vinod kothari & company vinod kothari consultants p ltd...
TRANSCRIPT
1 Focus on capabilities, opportunities will follow
SPARSH…..
Touches
July, 2013
Vinod Kothari & Company Vinod Kothari Consultants P Ltd Academy of Financial Services 1012 Krishna 224 AJC Bose Road Kolkata – 700017 91-33-22817715/ 1276/ 3742 Also at: 601-C, Neelkanth, 98, Marine Drive, Mumbai- 400 002
91-22-22817427
In this Issue:
Editorial
Our Articles Published
What’s happening at VKC and VK & Co.
Our Corner
Contact Us
2 Focus on capabilities, opportunities will follow
Editorial
“Ignorance is the curse of God; knowledge is the wing wherewith we fly to heaven.”
-William Shakespeare As rightly said above by the famous writer William Shakespeare, we at VKCPL & VK & Co., believe in providing wings that would help our associates to come out with flying colors through their knowledge and skills. With this thought in mind, we come again with “Sparsh” Stay in touch with us through SPARSH!!
Editor: -Pooja Rawal
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Articles Published
An article on RBI goes fishing for NBFCs by Vinod Kothari & Nidhi Ladha published in MoneyLife.
An article on Malaysian Sukuk Market Poised for Next Stage of Development by Nidhi Bothra in Islamic Finance News dated 24th July, 2013.
An article on Indian leasing set to grow as non-banking finance companies benefit from new regulation by Nidhi Bothra published in assetfinanceinternational.com
An article on RBI takes the wind out of NBFC’s sails: Imposes restrictions on private placement of debentures by Nidhi Ladha & Vinita Nair published in Moneylife.
An article on RBI spreads its net to unregulated Private Placement of debentures by NBFCs: Guidelines issued by Nidhi Ladha & Vinita Nair published in Indian Corp law Blog.
An article on SEBI makes amendment to Takeover Code to iron out difficulties in the Regulations, SEBI (SAST) (Amendment) Regulations, 2013 by Aditi Jhunjhunwala published in ICSI-EIRC Newsletter April-May, 2013.
An article on Safeguarding Legitimate Expectation in Oppression proceedings by Aditi Jhunjhunwala published in Souvenir published by Institute of Company Secretaries of India.
An article on Securities Laws(Amendment) Ordinance, 2013 gives more teeth to SEBI by Nivedita Shankar published in India Corp Law Blog
An article on Appointment of arbitrator solely by one party - does it resolve or give rise to disputes by Nivedita Shankar published in lawyersclubindia.com.
An article on Piercing Corporate Veil-Moving Towards a Principled Approach by Nivedita Shankar published in Souvenir published by Institute of Companies Secretaries of India.
Highlights of July, 2013
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Our Forthcoming Workshops
Leasing & Asset Backed Lending 23–24 August, 2013, Mumbai.
1 day Workshop on Treasury Management in NBFCs on 2nd September, 2013, Kolkata, India.
2 Day Workshop on Moving from Basel II to Basel III Framework, 6-7 September, 2013, Kolkata.
What’s happening at VKCPL and VK & Co.
Seminars & Session taken by Vinod Kothari.
Seminar on Recent Development in NBFC/Role of Auditor and Critical issues in Revised Schedule VI for NBFC on 12th July, 2013.
MSOP session on Securitisation at Kolkata, EIRC-ICSI on July 03, 2013
Seminar on Laws related to Debentures & Competition on 6th April, 2013 at Rotary Sadan, Kolkata.
2 day Training at L&T Mumbai on 8th-9th July 2013 on Secured lending law and loan recovery with special emphasis on SARFAESI Act.
EDP & SIP sessions undertaken
Our Corner
Ms. Monica Chandak (Former Associate) became Chartered Accountant.
Ms. Sikha Bansal (Former Associate) bagged 2nd best Participation award in 77th MSOP in EIRC-ICSI.
Get together with our former associates on 27th July 2013.
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Our Articles Published
Unable to save lakhs of investors from losing thousands of crores, RBI has started fishing for NBFCs. It has recently shot thousands of notices to companies asking to send their annual reports, for the RBI to examine whether the company is an NBFC or not. It is the same RBI that slept over the years as Sahara collected in excess of Rs 20,000 crores. All this, surprisingly, comes just in the backdrop of the Usha Thorat Panel Report which sought a major recast of NBFC regulation. RBI itself has published an advanced notice of rule making seeking to exempt companies, except those very large, from registration requirements. Currently RBI is sitting on some 12,385 companies which are registered with the RBI as NBFCs. As if this was not enough, RBI has sent roving mailers to all those companies bearing registration with the ROC under a “financial code” asking the companies to send their annual reports and details of other companies in same group, so that the RBI could ensure that the company is not an NBFC.
