SEBI Board Meeting

SEBI Board Meeting

The SEBI Board met today in Mumbai and took the following decisions:

Platform for E-Voting by Shareholders of Listed Entities

In line with the budget proposal of Hon’ble Finance Minister, to make it mandatory for top listed companies to provide for electronic voting facilities, it has been decided to implement the said proposal by making electronic voting mandatory for all listed companies in respect of those businesses to be transacted through postal ballot. The same would be implemented in a phased manner. To begin with, it would be mandated for top 500 listed companies at BSE and NSE based on market capitalization. Listed companies may choose any one of the agency which is currently providing the e-voting platform.

Manner of dealing with Audit Reports filed by listed entities

In order to enhance the quality of financial reporting done by listed entities, it has been decided to put in place, a mechanism to process qualified annual audit reports filed by the listed entities with stock exchanges and Annual Audit Reports where accounting irregularities have been pointed out by Financial Reporting Review Board of the Institute of Chartered Accountants of India (ICAI-FRRB). It has been, inter-alia, decided that:

• Deficiencies in the present process would be examined and rectified.
• SEBI would create Qualified Audit Report review Committee (QARC) represented by ICAI, Stock Exchanges, etc. to guide SEBI in processing audit reports where auditors have given qualified audit reports.
• Listed entities would be required to file annual audit reports to the stock exchanges alongwith the applicable Forms (Form A: 'Unqualified' / 'Matter of Emphasis Report'; Form B: 'Qualified' / 'Subject To' / 'Except For Audit Report').
• After preliminary scrutiny and based on materiality, exchanges would refer these reports to SEBI/QARC.
• Cases wherein the qualifications are significant and explanation given by Company is unsatisfactory would be referred to the ICAI-FRRB. If ICAI-FRRB opines that the qualification is justified, SEBI may mandate a restatement of the accounts of the entity and require the entity to inform the same to the shareholders by making the announcement to stock exchanges.

Amendment to certain provisions in SEBI (ICDR) Regulations relating to Infrastructure Sector

In order to harmonize the SEBI (ICDR) Regulations relating to Infrastructure Sector with the amended Securities Contracts (Regulation) Rules, 1957, it has been decided to carry out consequential amendments to SEBI (ICDR) Regulations pertaining to minimum public shareholding and minimum subscription requirements. It has also been decided to modify the minimum subscription requirements for companies coming out with IPOs to state that the minimum subscription shall not be less than 90% of the offer, subject to allotment of minimum 25% or 10%, as the case may be, of the securities offered to the public.

Review of Offer for Sale (OFS) through stock exchange mechanism

1. The Board has approved the following changes in the OFS mechanism through stock exchange:

i. Within the cooling off period of +12 weeks, the promoter(s)/promoter group entities can offer their shares only through OFS or Institutional Placement Programme (IPP) while maintaining a gap of 2 weeks between two successive OFS or IPP. This would also be applicable on promoters who have already offloaded their shares through OFS or IPP. Board also approved these changes in the SEBI (ICDR) Regulations for OFS through IPP route.

ii. Modification / cancellation of bids shall not be allowed during the last 60 minutes from the close of bidding session instead of last 30 minutes.

2. The Board also took note of the following changes in the OFS mechanism:

a. Indicative price shall be displayed during the last 60 minutes of the close of bidding session irrespective of the book being built.

b. The dissemination of floor price shall not be a part of the notice. If the seller intends to disclose the floor price, the price shall be disclosed after the close of business hours on (T-1) day (T day being the day of OFS).

c. The minimum size of the offer shall be Rs.25 crore. However, the size of offer can be less than Rs.25 crore so as to achieve minimum public shareholding in a single tranche.

d. The issuer shall have the option to upsize the offer subject to appropriate disclosure in the notice and advance pay-in of shares.

e. Institutional investors shall have the option of applying with 100% upfront margin in cash or with an adhoc margin of certain lower percentage to be determined by the Exchanges. In the latter case the bids shall not be permitted to be modified.

f. Additional time shall be provided to the custodians to confirm the institutional bids during post close trading hours subject to the condition that the bids and payments have been received before closure of the bidding process.

Mumbai

June 26, 2012                              

Amendments to the Equity Listing Agreement

Securities and Exchange Board of India

CIRCULAR

CIR/CFD/DIL/1/2012                                        February 8, 2012

To

All Stock Exchanges

Dear Sir/Madam,

Sub: Amendments to the Equity Listing Agreement

1. As part of SEBI’s endeavour to review the listing conditions, certain amendments are hereby carried out to the Equity Listing Agreement. The full texts of amendments to be effected in the Listing Agreements are given at Annexure-1. The gist of the amendments

are as under:-

a. Amendment to Clause 40A

In addition to the existing methods which listed company can adopt to achieve minimum public shareholding, the listed company may also achieve the minimum level of public shareholding through Institutional Placement Programme (IPP) in terms of Chapter VIII-A of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended.

Further, sale of shares by promoters through stock exchanges shall be now carried out in terms of SEBI circular CIR/MRD/DP/05/2012 dated February 1, 2012.

b. Amendment to Clause 43 & 43A

In order to enhance disclosure requirements, listed entities have been mandated to disclose utilization of funds raised upon conversion/ exercise of warrants issued along with public or rights issue of specified securities.

2. This circular shall be applicable with immediate effect.

3. The above listing conditions are specified in exercise of the powers conferred under Section 11 read with Section 11A of the Securities and Exchange Board of India Act, 1992. The said listing conditions should form part of the existing Listing Agreement of the stock exchange.

4. All stock exchanges are advised to ensure compliance with this circular and carry out the amendments in their Listing Agreement as per the Annexure to this circular.

5. This circular is available on SEBI website at http://www.sebi.gov.in/ under the categories “Legal Framework” and “Issues and Listing”.

Yours faithfully,

Sanjay Purao

Deputy General Manager

+91-22-26449612

sanjayp@sebi.gov.in

Annexure-1

Amendments to Listing Agreement

1. Sub-clause (ii)(c) of Clause 40A, shall be substituted by

“(c) sale of shares held by promoters through the secondary market in terms of SEBI circular CIR/MRD/DP/05/2012 dated February 1, 2012; or”

2. After sub-clause (ii)(c) of Clause 40A, the following sub-clause shall be inserted:

“(d) Institutional Placement Programme (IPP) in terms of Chapter VIIIA of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended.”

3. ‘The proviso’ and ‘Explanation to sub-clause (ii)(c) of Clause 40A, shall be omitted.

4. In Clause 43, a new sub-clause (d) shall be inserted:

“(d) The statement referred to in clause (a) shall also be given for warrants issued along with public or rights issue of specified securities”.

