KREO CAPITAL PRIVATE LIMITED

NEWS LETTER - FIRST EDITION, 2018

Monday, September 03, 2018

“An investment in knowledge yields the best return.”

In the ever changing and dynamic Capital Market Environment, staying

updated with the latest happenings is the need of the hour.

Keeping up to date with laws & notifications is time consuming and

legislation itself is complex. However, it is of vital importance that

businesses stay up to date on regulations in their sector to keep pace with

best practices.

This is our series of knowledge sharing initiative towards sharing

regulations and updates on corporate laws.

BODIES COVERED

KREO CAPITAL NEWSLETTER EDITION – JULY, 2018 KREO CAPITAL NEWSLETTER - FIRST EDITION, 2018

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YES BANK FALLS 7% EVEN AS RBI APPROVES RANA KAPOOR AS MD TILL FURTHER NOTICE

Key Highlights

Yes Bank’s shares fell almost 7% on Friday, even after RBI’s nod for continuance of Rana Kapoor as MD. For more details, please refer link : https://www.moneycontrol.com/news/business/markets/yes-bank-falls-7-even-as-rbi-approves-rana-kapoor-as-md-till-further-notice-2901731.html

INDIAN COMPANIES CONTINUE PAYING BUMPER DIVIDENDS

Key Highlights

• India Companies distributed the highest amount of dividend in FY18 since at least FY13.

• According to the data compiled by the ET Intelligence Group, a sample of 870 companies that declared dividends every year since FY13 paid Rs 1,78,501 crore of dividend, 3 per cent more than that paid in the previous fiscal.

For more details, please refer link://economictimes.indiatimes.com/articleshow/65571567.cms?utm_source=ETMyNews&utm_medium=HPMN&utm_campaign=AL1&utm_content=20&utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

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THE CAPITAL MARKET…

INDIAN RUPEE HITS FRESH RECORD LOW OF 70.82 PER DOLLAR; DOWN 10% THIS YEAR

Key Highlights

• The rupee fallen by 10 percent this year so far making it the worst-performing currency in Asia.

• It has opened marginally lower at 70.63 per dollar versus previous close 70.59.

For more details, please refer link: https://www.moneycontrol.com/news/business/indian-rupee-hits-fresh-record-low-of-70-82-per-dollar-2896731.html

JEFF BEZOS, WARREN BUFFETT BET ON A $250 BILLION UNCLAIMED INTERNET MARKET Key Highlights Walmart Inc. just wrapped up a $16 billion agreement for control of the country’s leading e-commerce player, Flipkart Online Services Pvt., while Bezos’ Amazon.com Inc. negotiates deals with a large supermarket chain and an investment in a prominent retail conglomerate, according to local media. Read more at: //economictimes.indiatimes.com/articleshow/65607225.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

KREO CAPITAL NEWSLETTER - FIRST EDITION, 2018

EXTENSION OF TRADING HOURS OF SECURITIES LENDING AND BORROWING (SLB) SEGMENT

Key Highlights

• With a view to facilitate physical settlement of equity derivatives contracts, it has been decided to permit Stock Exchanges to set their trading hours in the SLB Segment, subject to the condition that:

a) The trading hours are between 9 am and 5 pm

b) Exchange/Clearing Corporation has in place risk management system and infrastructure commensurate to the trading hours.

• Accordingly, the clause under “Time Window for SLB” of Circular No. MRD/DoP/SE/Cir- 31 /2008 dated October 31, 2008 shall stand modified.

For more details, please refer link : https://www.sebi.gov.in/legal/circulars/aug-2018/extension-of-trading-hours-of-securities-lending-and-borrowing-slb-segment_40091.html

KREO CAPITAL NEWSLETTER

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KNOW YOUR CLIENT REQUIREMENTS FOR FOREIGN PORTFOLIO INVESTORS

Key Highlights

• Beneficial Owner is the natural person(s) who ultimately owns or controls an FPI and, should be identified in accordance with Rule 9 of the Prevention of Money-laundering (Maintenance of Records) Rules.

• Accordingly, Bos of FPIs having structure of company or trust should be identified on controlling ownership interest (also termed as ownership or entitlement) and control basis. The BOs in case of partnership firm and unincorporated association of individuals should be identified on ownership or entitlement basis.

