming to be aggrieved by the said order filed the present appeal.
Learned Senior Counsel further contended that it was incumbent on the part of the Respondent to take into consideration the pretax dividend received by the shareholders of the target company and the dividend amount received should have been deducted from the interest amount to be received as otherwise it would amount to unjust enrichment for such shareholders.
The Hon'ble Tribunal held that:
(i) Those persons who were holding shares of the target company on 24.2.1998 and continue to be shareholders on the closure day of public offer to be made in terms of the directions given by the Respondent vide the impugned order alone shall be eligible to receive interest in case the shares which they were holding on 24.2.1998 are tendered in response to public offer made in terms of the impugned order, and accepted by the Appellants.
(ii) The interest payable by the Appellants shall be at the rate of 15% as directed by the Respondent in its order dated 16.10.2002.
(iii) The dividend paid by the target company to its shareholders not required to be deducted from the interest payable to the shareholders by the Appellants.
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Budget Highlights |
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The highlights of the
budget 2003-04 are as under,
Standard deduction for salaried employees raised to 40 per cent of salary, or Rs.30,000, whichever is less, for salary income up to Rs.5 lakh; and a deduction of Rs.20,000 allowed for salary income above Rs.5 lakh. VRS payments exempted up to Rs.5 lakh, even when taken in
instalments.
Promoting investment: tax treatment of dividends and capital gains
From April 1, 2003 dividends tax-free in the hands of the shareholders. Correspondingly, there will be a 12.5 per cent dividend distribution tax on domestic companies.
All listed equities that are acquired on or after March 1, 2003, and sold after the lapse of a year, or more, exempt from the incidence of capital gains tax.
Tax holiday extended to R&D companies established up to March 31, 2004.
Additional Duties of Excise Act, 1957 being amended to allow States to levy sales tax on textiles, sugar and tobacco products at a rate not exceeding 4 per cent.
Constitutional amendment proposed to give Central Government the power to levy service tax and both the Central and the State Governments powers to collect the proceeds.
5 per cent surcharge halved in the case of corporates and removed in the case of individuals and HUFs, except those earning an income above Rs.8.5 lakh. A 10 per cent surcharge on those earning above Rs.8.5
lakh.
General deduction of Rs.9,000 given to individual taxpayers having income from dividends, interest, etc. increased to Rs.12,000. An additional deduction of Rs.3,000 allowable in respect of interest from Government securities.
Individuals and HUF carrying on business or profession need not deduct tax at source, from payments made by them for personal purposes.
The details of the Budget are available on site. |
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