5. In Clause 43A, a new sub-clause (5) shall be inserted:

“(5) The statement referred to in clause (1) shall also be given for warrants issued along with public or rights issue of specified securities”.

SEBI (Buy-back of Securities) (Amendment) Regulations

THE GAZETTE OF INDIA

EXTRAORDINARY

PART –III – SECTION 4

PUBLISHED BY AUTHORITY

NEW DELHI, FEBRUARY 07, 2012

SECURITIES AND EXCHANGE BOARD OF INDIA

NOTIFICATION

Mumbai, the 7th February, 2012

SECURITIES AND EXCHANGE BOARD OF INDIA (BUY-BACK OF SECURITIES) (AMENDMENT) REGULATIONS, 2012.

LAD-NRO/GN/2011-12/36/3187 - In exercise of powers conferred by sub-section (1) of section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) read with clause (f) of sub-section (2) of Section 77A of the Companies Act, 1956 (1 of 1956) the Board hereby makes the following regulations to amend the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 1998, namely:-

1. These regulations shall be called the. Securities and Exchange Board of India (Buy-Back of Securities) (Amendment) Regulations, 2012.

2. They shall come into force on the date of their publication in the Official Gazette.

3. In the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 1998-

(i) in regulation 2, in sub-regulation (1),

(a) after clause (l), the following new clause shall be inserted, namely:-

“(la) „small shareholder‟ means a shareholder of a listed company, who holds shares or other specified securities whose market value, on the basis of closing price of shares or other specified securities, on the recognised stock exchange in which highest trading volume in respect of such security, as on record date is not more than two lakh rupee;”

(b) after clause (o), the following new clause shall be inserted, namely:-

“(p) 'working day' means any working day of the Board.”

(ii) In regulation 5, in sub-regulation (1) words and figures “Schedule I” shall be substituted with the words and figures “Schedule II, Part A”.

(iii) regulation 5A shall be substituted with the following, namely:-

“Board resolution

5A. A company, authorized by a resolution passed by the Board of Directors at its meeting to buy back its shares or other specified securities under first proviso to clause (b) of sub-section (2) of section 77A of the Companies Act, 1956, as inserted by the Companies (Amendment) Act, 2001, shall file a copy of the resolution, with the Board and the stock exchanges, where the shares or other specified securities of the company are listed, within two working days of the date of the passing of the resolution.”

(iv) in regulation 6,-

(a) for the full stop, the figure “:” shall be substituted.

(b) the following shall be inserted, namely:-

“Provided that fifteen percent of the number of securities which the company proposes to buy back or number of securities entitled as per their shareholding, whichever is higher, shall be reserved for small shareholders.”

(v) in regulation 7, in the opening sentence the words and figures “or the public notice under sub-regulation (1) of regulation 5A” and “or regulation 5A” shall be omitted.

(vi) in regulation 8,-

(a) sub-regulation (1), shall be substituted with the following namely:-

“(1) The company which has been authorised by a special resolution or a resolution passed by the Board of Directors at its meeting shall make a public announcement within two working days from the date of resolution in at least one English National Daily, one Hindi National Daily and a Regional language daily all with wide circulation at the place where the Registered office of the company is situated and shall contain all the material information as specified in Schedule II, Part A.”

(b) after sub-regulation (1), the following new sub-regulation shall be inserted, namely:-

“(1A) A copy of the public announcement along with the soft copy, shall also be submitted to the Board simultaneously through a merchant banker.”

(c) sub-regulation (2) and sub-regulation (3), shall be omitted.

(d) in sub-regulation (4),

(1) the words “seven working days” shall be substituted with the words “five working days”

(2) after the words “a draft letter of offer” and before words “containing disclosures”, the sign and words “, along with soft copy,” shall be inserted.

(e) sub-regulation (6), shall be substituted with the following, namely:-

“(6)The Board may give its comments on the draft letter of offer not later than seven working days of the receipt of the draft letter of offer: Provided that in the event the Board has sought clarifications or additional information from the merchant banker to the buyback offer, the period of issuance of comments shall be extended to the seventh working day from the date of receipt of satisfactory reply to the clarification or additional information sought: Provided further that in the event the Board specifies any changes, the merchant banker to the buyback offer and the company shall carryout such changes in the letter of offer before it is dispatched to the shareholders.”

(vii) regulation 9, shall be substituted with the following, namely:-

“(1) A company making a buyback offer shall announce a record date for the purpose of determining the entitlement and the names of the security holders, who are eligible to participate in the proposed buyback offer.

(2) The letter of offer along with the tender form shall be dispatched to the security holders who are eligible to participate in the buyback offer, not later than five working days from the receipt of communication of comments from the Board.

(3) The date of the opening of the offer shall be not later than five working days from the date of dispatch of letter of offer.

(4) The offer for buy back shall remain open for a period of ten working days.

(5) The company shall accept shares or other specified securities from the security holders on the basis of their entitlement as on record date.

(6) The shares proposed to be bought back shall be divided in to two categories; (a) reserved category for small shareholders and (b) the general category for other shareholders, and the entitlement of a shareholder in each category shall be calculated accordingly.

(7) After accepting the shares or other specified securities tendered on the basis of entitlement, shares or other specified securities left to be bought back, if any in one category shall first be accepted, in proportion to the shares or other specified securities tendered over and above their entitlement in the offer by security holders in that category and thereafter from security holders who have tendered over and above their entitlement in other category.”

(viii) in regulation 11, sub-regulation (2), shall be substituted with the following, namely:-

“(2) The company shall complete the verifications of offers received and make payment of consideration to those security holders whose offer has been accepted or return the shares or other specified securities to the security holders within seven working days of the closure of the offer.”

(ix) In regulation 15, clause (d) after the words “commencement of buyback” the words and figures “and shall contain disclosures as specified in Schedule II, Part B” shall be inserted.

(x) In regulation 17, in sub-regulation (2) words and figures “sub-regulation (5) of regulation 9” shall be substituted with the words and figures “sub-regulation (2) of regulation 11”.

(xi) in regulation 19, in sub-regulation (1), in clause (a) the words and figures “or public notice referred to in clause (a) of sub-regulation (1) of regulation 5A” shall be omitted.

(xii) Schedule I shall be omitted.

(xiii) Schedule II shall be substituted with the following, namely:-

“SCHEDULE II

CONTENTS OF THE PUBLIC ANNOUNCEMENT

1. The Public announcement shall be dated and signed on behalf of the Board of Directors of the company by its manager or secretary, if any, and by not less than two directors of the company one of whom shall be a managing director where there is one.

