Regulations
IRDA issues draft IPO norms for general insurance companies

IRDA said no general insurance company shall approach SEBI for public offering without specific previous written approval of the insurance regulator

 
New Delhi: General insurance companies planning to tap the capital market for funds should have a 10 year experience and will have to seek prior approval from the sector regulator, reports PTI quoting draft guidelines issued by Insurance Regulatory and Development Authority (IRDA).
 
"No general insurance company shall approach the SEBI for public issue of shares and for any subsequent issue ... without the specific previous written approval of the Authority," IRDA said in the draft norms for initial public offering (IPO) of non-life insurers.
 
The draft norms -- IRDA (Issuance of Capital by General Insurance Companies) Regulations, 2012 -- states that the regulator would take into account the insurer's financial position, its capital structure and regulatory record before permitting them to come out with the share sale.
 
Further, the IRDA has kept with it the powers to prescribe the extent to which the promoters shall dilute their respective shareholding and the shares that can be allotted to foreign investors.
 
Further, the IRDA would also prescribe the minimum lock-in period for the promoters after the share sale.
 
The IRDA would also look into the purpose for which the insurer is proposing to raise the funds from the market and the insurer's capital structure.
 
"An applicant company proposing to raise share capital through a public issue may do so only on completion of 10 years from the date of commencement of business," the IRDA said, adding that the approval granted by the Authority shall have a validity period of one year.
 
The regulator has also prescribed additional information -- risk factors specific to insurance companies, an overview of the insurance industry and a glossary of terms used in the insurance sector -- in the offer document for companies to come out with share sale offer.
 
The IRDA has invited comments from general insurance companies by 30th September on the exposure draft.
 
Last year, the IRDA had notified the guidelines for life insurance companies to tap the capital market.
 

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STT needs to be used to incentivise investors: SEBI chief

According to SEBI chief Sinha, STT should be used in a manner that investors are incentivised to invest for the long term rather than for short term

 
New Delhi: UK Sinha, chief of Securities and Exchange Board of India (SEBI) has said that securities transaction tax (STT) should be used in such a way that it incentivises people to make investments for the long term rather than reap short term benefits, reports PTI.
 
Sinha, the chairman of SEBI, also said that the STT rate is rather high now.
 
"... (STT) should be used in a manner that people (investors) are incentivised to invest for the long term rather than for short term (speculation)," Sinha told reporters on the sidelines of launch of National Stock Exchange's listing platform for Small and Medium Enterprises.
 
Noting that STT is the prerogative of the government, Sinha said it is not something where the market regulator can take a call.
 
"SEBI's view has been that in securities market, the tax rate is rather high," he noted.
 
According to him, taxes should be across various segments of various markets rather than only in the securities market.
 
NSE Managing Director and CEO Ravi Narain too echoed similar views.
 
Asked about STT, Narain said all asset classes should treated equally for taxation purposes and there should not be any arbitrage between two different asset classes.
 
Market entities and various industry bodies have been strongly demanding a complete abolition of STT, which was lowered earlier this year in the Union Budget.
 
Earlier this month, the government-appointed panel for rationalising the proposed General Anti Avoidance Rule tax regime had suggested a hike in the STT.
 
Portfolio investments in listed securities attract STT at rate of 0.1%. A hike in STT rate would increase costs of equity transactions. The levy was introduced in 2004.
 
In its draft report, the Shome panel said, "The government should abolish the tax on gains arising from transfer of listed securities, whether in the nature of capital gains or business income... In order to make the proposal tax neutral, the government may consider to increase the rate of STT appropriately," the panel, headed by Parthasarathi Shome, had said.
 

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SAT sets aside SEBI order banning directors of Denim

While setting aside orders issued by SEBI, the Tribunal also pulled up the market regulator for delay in finalisation of proceedings against two directors of Denim Enterprises

 
New Delhi: The Securities Appellate Tribunal (SAT) has set aside orders issued by  Securities and Exchange Board of India (SEBI) banning Denim Enterprise Directors BJ Shah and SB Bafna from accessing markets, saying that the market regulator could not establish the charges against the duo, reports PTI.
 
"....we hold that the appellants (Shah and Bafna) cannot be held guilty of violating regulation 5 of FUTP Regulations.
 
The order of the Whole-time Member is set aside. In the result the appeals are allowed with no order as to costs," said a two-member bench of SAT.
 
After a probe into a 'artificial' rise in Denim's share price between November 1999 and March 2000, SEBI had charged the directors with publication of false/misleading information about the company and alleged this led to rise in share prices.
 
The tribunal said, "On a consideration of the facts and evidences on record, we have to conclude that the Board has not established that the appellants involved themselves or were responsible for making any statement or disseminated any information which is false or misleading." 
 
SAT also pulled up SEBI for delay in finalisation of proceedings against them and observed that it "causes undue hardship to the delinquent in putting forth timely defense".
 
SEBI had issued notice in April 2009, but the proceedings culminated only in May 2012.
 
"The proceedings could have been completed within a reasonable period of time, especially when the appellants have been restrained from taking part in market operations," said SAT.
 
SEBI in May this year had restrained Shah and Bafna from accessing the securities market for two years. They were prohibited from buying, selling or dealing in securities.
 
The two had contended that they were not involved in the day to day affairs of the company and had no role whatsoever in the alleged publication of misleading information in the newspapers.
 

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