Millennium Post

Firms must soon have at least one woman, 2 independent directors

The new requirements are part of the rules related to the appointment and qualification of directors under the Companies Act, 2013. Applicable to certain class of companies, the norms will be operational from April 1.

Under the rules notified by the Corporate Affairs Ministry, every listed company and those public firms having paid up share capital of Rs 100 crore or more should have at least one woman director on their board. It will be also applicable to entities with a minimum turnover of Rs 300 crore.

‘...any intermittent vacancy of a woman director shall be filled up by the board at the earliest but not later than immediate next board meeting or three months from the date of such vacancy whichever is later,’ the ministry has said. Besides, certain class of corporates are required to have at least two independent directors on their respective boards.

The rule would apply to public companies having minimum paid up share capital of Rs 10 crore and those where their aggregate "outstanding loans, debentures and deposits" exceed Rs 50 crore, according to the notification dated March 27.

With regard to independent directors also, the vacancies should be filled up at the earliest — not later than the next board meeting or three months from the date of the post falling vacant. For the purpose of complying with the rules, the paid up share capital and turnover, among others, as recorded in the latest audited financial statements should be taken into consideration by the companies.

To make it easier for corporates to choose the independent directors, a government authorised agency will maintain a database of ‘persons willing and eligible to be appointed as independent director’. The data base, to be placed on the Corporate Affairs Ministry's website, will have details about potential candidates such as their qualifications, experience and whether they face any legal proceedings.

Information about their tenure in listed companies and nature of directorship will also be made available. The ministry has mentioned that a company must carry out due diligence before deciding to choose a person.

That apart, a listed company will be required to have a small shareholders' director. The rule will kick in if at least 1,000 or one-tenth of the total number of small shareholders move a notice for appointing such a director. The companies can, however, have such a director suo motu.

The tenure of a small shareholders' director will be for a maximum of three years and will not be
eligible for re- appointment after that period.

Sebi extends time-frame for FPI norms’ implementation by 3 months to June 30

Market regulator Sebi on Friday extended the time-frame for implementing new Foreign Portfolio Investor (FPI) regulations by three months to June 30. The new Foreign Portfolio Investor (FPI) regulations was put in place to make an easier registration process and operating framework for overseas entities seeking to invest in Indian capital markets.

The new regulations which will replace the existing Sebi norms for foreign institutional investors (FIIs) and the new class of investors, FPIs, would encompass all FIIs, their sub-accounts and qualified foreign investors (QFIs). In a circular issued today, the regulator said that it ‘may continue to grant certificate of registration as a FII or sub-account under Sebi (FIIs) Regulations 1995 till March 31, 2014 which may be extended up to June 30, 2014 by the Board’.

‘The FPI regime shall commence with effect from June 1, 2014,’ the Securities and Exchange Board of India (Sebi) said. The decision was taken as the market participants have informed Sebi that they were still in process of putting in place necessary systems and procedures to discharge their assigned role effectively and had sought an extension of time for implementation of the FPI regime.

Sebi said it would continue to accept all applications for registration of FIIs and Sub-accounts till May 31, 2014 provided these are complete in all respects. Also, it would accept applications for acknowledgement of fee, in respect of those FIIs and sub-accounts whose fee validity is expiring on or before September 30, 2014.

Designated Depository Participants (DDPs), through which FPIs can apply for registration, may continue to open QFI accounts till May 31, 2014. Under the new norms, FPIs have been divided into three categories as per their risk profile and the KYC (know your client) requirements and other registration procedures would be much simpler for FPIs compared to current practices.

Sebi has decided to grant them a permanent registration, as against the current practice of granting approvals for one year or five years to the overseas entities seeking to invest in Indian markets. They will be permanent unless suspended or cancelled by the board or surrendered by the FPI. The Category I FPIs, which would be the lowest risk entities, would include foreign governments and government related foreign investors.

Category II FPIs would include appropriately regulated broad-based funds, appropriately regulated
entities, broad- based funds whose investment manager is appropriately regulated, university funds,university related endowments, pension funds, etc. The Category-III FPIs would include all others not eligible under the first two categories.
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