2. A full and complete disclosure of all material facts including the following shall be made:

Part A: Disclosures under Regulation 5(1) and 8(1)

i. Date of the Board meeting at which the proposal for buy back was approved by the Board of Directors of the company;

ii. Necessity for the buy back;

iii. Maximum amount required under the buy back and its percentage of the total paid up capital and free reserves;

iv. Maximum price at which the shares or other specified securities are proposed be bought back and the basis of arriving at the buyback price;

v. Maximum number of securities that the company proposes to buy back;

vi. Method to be adopted for buyback as referred in sub-regulation(1) of regulation 4;

vii. (a) the aggregate shareholding of the promoter and of the directors of the promoters, where the promoter is a company and of persons who are in control of the company as on the date of the notice convening the General Meeting or the Meeting of the Board of Directors;

(b) aggregate number of shares or other specified securities purchased or sold by persons including persons mentioned in (a) above from a period of six months preceding the date of the Board Meeting at which the buyback was approved till the date of notice convening the general meeting;

(c) the maximum and minimum price at which purchases and sales referred to in (b) above were made along with the relevant dates;

viii. Intention of the promoters and persons in control of the company to tender shares or other specified securities for buy-back indicating the number of shares or other specified securities ,details of acquisition with dates and price;

ix. A confirmation that there are no defaults subsisting in repayment of deposits, redemption of debentures or preference shares or repayment of term loans to any financial institutions or banks;

x. A confirmation that the Board of Directors has made a full enquiry into the affairs and prospects of the company and that they have formed the opinion-

(a) that immediately following the date on which the General Meeting or the meeting of the Board of Directors is convened there will be no grounds on which the company could be found unable to pay its debts;

(b) as regards its prospects for the year immediately following that date that, having regard to their intentions with respect to the management of the company‟s business during that year and to the amount and character of the financial resources which will in their view be available to the company during that year, the company will be able to meet its liabilities as and when they fall due and will not be rendered insolvent within a period of one year from that date; and

(c) in forming their opinion for the above purposes, the directors shall take into account the liabilities as if the company were being wound up under the provisions of the Companies Act, 1956 (including prospective and contingent liabilities); xi. A report addressed to the Board of Directors by the company‟s auditors stating that- (i) they have inquired into the company‟s state of affairs; (ii) the amount of the permissible capital payment for the securities in question is in their view properly determined; and (iii) the Board of Directors have formed the opinion as specified in clause (x) on reasonable grounds and that the company will not, having regard to its state of affairs, will not be rendered insolvent within a period of one year from that date.

Part B: Disclosures under Regulation 15(d)

In addition to the disclosures in Part A, the following disclosures shall be made:

i. Date of shareholders approval for buy back, if applicable;

ii. Minimum and maximum number of securities that the company proposes to buy back, sources of funds from which the buyback would be made and the cost of financing the buy back;

iii. Proposed time table from opening of offer till the extinguishment of the certificates;

iv. Process and methodology to be adopted for the buyback;

v. Brief information about the company;

vi. Audited Financial information for the last 3 years and the lead manager shall ensure that the particulars (audited statement and un-audited statement) contained therein shall not be more than more than 6 months old from the date of the pu blic announcement together with financial ratios as may be specified by the Board;

vii. Details of escrow account opened and the amount deposited therein;

viii. Listing details and stock market data:

(a) high, Low and average market prices of the securities of the company proposed to be bought back, during the preceding three years;

(b) monthly high and low prices for the six months preceding the date of the public announcement;

(c) the number of securities traded on the days when the high and low prices were recorded on the relevant stock exchanges during the period stated at (a) and (b) above;

(d) the stock market data referred to above shall be shown separately for periods marked by a change in capital structure, with such period commencing from the date the concerned stock exchange recognises the change in the capital structure.(e.g. when the securities have become ex-rights or ex-bonus) ;

(e) the market price immediately after the date of the resolution of the Board of directors approving the buy back; and

(f) the volume of securities traded in each month during the six months preceding the date of the public announcement along with high, low and average prices of securities of the company, details relating to volume of business transacted should also be stated for respective periods.

ix. Present capital structure (including the number of fully paid and partly paid securities) and shareholding pattern;

x. The capital structure including details of outstanding convertible instruments, if any post buyback;

xi. Aggregate shareholding of the promoter group and of the directors of the promoters, where the promoter is a company and of persons who are in control of the company;

xii. Aggregate number of shares or other specified securities purchased or sold by persons mentioned in clause xi above during a period of twelve months preceding the date of the public announcement; the maximum and minimum price at which purchases and sales referred to above were made along with the relevant dates;

xiii. Management discussion and analysis on the likely impact of buy back on the company‟s earnings, public holdings, holdings of NRIs/FIIs etc., promoters holdings and any change in management structure;

xiv. Details of statutory approvals obtained;

xv. Collection and bidding centres;

xvi. Name of compliance officer and details of investors service centres;

xvii. Such other disclosures as may be specified by the Board from time to time by way of guidelines.”

(xiv) Schedule III shall be substituted with the following, namely:-

“SCHEDULE III

[see regulation 8(4) ]

DISCLOSURES TO BE MADE IN THE LETTER OF OFFER

The letter of offer shall be dated and signed on behalf of the Board of Directors of the company by its manager or secretary, if any, and by not less than two directors of the company one of whom shall be a managing director where there is one.

The letter of offer shall, inter-alia, contain the following;

i. Disclosures in Schedule II;

ii. Disclaimer Clause as may be specified by the Board;

iii. Record date and ratio of buyback as per the entitlement in each category.”

U. K. SINHA

CHAIRMAN

SECURITIES AND EXCHANGE BOARD OF INDIA

Footnotes:

1. Securities and Exchange Board of India (Buy-back of Securities) Regulations, 1998, the principal regulations, were published in the Gazette of India on November 14, 1998; vide S.O. No. 975 (E).

2. It was subsequently amended –

(a) on September 21, 1999 by SEBI (Buy-Back of Securities) (Amendment) Regulations, 1999 vide S.O. 776 (E).

(b) on November 28, 2001 by SEBI (Buy-Back of Securities) (Amendment) Regulations, 2001 vide S.O. 1181(E).

(c) on June 18, 2004 by SEBI (Buy-Back of Securities) (Amendment) Regulations, 2004 vide S.O. 745 (E).

(d) on August 21, 2006 by SEBI (Buy-Back of Securities) (Amendment) Regulations, 2006 vide S.O. No. 1331 (E).

(e) on May 28, 2007 by SEBI (Buy-Back of Securities) (Amendment) Regulations, 2007 vide No.11/LC/GN/2007.

(f) on March 31, 2008 by SEBI (Payment of Fees)(Amendment) Regulations, 2008 vide F. No. 11/LC/GN/2008/21669.