For more details, please refer link :https://www.business-standard.com/article/markets/sebi-proposes-to-tighten-rules-for-auditors-valuers-seeks-feedback-118071400771_1.html

KREO CAPITAL NEWSLETTER - FIRST EDITION, 2018

SEBI CUTS TIMELINE FOR LISTING OF DEBT SECURITIES TO SIX DAYS FROM 12

Key Highlights

• Sebi cuts timeline for listing of debt securities to six days from 12 at present to make the existing process of issuance of such securities simpler and cost effective.

• Sebi made ASBA mandatory for all investors for making payment, while applying in a public issue of debt securities to reduce time taken.

• The new rule will be applicable to all public issues of debt securities from October 1, 2018.

• An investor, intending to subscribe to a public issue, will have to submit a completed bid-cum application form to self-certified syndicate banks (SCSBs), with whom the bank account to be blocked is maintained.

For more details, please refer link : https://www.business-standard.com/article/markets/sebi-cuts-timeline-for-listing-of-debt-securities-to-six-days-from-12-118081601693_1.html

KREO CAPITAL NEWSLETTER

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SEBI TIGHTENS THE NORMS GOVERNING AGENCIES THAT UNDERTAKE THIRD PARTY FIDUCIARY ASSIGNMENTS

Key Highlights

• To strengthen the supervision of stock brokers, markets regulator SEBI is mulling additional measures to prevent misuse of client's securities.

• In addition, regulator plans to initiate technology-based measures to streamline the sharing of information among the stock exchanges, depositories and SEBI to enhance the inspection of intermediaries.

• The move comes amid several instances have been reported about the misuse of clients' securities by stock brokers.

For more details, please refer link :https://www.business-standard.com/article/markets/sebi-proposes-to-tighten-rules-for-auditors-valuers-seeks-feedback-118071400771_1.html

KREO CAPITAL NEWSLETTER - FIRST EDITION, 2018

EFFECTIVE DATE OF NOTIFIED SECTIONS UNDER COMPANIES ACT UPTO AUG 15, 2018

Key Highlights

• The Ministry of Corporate Affairs through its notifications dated May 07, 2018, June 13, 2018, June 21, 2018, 5 July 2018 , 27 July 2018, July 31, 2018 and August 07, 2018 notified certain sections of the Companies (Amendment) Act, 2017. Additionally, MCA issued amendments to certain rules under the Companies Act, 2013.

• Effective date of notified sections under Companies Act is upto 15 August 2018 respectively.

For more details, please refer link : https://www.caclubindia.com/articles/effective-date-of-notified-sections-upto-aug-15-2018-34116.asp

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SUPREME COURT STAYS BOMBAY HC ORDER GRANTING RELIEF TO DISQUALIFIED DIRECTORS Key Highlights

• Supreme Court on special leave petition of MCA, stayed a Bombay High Court order, which gave relief to directors of the companies struck off by RoC last year.

• The latter directed the RoC to accept physical documents of struck-off companies and treat them as applications for voluntary striking off.

• MCA, in September last year, struck off 2.26 lakh registered companies and disqualified more than 3 lakh directors for failure to file financial statements and annual returns for three consecutive years.

For more details, please refer link : https://www.moneycontrol.com/news/business/supreme-court-stays-bombay-hc-order-granting-relief-to-disqualified-directors-2815121.html

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KREO CAPITAL NEWSLETTER - FIRST EDITION, 2018

COMPANY LAW OVERHAUL: GOVT PANEL TARGETS SHELL COS, WANTS NCLT UNCLOGGED

Key Highlights

• A government committee has recommended companies to declare commencement of business in order to curb shell companies. Suggested capping independent directors’ remuneration.

• Corporate Affairs Secretary Injeti Srinivas submitted report to FM, observing that there is no specific definition of a shell company under the Company Law, formed to launder money and thus become instrumental in generating black money.

• The committee recommended re-introduction of declaration of commencement of business provision to better tackle the menace of ‘shell companies.’

For more details, please refer ink: https://www.thehindubusinessline.com/companies/company-law-overhaul-govt-panel-targets-shell-cos-wants-nclt-unclogged/article24794431.ece

MCA BOOSTING ITS DRIVE AGAINST SHELL COMPANIES DEREGISTERING 50,000 SHELL COMPANIES IN A WEEK

Key Highlights

• MCA deregistered about 50,000 companies in the last week to eliminate shell companies.

• Delhi RoC & Mumbai RoC struck off more than 30,000 & 11,000 companies resp., for not carrying any business or operations for 2 years.

