Independent Director: Senior CA Resigns Citing Lack of Time to Study for MCA Proficiency Test!
A chartered accountant (CA), with 30 years of experience, has resigned as independent director from a listed company citing lack of time to attend the affairs of the company and study and appear for the proficiency test as mandated by the ministry of corporate affairs (MCA). 
 
CA Anjali S Dalvi has resigned from Jenburkt Pharmaceuticals Ltd as independent director on 7 February 2020. In her resignation letter she says, "I was given to understand that the MCA has made it mandatory for all independent directors to register themselves as also appear for a proficiency test thereafter. I am a CA qualified in January 1990 and I have a 30 year experience. I have also commenced my own venture since 2019. These activities are taking up most of my working hours and I am finding it difficult to attend to the affairs of Jenburkt (Pharmaceuticals) let alone find time to study and appear for tests. Considering the time at my disposal I am finding it difficult to comply with the new norms laid down by the MCA."
 
Last year in October, MCA issued a notification making it mandatory for independent directors to get listed with a central database, and to qualify under proficiency test. The amendments become effective from 1 December 2019.
 
Vinita Nair, who is company secretary (CS) and partner at Vinod Kothari & Co, feels the idea of the board report reporting their directors’ performance in the so-called proficiency test is even more bizarre.
 
"While there is need for sensitisation on things like duties or liabilities of directors, accountability and responsibility by virtue of being a member of the company board, it cannot be a stuff for an online examination or proficiency self-assessment test," she said in an article. (Read: Will Independent Directors Pass the Common Proficiency Test as Proposed by MCA?)  
 
There are training workshops and skill building courses for non-executive directors run all over the world, but that a director should mandatorily sign for one such test and qualify under the same with 60%, seems exceptional.
 
In addition, the question of testing a person for any “proficiency” arises only when a director is expected to have such common proficiency. Normally, companies appoint directors who have core skills or expertise or competencies required for the business or sector. 
 
The contents of the common proficiency test, such as company law, securities law and basic accountancy, seem to be eminently suited to corporate professionals.
 
Corporate boards have to have diverse skills – technical, behavioural, industrial, and so on. How does a common proficiency test assess the capability, for example, of a person, who has technical competence on the line of business that the company is engaged in? Ms Nair asks.
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    COMMENTS

    suketu

    1 week ago

    After 30 yrs experience,Modi govt wants such experiences CA's to sit for an exam!

    adityag

    2 weeks ago

    This is how regulators make money -- pointless exams as a pre-requisite.

    Meenal Mamdani

    2 weeks ago

    So typical of Indian authorities.
    A test where none is needed.
    They should add a test for honesty and integrity too. May be they are afraid that some directors may not reach even 35%, the passing marks.

    RBI issues draft framework for alternative retail payments system
    The Reserve Bank of India on Tuesday published the draft framework for authorisation of a new pan-India umbrella organisation for retail payment systems, apart from the National Payments Corporation of India (NPCI) which developed the widely-used UPI payment system in August 2016.
     
    The new entity proposed by the central bank should have a minimum paid-up capital of Rs 500 crore and no single promoter or promoter group should have more than 40 per cent investment in the capital of the New Umbrella Entity (NUE).
     
    "The promoter or promoter group shareholding shall be diluted to a minimum of 25 per cent after 5 years of the commencement of business of the NUE. A minimum net-worth of Rs 300 crore shall be maintained at all times," the RBI said on Tuesday.
     
    The proposed umbrella body will set up, manage and operate new payments systems, especially in the retail space, comprising of but not limited to ATMs, White Label PoS, Aadhaar-based payments and remittance services. It will develop new payment methods, standards and technologies and also operate clearing and settlement systems.
     
    The NUE will also be responsible for monitoring retail payments system developments and related issues in the country and internationally to avoid shocks, frauds and contagions that may adversely affect the system.
     
    The entity will have to fulfill the norms of corporate governance along with 'fit and proper' criteria for persons to be appointed to its board. The RBI will have the right to approve the appointment of directors and also nominate a member to the board.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    Zerodha Takes on SEBI’s Job; Warns Investors of Market Manipulation
    In a supreme irony, it is a stockbroking firm and not the market regulator that has stepped forward to warn investors of how they could be scammed by unscrupulous players. Zerodha, which is now India’s largest brokerage firm, has sent out messages warning its investor clients of two types of scams—unauthorised trading in illiquid options and ‘pump-and-dump’ schemes of penny stocks by market manipulators. 
     
    That a stockbroker has felt the need to issue such a warning shows how deep-rooted and widespread the problem is. But the Securities and Exchange Board of India (SEBI) has been dragging its feet over action and ignores whistleblowers desperately trying to flag the issue. 
     
    Indeed, we at Moneylife have been writing about this brazen price manipulation for over 10 years. We have highlighted the rigging of at least one scrip in every issue of the magazine for six years. 
     
     
    However, there has been no end to such practices. 
     
    It is surprising that a stockbroker is highlighting two modus operandi of scammers and creating awareness, setting up a back–end algorithm and additional features in its front-end trading software to alert investors about the stock market scams when it is the market regulator’s (SEBI’s) job.
     
    1. Pump-and-dump schemes: This is extremely common and, in fact, over the years, SEBI has been ineffective in controlling it, despite spending hundreds of crores in Integrated Market Surveillance System (IMSS). In fact, in repsonse to an RTI (Right to Information) query filed by us in 2013, SEBI even replied that it does not have surveillance data!
     