Offer For Sale of Shares by Promoters through the Stock Exchange Mechanism

Securities and Exchange Board of India

CIRCULAR

CIR/MRD/DP/ 05/2012                                 February 1, 2012

The Managing Director and CEO 
Bombay Stock Exchange Limited     

Phiroze Jeejeebhoy Towers            

Dalal Street                                  

Mumbai - 400001                         

The Managing Director
National Stock Exchange of India Ltd.
Exchange Plaza, Bandra Kurla Complex
Bandra (E), Mumbai - 400 051

Dear Sir,

Sub: Offer For Sale of Shares by Promoters through the Stock Exchange Mechanism

In order to facilitate promoters to dilute/offload their holding in listed companies in a transparent manner with wider participation, it has been decided to allow the offer for sale of shares by promoters of such companies through a separate window provided by the stock exchange(s). The guidelines for the same are as under:

1. Eligibility

(a) Exchanges

To begin with, the facility of offer for sale of shares shall be available on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

(b) Sellers

(i) All promoter(s)/ promoter group entities of such companies that are eligible for trading and are required to increase public shareholding to meet the minimum public shareholding requirements in terms Rule 19(2)(b) and 19A of Securities Contracts (Regulation) Rules, 1957 (SCRR), read with clause 40A (ii) (c) of Listing Agreement.

(ii) All promoter(s)/ promoter group entities of top 100 companies based on average market capitalization of the last completed quarter.

For (i) and (ii) above, the promoter/promoter group entities should not have purchased and/or sold the shares of the company in the 12 weeks period prior to the offer and they should undertake not to purchase and/or sell shares of the company in the 12 weeks period after the offer.

(c) Buyers

All investors registered with the brokers of the aforementioned stock exchanges other than the promoter(s)/ promoter group entities.

2. Definitions

(a) "Single Clearing Price” is the price at which the shares are allocated to the successful bidders in a proportionate basis methodology.

(b) “Multiple Clearing Prices” are the prices at which the shares are allocated to the successful bidders in a price priority methodology.

(c) “Indicative Price” is the price at which the quantity offered is exhausted.

(d) “Floor Price” is the minimum price at which the seller intends to sell the shares.

3. Size of Offer for sale of shares

The size of the offer shall be atleast 1% of the paid-up capital of the company, subject to a minimum of Rs 25 crores. However, in respect of companies, where 1% of the paid-up capital at closing price on the specified date is less than Rs 25 crores, dilution would be atleast 10% of the paid-up capital or such lesser percentage so as to achieve minimum public shareholding in a single tranche.

Note: Specified date shall be the last trading day of the last completed quarter

4. Advertisement and offer expenses

(a) Advertisements about the offer for sale of shares through stock exchange(s) shall be made after the announcement/ notice of the offer for sale of shares has been made to the stock exchanges in accordance with para 5 (b) below;

(b) All expenses relating to offer for sale of shares through stock exchange(s) shall be borne by the seller(s).

5. Operational Requirements

(a) Appointment of Broker

The Seller(s) would have to appoint Sellers‟ broker(s) for this purpose. The Seller‟s broker(s) may also undertake transactions on behalf of eligible buyers.

(b) Announcement/ Notice of the Offer for sale of shares

Seller(s) shall announce the intention of sale of shares at least one clear trading day prior to the opening of offer, along with the following information:

(i) Name of the seller(s) (promoter/ promoter group) and the name of the company whose shares are proposed to be sold.

(ii) Name of the Exchange(s) where the orders shall be placed. In case orders are to be placed on both BSE and NSE, one of them shall be declared as the Designated Stock Exchange (“DSE”).

(iii) Date and time of the opening and closing of the offer.

(iv) Allocation methodology i.e. either on a price priority (multiple clearing prices) basis or on a proportionate basis at a single clearing price.

(v) Number of shares being offered for sale.

(vi) The name of the broker(s) on behalf of the seller(s).

(vii) Floor price, if the seller(s) chooses to announce it to the market or a declaration to the effect that the floor price will be submitted to the stock exchange(s) in a sealed envelope which shall be declared post closure of the offer.

(viii) Conditions, if any, for withdrawal or cancellation of the offer.

(c) Floor price

(i) Seller(s) may declare a floor price in the announcement/ notice

(ii) In case the seller(s) chooses not to publicly disclose the floor price, the seller(s) shall give the floor price in a sealed envelope to DSE before the opening of the offer.

(iii) The floor price if not declared to the market, shall not be disclosed to anybody, including the selling broker(s).

(iv) Sealed envelope shall be opened by the DSE after the closure of the offer for sale and the floor price suitably disseminated to the market.

(d) Timelines

(i) The duration of the offer for sale shall not exceed one trading day.

(ii) The placing of orders by trading members shall take place during trading hours.

(e) Order Placement

(i) A separate window for the purpose of offer for sale of shares shall be created by stock exchanges. Modification/ Cancellation of orders/ bids will be allowed during the period of the offer. However, modification/ cancellation of orders/ bids shall not be allowed during the last 30 minutes of the duration of the offer..

(ii) Indicative Price and Cumulative orders/ bid quantity information shall be made available online by the exchanges at specific time intervals.

(iii) No price bands shall be applicable for the orders/ bids placed in the offer for sale. Stock specific tick size as per the extant practice in normal trading session shall be made applicable for this window.

(iv) In case of shares under offer for sale, the trading in the normal market shall also continue. However, in case of market closure due to the incidence of breach of „Market wide index based circuit filter‟, the offer for sale shall be halted.

(v) Only limit orders/ bids shall be permitted.

(vi) Multiple orders from a single buyer shall be permitted.

(vii) In case floor price is disclosed, orders/ bids below floor price shall not be accepted.

6. Risk Management

(a) Stock Exchange shall collect 100% of the order value in cash, at the order level for every buy order/ bid. Such funds shall neither be utilized against any other obligation of the trading member nor co-mingled with other segments. Such upfront collection shall also be applicable for all institutional orders.

(b) In case of order/bid modification/cancellation, such funds shall be released/collected on a real time basis by the stock exchange.

(c) The seller(s) shall deposit the entire quantity of shares offered for sale as payin with the clearing corporation/clearing house or DSE prior to the commencement of the offer. No other margin shall be charged on the seller(s).

7. Allocation

(a) Minimum of 25% of the shares offered shall be reserved for mutual funds and insurance companies, subject to allocation methodology. Any unsubscribed portion thereof shall be available to the other bidders.

(b) The orders shall be cumulated by the DSE immediately on close of the offer. Based on the methodology for allocation to be followed as disclosed in the notice, the DSE shall draw up the allocation. i.e. either on a price priority (multiple prices) basis or on a proportionate basis at a single clearing price.

(c) No allocation will be made incase of order/ bid is below floor price.