To view the article click here. The article was also
published in moneylife and can be viewed here.
RBI goes fishing for NBFCs -by Vinod Kothari & Nidhi Ladha
published in MoneyLife
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Malaysian Sukuk market poised for next stage of growth -by Nidhi Bothra
published in Islamic Finance News on 24th, July, 2013
The Malaysian Islamic finance market has been driven by the need for providing financial access to Malaysians who require savings and investment products which are not inconsistent with the Shariah. Malaysia has made attempts to establish itself as an international Islamic finance center over the years. The constant endeavor of the regulators has been to enhance the efficiency and competitiveness of the Malaysian Sukuk market, provide wider reach and access to Shariah compliant Islamic finance products, facilitate transparency in issuances and enable issuance and standardization of documentation that would be comparable by international standards and practices. In the year 2012, the Sukuk issuance as a percentage of total bond issuances have been 51% as compared to 35.7% in 2011. The types of corporate Sukuk approved in 2012 based on Shariah principles are illustrated in Figure 1. The Malaysian Sukuk market continues to grow, dominating the global Sukuk market with 77% of new Sukuk issuance in 2012. There have been several regulatory amendments in the recent times to broaden the range of investments made available to the retail investors. To know more about the article please refer to Page 16 of Islamic Finance News dated 24th July, 2013. The article can also be viewed here.
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Indian leasing set to grow as non-banking finance companies benefit from new regulation
-by Nidhi Bothra published in assetfinanceinternational.com
Reserve Bank of India vide its circular dated 8th July, 2013 has granted access to External Commercial Borrowings (ECBs) to Non-banking Financial Companies (NBFCs) categorised as Asset Finance Companies (NBFC-AFCs) under the automatic route. Typically NBFC-AFCs are one of the categories of NBFCs in India carrying out asset backed lending business. So long NBFC-AFCs availing ECBs with a minimum average maturity of 5 years to finance import of infrastructure equipment for leasing of infrastructure projects came under the approval route. With this circular, NBFC-AFCs can avail ECBs under automatic route to finance import of infrastructure equipment for leasing to infrastructure projects with minimum average maturity period of five years. ECB can be availed under the automatic route upto 75% of owned funds of NBFC-AFCs, subject to a maximum of USD 200 million or its equivalent per financial year and currency risk of such ECBs is required to be hedged in full. Availing ECBs above 75% of NBFC-AFCs owned funds will be considered under approval route by RBI. To view the article click here. The article was also published in assetfinanceinternational.com and can be viewed here.
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Privately placed debt is undoubtedly the lifeline for
majority of NBFCs. The stringent condition requiring
sufficient security cover for privately placed
debentures, including NCDs, will surely affect the
NBFCs who primarily raise money by issue of
debentures. The primary market for corporate debt
in India is mainly dominated by private placements
of debts (93% of total issuance in 2011-12) as
corporate prefer this route to public issues because
of operational ease, i.e. minimum disclosures, low
cost, tailor made structures and speed of raising
funds. Banks/financial institutions (42.3% of total
issuances) followed by finance companies (26.4%)
were the major issuers of debentures in 2011-12.
To view the article click here. The article was also
published in moneylife and can be viewed here.
RBI takes the wind out of NBFC’s sails: Imposes restrictions on private placement of debentures
-by Nidhi Ladha & Vinita Nair
published in Moneylife
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Non Banking Financial Companies (NBFCs) raise money through the issuance of capital/debt securities (including debentures) by way of public issue or private placement. Lately, a substantial increase in borrowings of NBFCs has been witnessed by way of issue of debentures being on private placement basis. As per RBI’s report on ‘Trend and Progress of Banking in India’, 2011-12, NBFCs-D have borrowed Rupees 238 billion by issue of debentures during the year 2011-12 and Rupees 2950 billion has been raised by NBFC-ND-SI during the same period. Such debentures consisted of both secured and unsecured issues. The reason for huge borrowing by way of issue of debentures may be that the extant guidelines may not be strict enough. The public issues of debentures by public NBFCs are governed by SEBI (Issue and Listing of Debt Securities) Regulations, 2008. However, there were as such no guidelines for issue of debentures on private placements by public or private NBFCs. Moreover, the limit of 49 subscribers for a private offer as envisaged by section 67 of the Companies Act, 1956 was not applicable to the NBFCs.
To view the article click here. The article was also published in Indian Corp law Blog and can be viewed here.