• Notices of deregistration have been sent to all these companies, he added.

• Last fiscal, about 250,000 companies were struck off.

• MCA likely to weed out the LLPs that haven’t done any business in 2 consecutive years. About already been derecognized.

For more details, please refer link: //economictimes.indiatimes.com/articleshow/65361314.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

KREO CAPITAL NEWSLETTER EDITION – JULY, 2018

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KREO CAPITAL NEWSLETTER - FIRST EDITION, 2018

AMENDMENT IN COMPANIES ACCOUNTS RULES, 2018 Key Highlights

• Companies to disclose following in Board’s Report :

I. Disclose as to whether maintenance of cost records under section 148 required, if so, such accounts & records made accordingly.

II. Company has complied provisions relating to constitution of Internal Complaints Committee under sexual harassment of women at workplace(Prevention, Prohibition & Redressal) Act, 2013.

• Exception of above are One Person Company & Small Company.

For more details, please refer link:http://www.mca.gov.in/Ministry/pdf/companisAccountsRules_31072018.pdf

MCA EXTENDS DIR-3 KYC DEADLINE UPTO 15 SEPT 2018; AMENDS E-FORM DIR-3

Key Highlights

• MCA has extended due date for filing DIR-3 KYC from 31 Aug. 2018 to 15 Sept. 2018 without any late filing fee.

• Penalty of Rs. 5,000 applicable only where e-form DIR-3 KYC is filed on or after 16 Sept. 2018 in respect of FY 2017-18.

• Also MCA has amended/ revised the e-Form DIR-3 KYC.

• MCA has earlier notified annual KYC of all directors under Rule 12A (i.e. filing of e-Form DIR-3 KYC) latest by 30 April each year (31st Aug. 2018 in the case of FY 2017-18) and has imposed a penalty of Rs. 5,000 for directors who fail to make timely compliance of this requirement.

For more details, please refer link: https://caclub.in/mca-extends-dir-3-kyc-deadline-upto-15-sept-2018-amends-e-form-dir-3/

KREO CAPITAL NEWSLETTER EDITION – JULY, 2018

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KREO CAPITAL NEWSLETTER - FIRST EDITION, 2018

GOVERNMENT TO MAKE IT COMPULSORY FOR UNLISTED FIRM TO ISSUE IN DEMAT FORM

Key Highlights

• The government will soon make it mandatory for unlisted companies to issue new shares only in the dematerialised form, senior officials said, to fight black money menace.

• MCA would be soon issuing rules under Companies Act, for unlisted firms with respect to having shares certificate in demat form.

• Proposed move to help enhance transparency in ownership, curb benami transactions & to weed out shell companies.

• MCA has already struck off more than 2.2 lakhs Companies that have not been carrying out business activities for long. These are suspected to have been as a conduit for illicit fund flows.

For more details, please refer ink: http://timesofindia.indiatimes.com/articleshow/65549798.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

MCA - PUTS IN PLACE THE CENTRALISED SCRUTINY MECHANISM (CSM) FOR CSR NORMS Key Highlights

• MCA keeping check on CSR provisions by Centralised Scrutiny And Prosecution Mechanism, according to Union Minister P P Chaudhary.

• He added whenever prescribed entities violates CSR provision, RoC initiates action after due examination of records.

• In FY 2014-15, 33 companies applied for compounding out of 254 companies against which prosecution were sanctioned.

• MCA established it in April 2018 for the FY 2015-16 onwards on pilot basis for enforcement of CSR provisions, he added further.

For more details, please refer

link://economictimes.indiatimes.com/articleshow/65216557.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

KREO CAPITAL NEWSLETTER EDITION – JULY, 2018

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KREO CAPITAL NEWSLETTER - FIRST EDITION, 2018

RBI DEADLINE ENDS: MANY POWER(LESS) PLANTS MAY FALL INTO BANKRUPTCY

Key Highlights

• Nearly 40 companies which have defaulted on loans of more than Rs. 2000 cr., would be victims of the Reserve Bank of India’s February 12 circular

• Although the 180-day deadline ends on August 27, banks will not be rushing to the tribunals on August 28.Now banks have a 15-day window to initiate legal process to recover funds.

• Power sector, which has around 34 stressed accounts with Rs 1.5 lakh crore of loans, is one of the biggest worry for banks.

• Lenders led by SBI have been working round the clock on resolution plans for KSK Mahanadi, Prayagraj Power, JP Power Venture & SKS Power.