(d) No single bidder other than mutual funds and insurance companies shall be allocated more than 25% of the size of offer for sale.

8. Settlement

(a) The settlement shall take place similar to trade for trade basis.and shall be completed latest by T + 2 day (where T is the date of the closure of the offer). The allocation and the obligations resulting thereof shall be intimated to the brokers not later than T+1 day.

(b) There shall be no netting of settlement at broker‟s end.

(c) The clearing house of DSE shall transfer the shares received as payin to the clearing corporation/clearing house of the other stock exchange, to the extent of their obligations.

(d) Funds collected from the bidders who have not been allocated shares shall be released after the download of the obligation.

(e) The direct credit of shares shall be given to the demat account of the successful bidder provided it is indicated by the broker/bidder.

9. Issuance of Contract Notes

The brokers shall be required to issue contract note to the client based on the allotment price and quantity in terms of conditions specified by the exchange.

10. Withdrawal of offer

The offer for sale may be withdrawn prior to its proposed opening. In such a case there will be a cooling off period of 10 trading days from the date of withdrawal before an offer is made once again. The stock exchange(s) shall suitably disseminate details of such withdrawal.

11. Cancellation of offer

Cancellation of offer shall not be permitted during the bidding period. If the seller(s) fails to get sufficient demand at or above the floor price, he may choose to either conclude the offer or cancel it in full.

12. Stock Exchanges are advised to:

a. take necessary steps and put in place necessary systems for implementation of the above.

b. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision.

c. bring the provisions of this circular to the notice of the member brokers

of the stock exchange and also to disseminate the same on the website.

d. communicate to SEBI, the status of implementation of the provisions of this circular in the Monthly Development Report.

13. This circular is being 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.

Yours faithfully,

Harini Balaji

Deputy General Manager

022-26449372

harinib@sebi.gov.in

Amendments to the Equity, IDR and SME Equity Listing Agreements

Amendments to the Equity, IDR and SME Equity Listing Agreements

Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and consequential amendments to Clause 35 of the Equity Listing Agreement.

Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and consequential amendments to Clause 35 of the Equity Listing Agreement.

SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 2011

SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 2011.

SEBI (ICDR) (Second Amendment) Regulations, 2011

SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) (SECOND AMENDMENT) REGULATIONS, 2011.

SEBI - Simplification and Rationalization of Trading Account Opening Process

CIRCULAR

CIR/MIRSD/16/2011                                 August 22, 2011

All Recognized Stock Exchanges

Dear Sirs,

Subject: Simplification and Rationalization of Trading Account Opening Process.

1. SEBI has been getting feedback from the investors that the present trading account opening procedure is very cumbersome. The investor has to enter into a number of agreements depending on his trading preferences i.e. stock exchanges, segments, internet / wireless technology based trading, etc. As a result, it requires a large number of signatures on various documents devised by the stock brokers/trading members.

2. With a view to simplify and rationalize the account opening process, we have reviewed, consolidated and updated all the documents/requirements prescribed in respect of account opening process over the years, in consultation with major stock exchanges and market participants. The simplification includes replacement of all client-broker agreements with the ‘Rights and Obligations’ document, which shall be mandatory and binding on the existing and new stock brokers (including trading members) and clients. Accordingly, SEBI (Stock Broker and Sub-Broker) Regulations, 1992 have been amended suitably vide notification No. LADNRO/GN/2011-12/19/26273 dated August 17, 2011.

3. SEBI has devised the uniform documentation to be followed by all the stock brokers / trading members; a copy thereof to be provided by them to the clients. The details of such documents are listed below:

i. Index of documents giving details of various documents for client account opening process - Annexure-1

ii. Client Account Opening Form in two parts:

a. Know Your Client (KYC) form capturing the basic information about the client and instruction/check list to fill up the form - Annexure-2.

b. Document capturing additional information about the client related to trading account -Annexure-3.

iii. Document stating the Rights & Obligations of stock broker, sub-broker and client for trading on exchanges (including additional rights & obligations in case of internet / wireless technology based trading)– Annexure–4.

iv. Uniform Risk Disclosure Documents (for all segments / exchanges) - Annexure-5.

v. Guidance Note detailing Do’s and Don’ts for trading on exchanges - Annexure-6.

4. In the account opening process, the stock brokers / trading members would also give the following useful information to the clients:

a. A tariff sheet specifying various charges, including brokerage, payable by the client to avoid any disputes at a later date.

b. Information on contact details of senior officials within the stock broking firm and investor grievance cell in the stock exchange, so that the client can approach them in case of any grievance.

5. It may be noted that any voluntary clause / document added by the stock brokers shall form part of the non-mandatory documents. The stock broker shall ensure that any voluntary clause/document shall neither dilute the responsibility of the stock broker nor it shall be in conflict with any of the clauses in the mandatory documents, Rules, Bye-laws, Regulations, Notices, Guidelines and Circulars issued by SEBI and the stock exchanges from time to time. Any such clause introduced in the existing as well as new documents shall stand null and void.

6. The client will now be required to sign only on one document i.e. Account Opening Form. Further, in the same form, the client shall continue to put his signatures instead of saying ‘yes’ or ‘tick mark’ while indicating preferences for trading in different exchanges / segments, in accordance with existing requirements. However, in case the investor wants to avail Running Account facility, execute Power of Attorney, etc., he would have to give specific authorization to the stock broker in order to avoid any dispute in the future.

7. In case the stock broker is also a depository participant, he can use the same KYC form (as specified in Annexure-2) for basic details and take additional information pertaining to demat account.

8. The stock brokers shall take necessary steps to implement this circular immediately and ensure its full compliance in respect of all new clients acquired on or after 15 days from the date of this circular.

9. The following SEBI circulars shall stand modified to the extent of the above changes:

a. No.SMD/POLICY/CIRCULR/5-97 dated April 11, 1997

b. No. SMD/POLICY/CIRCULAR/11-97 dated May 21, 1997

c. No. FITTC/DC/CIR-3468/98 dated December 03, 1998

d. No. SMDRP/POLICY/CIR- 06/2000 dated January 3, 2000

a. No. SEBI/MRD/SE/Cir- 37/2003 dated September 30, 2003

e. No. SEBI/MIRSD/DPS-1/Cir-31/2004 dated August 26, 2004

f. No. MIRSD/SE/Cir-19/2009 dated December 3, 2009

g. No. CIR/MRD/DP/25/2010 dated August 27, 2010

h. No. CIR/MRD/DP/26/2010 dated August 27, 2010

10. The Stock Exchanges are directed to:

a. bring the provisions of this circular to the notice of the Stock Brokers and also disseminate the same on their websites.

b. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision in co-ordination with one another to achieve uniformity in approach.

c. communicate to SEBI, the status of the implementation of the provisions of this circular Monthly Development Report of the following month; and

d. monitor the compliance of this circular through half-yearly internal audit and inspections of stock brokers.