RBI spreads its net to unregulated Private Placement of debentures by NBFCs: Guidelines issued
-by Nidhi Ladha & Vinita Nair published in India Corp law Blog
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An article on SEBI makes amendment to Takeover Code to iron out difficulties in the Regulations, SEBI (SAST) (Amendment) Regulations, 2013
-by Aditi Jhunjhunwala published in ICSI-EIRC Newsletter April-May, 2013
SEBI has vide notification no. No. LAD-NRO/GN/2012-13/36/7368 dated March 26, 2013 brought in amendments to the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 [the Regulations]. The amendments seek to bring clarity to certain existing provisions apart from introducing new provisions. Clarification has been provided in relation to time period of making public announcement in case of passive acquisitions in case of buy-back, disclosure requirements. Provision has been amended in relation to time period for making public announcement in case of preferential allotments. It is apparent that the amendments have been done only to bring in clarifications so as to remove ambiguity to the existing provisions, though we cannot say that all the requisite clarifications have been made. On one hand where the regulator has sought to clarify, on the other hand few amendments have also brought in certain queries and confusions. To view the article click here
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Safeguarding Legitimate Expectation in Oppression proceedings
-by Aditi Jhunjhunwala published in Souvenir by EIRC-ICSI at its 14th National
Conference for Practising Company Secretaries
Sections 397/398 of the Companies Act, 1956 (the Act) provide important tools of minority protection in corporate laws. Companies, like most of our institutions, run on majority rule. However, when the majority runs the company, the majority cannot run entirely at their whims and fancies and particularly not so as to strangulate the minority. This is where oppression and mismanagement proceedings come. With the Act giving variety of powers to the majority shareholders and vesting the fiduciary duty with the management, the Act has also empowered the minority to raise a voice in event of any kind of prejudice to their rights and interest and which may be oppressive in nature to them. There are also cases where such malafide acts may not affect the minority directly but yet be against the interest of the shareholders and the company; in such cases the minority can approach the Company Law Board against the mismanagement under the provisions of section 398 of the Act. To view the article click here
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The President of India promulgated The Securities Laws (Amendment) Ordinance, 2013 (“Ordinance, 2013”) to bring amendments to: 1. Securities and Exchange Board of India, 1992 (“SEBI”) 2. Securities Contracts (Regulation) Act, 1956 (“SCRA”) 3. Depositories Act, 1996 (“Act, 1996”) What sets the Ordinance, 2013 apart is that it has given SEBI a lot of powers when it comes to bringing to book violators. Further, by proposing to set up Special Courts, speedy trails of offences have also been attempted. To view the article click here. The article was also published in Indian Corp law Blog and can be viewed here
Securities Laws (Amendment) Ordinance, 2013 gives more teeth to SEBI -by Nivedita Shankar
published in India Corp law Blog
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Appointment of arbitrator solely by one party - does it resolve or give rise to disputes
-by Nivedita Shankar published in lawyersclubindia.com
Arbitration, world over is a tool to resolve a dispute between two parties privately by an independent party. Being an alternate dispute resolution mechanism and possibly a less-time consuming one, most agreements in India contained clauses for resolution of disputes by the method of arbitration. This was probably best summed up by Mr. Barry Feinstein, who said that, “I don't think it's possible without the structure of the arbitration in place to get a deal done”. Section 10(1) of the Arbitration Act, 1996 (“Act”) leaves it to the parties to decide on the number of arbitrators, provided the same is not an even number. This section has been widely exploited more so in lending agreements, as therein, the clause pertaining to arbitration solely allows the lender to appoint arbitrator. Usually in any lending agreement, the lender has the majority bargaining power. This leads to the borrower having no other choice but to accede to the lender’s demands and sign on the dotted lines. However, the question that arises is, is it at all tenable to give the right to appoint an arbitrator solely to the lender or should the borrower have any say in this? Does this not make the lender the moving spirit behind resolution of disputes which in turn can affect the award itself? To view the article click here. The article was also published in lawyersclubindia.com and can be viewed here
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Piercing Corporate Veil-moving towards a Principled Approach
-by Nivedita Shankar published in Souvenir by EIRC-ICSI at its 14th National
Conference for Practising Company Secretaries
A company being a juridical entity is run by its agents being its directors or shareholders. As much as directors are supposed to discharge duties only in their fiduciary capacity, yet quite often it is seen that a company is used as a front to shield fraudulent activities. Thus, the concept of piercing of corporate veil emerged. The earliest case of lifting of the corporate veil was in Salomon v. Salomon, where the House of Lords affirmed the separate legal personality of company from a shareholder. The real idea behind piercing the corporate veil is to determine the people who are in actual control of the company to pin down the real cause for any illegal activity carried on by the company. Ironically, this very phrase finds no mention in any legislation and resultantly, we have to look to judgements to understand the true meaning and purpose of “piercing of corporate veil”. Over the years, the concept of “piercing the corporate veil” has undergone a change and the jury is still not out as to when can this actually be done. To view the article click here