For more details, please refer link://economictimes.indiatimes.com/articleshow/65570301.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

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CUSTOMERS HAVE ZERO TO LIMITED LIABILITY IN UNAUTHORISED TRANSACTIONS: RBI

Key Highlights

• RBI reiterated the framework on limiting customers’ liability in unauthorised electronic banking transactions.

• It includes ‘zero liability’ and ‘limited liability’ for customers.

• To protect customers from erroneous debits arising from fraudulent or other transactions.

• Zero Liability in case of fraud/deficiency on the part of bank whether reported by customer or not or third party breach and notified within three working days.

• Limited Liability in cases where the loss is due to negligence by a customer or third party which is reported from 4 to 7 working days as per amount mentioned in notification.

For more details, please refer link: https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=11040

KREO CAPITAL NEWSLETTER - FIRST EDITION, 2018

BSE SME RELAXES LISTING CRITERIA Key Highlights • BSE SME Platform to strengthen

the platform and bring growth oriented companies.

• Post issue paid up capital not to be

more than Rs.25 crore with positive net worth.

• Track record of at least 3 years. • Positive cash accruals from

operations for at least 2 financial and positive net worth.

For more details please refer link: https://www.bseindia.com/markets/MarketInfo/DispNewNoticesCirculars.aspx?page=20180711-23

KREO CAPITAL NEWSLETTER EDITION – JULY, 2018

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BSE TO LAUNCH LIQUIDITY ENHANCEMENT PLAN ON SINGLE STOCK OPTIONS, INDEX OPTIONS FROM SEPTEMBER Key Highlights

• BSE to launch liquidity enhancement scheme on monthly single stock options and index options.

• Under the liquidity enhancement scheme, brokers and other market intermediaries are given incentives for a specified period of time to bring in liquidity and generate investor interest in securities which have limited trading activity.

• The bourse said it will monitor performance of the programme including presence of market makers and their compliance.

• For more details please refer link: https://economictimes.indiatimes.com/markets/stocks/news/bse-to-launch-liquidity-enhancement-plan-on-single-stock-options-index-options-from-sep/articleshow/65412185.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

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KREO CAPITAL NEWSLETTER - FIRST EDITION, 2018

HC UPHOLDS NSE'S MOVE TO LEVY HIGHER STT ON PHYSICALLY SETTLED CONTRACTS Key Highlights • The Bombay High Court on Tuesday has upheld the National Stock

Exchange’s (NSE) move to levy higher Securities Transaction Tax (STT) on derivative contracts that are settled physically.

• A lobby of brokers had moved the court, to seek clarity on the STT slab applicable to stocks for which the markets regulator had made physical settlement mandatory.

• The decision of the Bombay High Court comes after CBDT told the court on Tuesday that 0.10 per cent STT would be levied on physical delivery of shares in the equity derivatives segment. This is ten times the normal STT rate.

• “We find that the CBDT clarification takes care of the situation. All the stakeholders are now aware of the STT payable.

• Thus, it will not be difficult for the petitioner association to recover money from the traders,” said Justice Gavai.

• Brokers have welcomed the decision as it puts an end to the impasse and thankful to the Bombay High Court for directing the concerned authorities to give clarity on the matter related to rate of STT applicable on physically settled derivatives.

For more details, please refer link: //economictimes.indiatimes.com/articleshow/65571567.cms?utm_source=ETMyNews&utm_medium=HPMN&utm_campaign=AL1&utm_content=20&utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

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KREO CAPITAL NEWSLETTER - FIRST EDITION, 2018

CA Varun Parakh Managing Director M:+91-9890920892

E: varun@kreocapital.com

HEAD OFFICE: 6th floor, B-Wing, Shriram Towers, Civil Lines, Nagpur – 440001. T: +91-0712-6652070

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W: www.kreocapital.com E: info@kreocapital.com

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Team Kreo is committed to long term relationships and has a proficient and skilled work force invested in its clients and their business. Our services enable our clients to access Capital Markets, Corporate Finance Advisory, Wealth Management Advisory, Mergers and Acquisition Advisory, ESOP & Valuation Advisory, Equity/Debt Placements and Restructuring.

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Disclaimer : All data and information is provided for informational purposes only and is not intended for any factual use. It should not be considered as binding / statutory provisions. Neither Kreo Capital, nor any of its group company, directors, or employees shall be liable for any of the data or content provided for any actions taken in reliance.