11. 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 markets.

Yours faithfully,

B. N. Sahoo

Deputy General Manager

022-26449250

email: biranchins@sebi.gov.in

Enclosures: Annexures 1-6

SMS and E-mail alerts to investors by stock exchanges

CIRCULAR

CIR/MIRSD/15/2011                                   August 02, 2011

To

All Recognized Stock Exchanges

Dear Sir/Madam,

Sub: SMS and E-mail alerts to investors by stock exchanges

1. SEBI receives complaints from investors against stock brokers which include alleged unauthorized trading in their accounts. SEBI has taken steps in the past to address this issue.

2. As an additional measure, it has now been decided in consultation with the major stock exchanges and market participants that the stock exchanges shall send details of the transactions to the investors, by the end of trading day, through SMS and E-mail alerts. This would be subject to the following guidelines:

A. Applicability

These guidelines are applicable to equity - cash and derivative - segments of the stock exchanges.

B. Uploading of mobile number and E-mail address by stock brokers

i. Stock exchanges shall provide a platform to stock brokers to upload the details of their clients, preferably, in sync with the UCC updation module.

ii. Stock brokers shall upload the details of clients, such as, name, mobile number, address for correspondence and E-mail address.

iii. Stock brokers shall ensure that the mobile numbers/E-mail addresses of their employees/sub-brokers/remisiers/authorized persons are not uploaded on behalf of clients.

iv. Stock Brokers shall ensure that separate mobile number/E-mail address is uploaded for each client. However, under exceptional circumstances, the stock broker may, at the specific written request of a client, upload the same mobile number/E-mail address for more than one client provided such clients belong to one family. ‘Family’ for this purpose would mean self, spouse, dependent children and dependent parents.

C. Verification by the stock exchanges

After uploading of details by the stock brokers, the stock exchanges shall take necessary steps to verify the details by any mode as considered appropriate by them which may include the following:

a. By way of sending SMS and E-mail directly to the investors at the numbers/E-mail address uploaded by the stock brokers.

b. By way of sending letters to the address of the investors uploaded by the stock brokers.

D. Sending of alerts by the stock exchanges

Upon receipt of confirmation from the investors, the stock exchanges shall commence sending the transaction details generated based on investors’ Permanent Account Number, directly to them.

E. Handling of discrepancies, if any.

If any discrepancy is observed by the stock exchanges in the details uploaded by the stock brokers including non-confirmation by investors, bounced E-mails, undelivered SMS/letters, etc., the stock exchanges shall inform the respective stock broker.

F. Meeting out the expenses for providing SMS and E-mail alerts

The stock exchanges may use the amount set aside from the listing fees for providing services to the investing public, as provided vide SEBI communication dated SE/10118 dated October 12, 1992, to meet the expenses for providing this facility.

G. Implementation

The stock exchanges shall put in place necessary infrastructure and implement the SMS and E-mail alert facility at the earliest and not later than four months from the date of this circular.

3. Stock exchanges are advised to :

a. issue necessary instructions to bring the provisions of this Circular to the notice of their constituents and also disseminate the same on their websites;

b. make amendments to the relevant bye-laws, rules and regulations for the implementation of the above, as deemed necessary, in coordination with other stock exchanges;

c. communicate to SEBI, the status of the implementation of the provisions of this Circular in the Monthly Development Report to SEBI;

d. develop the monitoring mechanism through the system of half-yearly internal audit and inspections; and

e. publicize widely the availability of this facility for the awareness of the investors.

4. 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 and shall come into effect from the date of this Circular.

5. This circular is available on SEBI website at www.sebi.gov.in under the categories “Legal Framework” and “Circulars”.

Yours faithfully,

V S Sundaresan

Chief General Manager

022-26449200

sundaresanvs@sebi.gov.in

SEBI updates

Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) (Amendment) Regulations, 2011


SEBI (Credit Rating Agencies) (Amendment) Regulations, 2011

SEBI (Underwriters) (Amendment) Regulations, 2011

Modification of Client Codes of Non-institutional Trades Executed on Stock Exchanges (All Segments)

SEBI (Depositories and Participants (Amendment) Regulations, 2011

Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2011

SEBI (Bankers to an issue) (Amendment) Regulations, 2011

SEBI (Debenture Trustees) (Amendment) Regulations, 2011

Shareholding of promoter / promoter group to be in dematerialized mode

CIRCULAR

Cir/ISD/ 3/2011                                                  June 17, 2011

To,
All Stock Exchanges

Dear Sir / Madam,

Sub: Shareholding of promoter / promoter group to be in dematerialized mode

1) SEBI had vide SEBI/Cir/ISD/1/2010 dated September 02, 2010 issued a circular on “trading rules and shareholding in dematerialized mode”. The said circular was issued in order to moderate sharp and destabilizing price movements in shares of companies, to encourage better price discovery and to increase transparency in securities market. The aforesaid circular inter-alia mandated securities of companies to be traded in normal segment, if and only if, the company has achieved atleast 50% non-promoter shareholding in dematerialized form and maintained the same on a continuous basis.

2) In order to further promote dematerialization of securities, encourage orderly development of the securities market and to improve transparency in the dealings of shares by promoters including pledge / usage as collateral, SEBI in consultation with Stock Exchanges, has decided that the securities of companies shall be traded in the normal segment of the exchange if and only if, the company has achieved 100% of promoter’s and promoter group’s shareholding in dematerialized form latest by the quarter ended September 2011 as reported to the stock exchanges.

3) In all cases, wherein the companies do not satisfy the above criteria, the trading in securities of such companies shall take place in trade for trade segment.

4) For the above purpose the exchanges shall take the latest shareholding pattern as required to be submitted by the listed companies with exchanges in pursuance to the Listing agreement as of the preceding quarter or of any subsequent date.

5) The Stock Exchanges are advised to:

a) put in place the adequate systems and issue the necessary guidelines for implementing the above decision.

b) make necessary amendments to the relevant bye-laws, rules and regulations as applicable for the implementation of the above decision immediately.

c) bring the provisions of this circular to the notice of the listed companies/issuers and member brokers of the Exchange and also to disseminate the same on the website.

d) communicate to SEBI, the status of the implementation of the provisions of this circular in the Monthly Development Report.

6) This circular is issued in exercise of powers conferred by sub-section (1) of Section 11 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.

7) This circular is available on SEBI website at http://www.sebi.gov.in/ under the head ‘legal framework’.

