Ratings Agency ICRA Sends its MD & CEO Naresh Takkar on Leave Pending Enquiry
Ratings Agency ICRA Ltd says it has sent its managing director and group chief executive (CEO) Naresh Takkar on leave following concerns raised in an anonymous representation shared by market regulator Securities and Exchange Board of India (SEBI).
 
In a regulatory filing, the ratings agency says, "…the board decided…pending the completion of the examination of the concerns raised in the anonymous representation that was forwarded to the Company by the SEBI, to place Naresh Takkar on leave, effective immediately, until further notice." 
 
ICRA said its board of directors has decided to appoint Vipul Agarwal as interim chief operating office. Mr Agarwal will continue to work as group chief financial officer (CFO) as well, the ratings agency said in a regulatory filing.
 
Mr Takkar was appointed as CEO in January 2015.
Like this story? Get our top stories by email.

User

How to Deal with Trading Window Closure for Companies with Listed Debt Securities
SEBI (Prohibition of Insider Trading) (PIT) Regulations, 2015 (Regulations) are applicable in relation to securities listed and proposed to be listed.  Companies having their debentures listed are also required to comply with the provisions of the Regulations. 
 
The intent of the Regulations is to prohibit trading—essentially the wrongful trading in listed securities while in possession of the unpublished price sensitive information (UPSI). UPSI has been defined to mean such information that is not generally available and which can materially affect the price of the securities on becoming generally available and includes information in relation to financial results, dividends, change in capital structure, restructuring and changes in key managerial personnel.
 
However, a few pertinent questions that arise are:
 
1. Should the trading window of a debt-listed entity be closed from the end of every quarter till the declaration of financial results by the company which will happen only after the completion of a half year? 
 
2. Should the debt-listed company close the trading window every quarter while submitting results to the holding company for consolidation purpose?
 
UPSI in Case of Debt Listed Entities
 
Sensitivity of any bit of information largely depends on the kind of security it is associated with; information that may be regarded as UPSI for an equity-listed entity may not necessarily affect prices of the debt-listed. For example, declaration of dividend is price sensitive information for an equity-listed entity but may not have any impact on the debt-listed one. The reason is that debentures receive a fixed rate of interest and are not at the discretion of the management. However, default/ expected default in the payment of interest on a loan is price sensitive information as it may result in non-service of obligations in relation to the debt-listed one too.
 
Generally speaking, the information with respect to the financial position of the company, revision in ratings, instance of default made by the company in repayment of any debt or any such information which affects the payment of principal and /or interest of the debentures are probable price sensitive information for listed debt securities.
 
Given the uniform applicability of the Regulation for all listed companies, there are certain implementation issues with respect to the closure of trading window in case of debt-listed company which has been discussed in this article. 
 
Closure of Trading Window in Case of Financial Results
 
Trading window denotes a notional window used as an instrument of monitoring the trades of designated persons. A designated person is permitted to trade only when the trading window is not closed.
 
As per para 4 of schedule B to the Regulations, it is mandatory for all listed companies to close its trading window from the end of 'every quarter' till 48 hours after the declaration of financial results. 
 
“Trading restriction period can be made applicable from the end of every quarter till 48 hours after the declaration of financial results”
 
An equity-listed entity is required to submit financial results on a quarterly basis. In case of debt-listed entity, listed entities are required to submit un-audited or audited financial results on a half-yearly basis. If the debt-listed entity is a subsidiary of an equity-listed entity, in that case it is required to submit financial results on a quarterly basis for consolidation purpose.
The quarterly results so submitted may not be published on the website of the debt-listed entity; however, the information becomes generally available by forming part of the consolidated financial results.
 
Possible Interpretation:
 
 
It is to be noted that, with the amended provisions in place, the tenure of closure of the trading window got elongated and covers almost 180 days or six months of the year. Now, if the provisions of PIT, for a debt listed company, are interpreted in a way that the window should be closed from the end of each quarter and opened once the financial results are declared after the half year, one can easily imagine that the window is closed for almost the eight to nine months of the year! Does that mean that the designated person of such companies will be allowed barely three months for trading? Taking such a view will be squarely impractical.
 
A debt listed company, which is not a subsidiary of an equity listed holding company, cannot be mandated to close the trading window every quarter merely to comply with Schedule B requirements. This will result in an absolutely impractical situation. 
 
Where the debt listed company is required to share quarterly financials for consolidation purpose, standalone financial results of the debt listed company are not published separately. Accordingly, the UPSI becomes published and publicly available, to the extent of consolidated figures, on the declaration of results by the holding company and therefore, keeping up with the intent of closing of the trading window (to prevent trading by the designated person while in possession of UPSI) it will be appropriate to interpret that the trading window of such debt listed companies should be closed quarterly and opened after 48 hours of declaration of consolidated financial results by the holding company to public. 
 
Compliances for Sharing of Financial Results with the Parent Company
 
So far as sharing of the quarterly results of the debt listed company with the holding company is concerned, the same being for a legitimate purpose, certain compliances have to be ensured by the debt listed company in line with its code of conduct, viz,:
 
  • Promoters are regarded as designated persons under the Regulations. Therefore, signing of non-disclosure / confidentiality agreement with the holding company may not be required;
  • Designated person shall not trade in the listed securities of the debt listed company until the information becomes generally available either pursuant to publishing of financial results by the debt listed entity or publishing of consolidated figures by holding company, as applicable.
  • Entry to be made in the structured digital database in relation to sharing of information with the employees of the holding company.
 
(CS Nitu Poddar is Senior Associate in the Corporate Law & Resolution Division at Vinod Kothari & Company
Like this story? Get our top stories by email.

User

RERA Delhi gets an overhaul and a new website
New Delhi, whose lack of focus on adopting and implementing the Real Estate Regulation Act (RERA) has suddenly upped its game with a brand new website. Just a few weeks ago, Moneylife had discovered a shabby website with just 30 projects registered. This seemed surprising given that Delhi has an Aam Aadmi Party (AAP) government that came to power with the promise of better governance. On checking with the party, we learned that realty, in the state of Delhi is under the purview of the Lt. Governor and not the state government.  
 
What is interesting though, is that less than two weeks after Moneylife published the article “Smiley, Faceless & RERA Ltd: These Are Your new RERA registered Agent, Promoter and Projects”  RERA Delhi has a brand new website that was launched on 27th June. 
 
Lt Governor Anil Baijal, of Delhi, launched the website in a bid to promote transparency and accountability in the real estate sector. The L-G also tweeted the following. 
 
 
 
The new and improved Delhi RERA website has rectified most of the previous glaring issues such as having false registrations, lack of details in registrations, non-responsive helpline and email and lack of statistical data on the website.
 
(Old Delhi RERA Website)
 
(New and improved website of Delhi RERA)
 
 We also discovered the helpline numbers that were unattended earlier were promptly responded to, at least on the first day.  The National Democratic Alliance (NDA) government now needs to ensure that RERA is adopted and becomes as effective in all other states under the BJP government.  Moneylife is conducting a detailed study on RERA and its implementation nationally. We urge you to help our efforts by taking this survey, if you have ever tried to use RERA or have attempted to purchase a RERA registered property in any state. Please click here to open the survey
 
Like this story? Get our top stories by email.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

online financial advisory
Pathbreakers
Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
online financia advisory
The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Online Magazine
Fiercely independent and pro-consumer information on personal finance
financial magazines online
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
financial magazines in india
MAS: Complete Online Financial Advisory
(Includes Moneylife Online Magazine)