     
    The manipulation takes place in the form of stock tips that promise quick returns and is circulated through SMS and other forms of messaging asking you invest in penny stocks. “Many scammers send SMS using shortcodes that make it seem like it is from a reputed brokerage firm.Variations of the name Zerodha have been illegally used by scammers recently,” pointed out Zerodha. 
     
    Zerodha suggests that “if you receive an SMS asking you to invest in a penny stock, make sure to report it to TRAI (Telecom Regulatory Authority of India) and help save others from falling to the fraud.” This advice is seemingly useless because TRAI is even worse than SEBI. It takes no responsibility whatsoever about spam messages and never acts on any complaints.
     
    Zerodha has introduced a special feature in the form of a penny stock nudge on their buy order window (currently on the web and soon to be introduced on the mobile). The idea is to alert customers if they are unaware that they are investing in a penny stock. They also have an additional warning for stocks which they think are being manipulated through SMS tips and social media buzz. Zerodha says that the customer would be free to proceed, but, hopefully, the customer won’t proceed and even if the customer does proceed, the customer will reduce the trading size to as little as possible to reduce his/ her risk. 
     
     
     
    While Zerodha has talked about pump-and-dump schemes, interested parties have used market manipulation to convert black money to white as unearthed by the extensive investigations by the income-tax department. However, SEBI has refused to act on such bogus trades, despite extensive documentation. Please see our exclusive Cover Story on this.
     
     
    2. Illiquid options: In the second type of scam, Zerodha has given an example how scammers place illegitimate, non-genuine trades, which might later on land investors into trouble. “Over 30,000 options contracts are listed on the exchange, but only a fraction of them actively trade, while the rest are illiquid. These options contracts where there is no other trading are used by scammers to place illegitimate trades (buy high and sell low with the same account and in quick succession) which creates a loss in your account and profit in the other trading account. You would assume this is a genuine market loss, but it clearly isn’t."
     
    Zerodha has advised that sharing your log in credentials with advisors or people claiming to be market experts, who offer to trade on your behalf, exposes you to the colossal risk of a fraudster who can create a loss in your account using non-genuine trades and move your money to another trading account, making it very difficult for you to even figure that you have been scammed. 
     
    "Apart from the loss, you are now also exposed to regulatory action. Any such trading activity in your account would be looked upon by the income tax department as money laundering (creating losses to avoid taxes, or convert white to black money or vice versa). SEBI considers such trades circular trading. Apart from the monetary penalty that such trades entail, you could potentially be banned for life from the markets by SEBI."
     
    Zerodha has also counselled that "If you had given access to someone who has created such an artificial loss, you can lodge a police complaint against the fraudster, let our compliance team know about it, and we will help you with the case."
     
    What are non-genuine trades ?
     
    Giving a brief idea about what exchanges consider abnormal or non-genuine trades, a BSE (Bombay Stock Exchange) guideline circular of February 2019, said, “Trading activity of clients concentrated in a specific security or contract, which is not traded frequently or trading with low volumes with client squaring up their position within a short span of time. Additionally, factors such as client’s earning significant profits or incurring losses on account of such transactions, and their consistent contribution to the daily average volumes of security, contract may also be looked at.”
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    COMMENTS

    Kumar123

    7 days ago

    Frankly don't see any thing ironic about these warning by a stock broker. We have motilal oswal TV ads talking about investing carefully. Likewise mutual funds magazine ads. It is like a value add that any company would do. Or like banks sending emails talking about phising and all sorts of SIM scams, to not share Pin etc.

    B. V. KRISHNAN

    2 weeks ago

    Stock market trading involves risk. Those who do not have basic common sense, are greedy, or do not have the stomach to face losses, better do not enter this activity.

    sactel

    2 weeks ago

    Excellent title for the article ! very sarcastic. SEBI wake-up !

    Newme

    2 weeks ago

    What Zerodha doing is commendable.
    However speculation is part of stock market. People knowingly trade on risky stocks for bigger profits. Let them be responsible for their act.
    For the last 6 months, we are hearing one big investor (even Bill Gates) after another supposedly looking to buy into Yes Bank. The share price rises 60s and then falls back to 30s going on in a circle.
    Even in other businesses we have such imprudent investments. Take the example of recent Rajnikanth movie Darbar, a flop movie. It was reportedly made at 250 crores budget with Rajni salary at 100 crores and Director at 38. It was sold at astronomical price. Previous Rajni movie his salary was 50 crores. So what made Lyca group a global mobile operator to pay double his salary. Are they stupid? Are they greedy? Tamilnadu theatrical rights distributors have lost 80 crores. They are going around threatening Director. Should some body warned them? What if the movie was a super hit and they made money?

    Ramesh Popat

    2 weeks ago

    ye stock excahnges hadson ka shahar hai, yahan zindagi hadson ka safar hai,
    yahan roz roz har mode mode par hota hai koi na koi ........hadasa..
    (from film- hadasa)

    ganesanjaicare

    2 weeks ago

    Not only penny stocks.Even stock like ITC manipulated today.one website mention ITC increased the prices of all sizes of cigarettes by 10 to 12 percent.noreport in nse and bse company information.In the morning ITC opened at 217 and went down to 212 .scamsters are able to manbipulate even a instituitional stock.Investors and traders have to be careful.Buyer beware .dont trust the regulator and exchanges.

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