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Upcoming Events
2 Day Workshop on Leasing & Asset Backed Lending 23rd – 24th August, 2013, Mumbai
Leasing has been the centre of attraction in the last few years. There are numerous reasons for which leasing has become vibrant in India and globally while there are several models and notions floating in the market and more and more players wanting to have a share in the market. New players are entering the market, new asset classes are being tried in the leasing space, lessor are trying again the much jinxed sale and lease back transactions also, leasing has surely picked up and is doing well in India. Leasing is not new to India and asset- backed financing is not a new type of funding but a difference of approach – where asset becomes the primary basis for credit decision of the lender. Asset financing differs in technique and structure, and has been preferred world-over, as assets are easier to analyze and predict than entities. To know more about the event click here
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1 Day Workshop on Treasury Management in NBFCs| 2nd September, 2013, Kolkata | India
The treasury desk of any corporate house is very critical as they are responsible to ensure continuous liquidity and manage cost of the funds of the company. Treasury managers are the strategists in the company managing the financial risks and the financial resources at all times. In the complex and dynamic business environment in which we are functioning there is a constant need to cope up with the growing complexities of the financial instruments, understand the volatile financial environment and ever-changing regulatory environment to reduce cost minimize volatility and yet bring value to the company. Treasury management services are important to all sorts of companies, however, in case of NBFCs, the need for asset and liability management, management of resources for providing financial services is critical for survival of the company. This course shall enable the participants to understand the various modes of raising funds -- on-balance sheet and off-balance sheet, the benefits and bottlenecks for the same, existing market conditions and the motivations of raising a particular form of funding. The course also tries to explore some innovative ways of tapping funds. To know more about the event click here
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2 Day Workshop on Moving from Basel II to Basel III
Framework 6th – 7th September, 2013, Kolkata
This two-day course is highly intensive and interactive where we will review relevant details of Basel III implementation in the context of new liquidity standards. We will focus on introduction of Basel III in India and how would capital requirements work under Basel III in India. This workshop is targeted to give you a good understanding of and hands-on experience with the updated Basel rules for capital adequacy and liquidity coverage in banks. To understand the current issues faced with implementing proposed Basel III and to uncover practical solutions to these challenges. This is also an ideal opportunity for you to ask questions, raise concerns and contribute to high level debate with some of Australasia's most influential decision makers in the finance industry. To know more about the event click here
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What’s happening at VKC and VK & Co
Seminars and Session taken by Vinod Kothari
MSOP Session on
Securitisation- July 03, 2013 at Kolkata, EIRC-ICSI
Training on Secured lending law and loan
recovery with special emphasis on
SARFAESI Act, at L & T Mumbai, on July 08-09, 2013
Full day seminar on Laws relating to Debentures and Competition conducted by EIRC-ICSI at Rotary Sadan, Kolkata, on 6th April, 2013
Seminar on Recent Development in NBFC/Role of Auditor and Critical issues in Revised Schedule VI for NBFC conducted on 12th July, 2013 at ITC, Kolkata.
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The Institute of Company Secretaries of India has made EDP and SIP classes mandatory for certain class of students. Our colleagues have been undertaking various sessions of EDP/SIP/OTS classes. Aditi Jhunjhunwala took 59th SIP Session on “Personality Development” on 6th July, 2013, and 32nd EDP Session on “Significance of Training and Code of Conduct” on 3rd July, 2013 at Kolkata, EIRC-ICSI.
EDP and SIP sessions taken by
Aditi Jhunjhunwala
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Our Corner!!!!
Our Former Associate Monica Chandak became a Chartered Accountant this year.
Congratulations CA Monica Chandak !!!!!!
We had a get together with our former associates, who came to have an informal chat with us on July 27, 2013. During the course of this informal chat, some useful discussions took place on the Indian judicial System by one of the associates. We were glad to have this get together and we thank all who turned up for the event and we look forward to have more of such meetings.
Ms. Sikha Bansal (Former Associate) bagged 2nd Best Participation Award in 77th MSOP in EIRC-ICSI
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1012 Krishna 224 AJC Bose Road Kolkata – 700017, India Ph: 91-33-22817715/ 1276/ 3742 Mumbai office: 222, Ashoka Shopping Centre 2nd Floor, LT Road Near GT Hospital Mumbai- 400 001 022-22675600
Mail to: [email protected]; [email protected] Our Websites: www.vinodkothari.com www.india-financing.com
Contact us