Yours faithfully,

S. Ramann

Officer on Special Duty

Integrated Surveillance Department

022-26441450

ramanns@sebi.gov.in

Periodical report - Grant of prior approval to Registrars to an Issue and Share Transfer Agents

Periodical report - Grant of prior approval to merchant bankers

Periodical report - Grant of prior approval to underwriters

Modification to Investor Protection Fund (IPF)/ Customer Protection Fund (CPF) Guidelines

CIRCULAR

CIR/MRD/DP/ 06 /2011                                        June 16, 2011

To,
All Stock Exchanges

Dear Sir / Madam,

Sub: Modification to Investor Protection Fund (IPF)/ Customer Protection Fund (CPF) Guidelines

1. SEBI vide circular no MRD/DoP/SE/Cir-38/2004 dated October 28, 2004 had issued comprehensive guidelines for regulation of Investor Protection Fund (IPF)/ Customer Protection Fund (CPF) required to be maintained by Stock Exchanges. Further vide circular No. MRD/DoP/SE/Cir-21/2006 dated December 14, 2006, SEBI issued a clarification to Clause 24 of the Annexure to Circular dated October 28, 2004, specifying that in case of defaulting brokers with multiple memberships, the residual amount after satisfying claims of SEBI, the concerned stock exchange, and all other exchanges, would be credited to the IPF/CPF of the concerned exchange. The Circular dated October 28, 2004 as clarified by Circular dated December 14, 2006 shall hereinafter be referred to as the “Comprehensive Guidelines on IPF/CPF of Stock Exchanges” or “The Comprehensive Guidelines”.

2. Exemptions have been sought by Stock Exchanges from strict compliance with Clause 24 of the Annexure to Circular dated October 28, 2004 on the ground that the residual amount remaining after satisfaction of claims against the defaulting broker should be refunded to the broker and not credited to the IPF/CPF. SEBI has decided to modify certain clauses of the abovementioned Annexure, with a view to harmonise the practices followed by various exchanges to meet investor claims.

3. Thus it has been decided to modify the Comprehensive Guidelines -

a) Clause 8 shall be substituted with the following –

8.”The specified period for inviting legitimate claims against a defaulter member, shall be a minimum of ninety days.”

b) Clause 13 shall be substituted with the following –

13.”If any eligible claims arise within three years from the date of expiry of the specified period such claims shall be borne by the stock exchanges without any recourse to the IPF/CPF.

Provided that any claims received after three years from the date of expiry of the specified period may be dealt with as a civil dispute.

Provided further that in cases where any litigations are pending against the defaulter member, the residual amount, if any, may be retained by the stock exchange until such litigations are concluded.”

Disbursement of Claims from the IPF/ CPF

c) Clause 22 shall be deleted.

d) Clause 23 shall be substituted with the following -

23. “The compensation shall be disbursed to the investor from the IPF/ CPF incase there is a shortage of defaulter broker’s assets after its realization.”

e) Clause 24, as it reads after incorporation of clarification vide Circular dated December 14, 2006, shall be substituted with the following –

24.”The Stock Exchange shall ensure that the amount realized from the assets of the defaulter member is returned to the defaulter member after satisfying the claims of the Stock Exchange and SEBI in accordance with the bye-laws of the Stock Exchange.

Provided that in case of a member broker having membership on multiple stock exchanges, amount realized from the assets of the defaulter member shall be returned to the said member only after satisfying eligible claims of the concerned stock exchange, SEBI, and other stock exchanges.”

4. Exchanges are advised to

a) make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision.

b) bring the provisions of this Circular to the notice of the member brokers/clearing members of the Exchange and also to disseminate the same on the website.

c) communicate the status of the implementation of this Circular in the Monthly Development Report to SEBI.

5. This circular is being 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.

Yours faithfully,

Harini Balaji

Deputy General Manager

022-26449372

email: harinib@sebi.gov.in

Change of Name by Listed Companies

CIR/MRD/DP/ 07 /2011                                        June 16, 2011


To,
All Stock Exchanges

Dear Sir/Madam,

Sub: Change of Name by Listed Companies

1. Please refer to SEBI Circulars No. SMDRP/Policy/Cir-8/99 dated April 26, 1999 and No. SEBI/MRD/Policy/AT/Cir-20/2004 dated April 30, 2004 on the captioned subject matter.

2. The aforementioned SEBI circular dated April 30, 2004 required all listed companies seeking change of name to comply inter alia with the following provision:

2.2. At least 50% of its total revenue in the preceding 1 year period should have been accounted for by the new activity suggested by the new name.

3. It is observed from the representations received from few companies and feedback received from the Stock Exchanges that the companies, where the gestation period of the business is usually longer and the revenue stream often delayed, find it difficult to comply with the aforesaid provision.

4. In view of the above, it is decided to modify the para 2.2 of the aforementioned circular as under:

2.2. At least 50% of its total revenue in the preceding 1 year period should have been accounted for by the new activity suggested by the new name

Or

The amount invested in the new activity/project (Fixed Assets + Advances + Works In Progress) is atleast 50% of the assets of the company. The ‘Advances’ shall include only those extended to contractors and suppliers towards execution of project, specific to new activity as reflected in the new name.

To confirm the compliance of the aforesaid provision 2.2, the company shall submit auditor’s certificate to the exchange.

5. All the Stock Exchanges are advised to:-

5.1. implement the above by making necessary amendments to the bye-laws and Listing Agreement, as applicable;

5.2. to bring the provisions of this circular to the notice of the listed companies and member brokers/ clearing members and also to put up the same on the website for easy access to the investors; and

5.3. 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.

6. This circular is being 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.

This circular is available on SEBI website at http://www.sebi.gov.in/.

Yours faithfully,

Harini Balaji

Deputy General Manager

022-26449372

harinib@sebi.gov.in

Standardisation of Rating Symbols and Definitions

CIRCULAR

CIR/MIRSD/4/2011                                            June 15, 2011

All Credit Rating Agencies Registered with SEBI

Dear Sirs,

Sub: Standardisation of Rating Symbols and Definitions

1. It has been observed that the Credit Rating Agencies (CRAs) registered with SEBI use different rating symbols and definitions.

2. It has been felt that there need to be common rating symbols and definitions (i) for easy understanding of the rating symbols and their meanings by the investors, and (ii) to achieve high standards of integrity and fairness in ratings.

3. The issue was discussed in the meeting of Corporate Bonds and Securitisation Advisory Committee of SEBI. The Committee recommended that the rating symbols and their definitions should be standardised.

4. Pursuant to the above, in consultation with the CRAs and considering the international practices, standardised symbols and their definitions have been devised for the following:

a) Long term debt instruments;

b) Short term debt instruments;

c) Long term structured finance instruments;

d) Short term structured finance instruments;

e) Long term mutual fund schemes; and

f) Short term mutual fund schemes.

5. The new symbols and definitions as given in Annexures 1-6 shall henceforth be used for the new ratings/ reviews by the CRAs.

6. For existing outstanding ratings, the CRAs shall:

(i) disclose new rating symbols and definitions on their websites;

(ii) update their rating lists on their websites; and

(iii) inform their clients about the change in the rating symbols and definitions and specifying that this should not be construed as a change in the ratings.

7. The CRAs shall ensure compliance with the requirements specified at Clause 6 above, as early as possible but not later than 4 months from the date of issuance of this circular.

8. The CRAs shall communicate to SEBI, the status of the implementation of the provisions of this circular by October 31, 2011. They shall also place the compliance status of this circular before their Boards.

9. This circular is issued in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 read with the provisions of regulations 13, 18 and 20 of 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

Deputy General Manager

Tel. No: 022-26449313

Email id : prasantam@sebi.gov.in

Encl: as above

ANNEXURE 1

I. Rating Symbols and Definitions for Long Term Debt Instruments

Long term debt instruments: The instruments with original maturity exceeding one year

Rating symbols should have CRA’s first name as prefix

AAA - Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.

AA - Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

A - Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.

BBB - Instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk.

BB - Instruments with this rating are considered to have moderate risk of default regarding timely servicing of financial obligations.

B - Instruments with this rating are considered to have high risk of default regarding timely servicing of financial obligations.

C - Instruments with this rating are considered to have very high risk of default regarding timely servicing of financial obligations.

D - Instruments with this rating are in default or are expected to be in default soon.

Modifiers {"+" (plus) / "-"(minus)} can be used with the rating symbols for the categories AA to C. The modifiers reflect the comparative standing within the category.

ANNEXURE 2

II. Rating Symbols and Definitions for Short Term Debt instruments

Short term debt instruments: The instruments with original maturity of upto one year

Rating symbols should have CRA’s first name as prefix

A1 – Instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations. Such instruments carry lowest credit risk.

A2 - Instruments with this rating are considered to have strong degree of safety regarding timely payment of financial obligations. Such instruments carry low credit risk.

A3 - Instruments with this rating are considered to have moderate degree of safety regarding timely payment of financial obligations. Such instruments carry higher credit risk as compared to instruments rated in the two higher categories.

A4- Instruments with this rating are considered to have minimal degree of safety regarding timely payment of financial obligations. Such instruments carry very high credit risk and are susceptible to default.

D - Instruments with this rating are in default or expected to be in default on maturity.

Modifier {"+" (plus)} can be used with the rating symbols for the categories A1 to A4. The modifier reflects the comparative standing within the category.

ANNEXURE 3

III. Rating Symbols and Definitions for Long Term Structured Finance instruments

Long term structured finance instruments: The instruments with original maturity exceeding one year

Rating symbols should have CRA’s first name as prefix

AAA (SO) - Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.

AA (SO) - Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

A (SO) - Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.

BBB (SO) - Instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk.

BB(SO) - Instruments with this rating are considered to have moderate risk of default regarding timely servicing of financial obligations.

B(SO) - Instruments with this rating are considered to have high risk of default regarding timely servicing of financial obligations.

C (SO) - Instruments with this rating are considered to have very high likelihood of default regarding timely payment of financial obligations.

D (SO) - Instruments with this rating are in default or are expected to be in default soon.

Modifiers {"+" (plus) / "-"(minus)} can be used with the rating symbols for the categories AA(SO) to C(SO). The modifiers reflect the comparativestanding within the category.

ANNEXURE 4

IV. Rating Symbols and Definitions for Short Term Structured Finance Instruments

Short term structured finance instruments: The instruments with original maturity of upto one year

Rating symbols should have CRA’s first name as prefix

A1 (SO) – Instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligation. Such instruments carry lowest credit risk.

A2 (SO) - Instruments with this rating are considered to have strong degree of safety regarding timely payment of financial obligation. Such instruments carry low credit risk.

A3 (SO) - Instruments with this rating are considered to have moderate degree of safety regarding timely payment of financial obligation. Such instruments carry higher credit risk as compared to instruments rated in the two higher categories.

A4 (SO) - Instruments with this rating are considered to have minimal degree of safety regarding timely payment of financial obligation. Such instruments carry very high credit risk and are susceptible to default.

D (SO) - Instruments with this rating are in default or expected to be in default on maturity.

Modifier {"+" (plus)} can be used with the rating symbols for the categories A1(SO) to A4(SO). The modifier reflects the comparative standing within the category.

ANNEXURE 5

V. Rating Symbols and Definitions for Long Term Debt Mutual Fund Schemes

Long term debt mutual fund schemes: The debt mutual fund schemes that have an original maturity exceeding one year.

Rating symbols should have CRA’s first name as prefix

AAAmfs – Schemes with this rating are considered to have the highest degree of safety regarding timely receipt of payments from the investments that they have made.

AAmfs – Schemes with this rating are considered to have the high degree of safety regarding timely receipt of payments from the investments that they have made.

Amfs – Schemes with this rating are considered to have the adequate degree of safety regarding timely receipt of payments from the investments that they have made.

BBBmfs - Schemes with this rating are considered to have the moderate degree of safety regarding timely receipt of payments from the investments that they have made.

BBmfs - Schemes with this rating are considered to have moderate risk of default regarding timely receipt of payments from the investments that they have made.

Bmfs - Schemes with this rating are considered to have high risk of default regarding timely receipt of timely receipt of payments from the investments that they have made.

Cmfs - Schemes with this rating are considered to have very high risk of default regarding timely receipt of timely receipt of payments from the investments that they have made.

Modifiers {"+" (plus) / "-"(minus)} can be used with the rating symbols for the categories AAmfs to Cmfs. The modifiers reflect the comparative standing within the category.

ANNEXURE 6

VI Rating Symbols and Definitions for Short Term Debt Mutual Fund Schemes

Short term debt mutual fund schemes: The debt mutual fund schemes that have an original maturity of upto one year.

Rating symbols should have CRA’s first name as prefix

A1mfs - Schemes with this rating are considered to have very strong degree of safety regarding timely receipt of payments from the investments that they have made.

A2mfs - Schemes with this rating are considered to have strong degree of safety regarding timely receipt of payments from the investments that they have made.

A3mfs - Schemes with this rating are considered to have moderate degree of safety regarding timely receipt of payments from the investments that they have made.

A4mfs - Schemes with this rating are considered to have minimal degree of safety regarding timely receipt of payments from the investments that they have made.

Modifier {"+" (plus)} can be used with the rating symbols for the categories A1mfs to A4mfs. The modifier reflects the comparative standing within the category.