Brace yourselves for a tale of high-stakes adventure, where the brave sailors of the Indian corporate world are casting off their domestic moorings and setting sail for the vast, uncharted waters of global capital markets. This is no ordinary voyage, me hearties – it’s a daring quest for untold riches and boundless opportunities, and the winds of change are blowing in their favor.

The Companies (Amendment) Bill, 2020: A Gale Force Unleashed

For years, Indian corporations were shackled to the shores of domestic exchanges, their only means of venturing abroad being the issue of depository receipts or listing of debt securities. But then, like a mighty gale force, the Companies (Amendment) Bill, 2020 swept in, shattering the chains that bound them and unlocking a whole new realm of possibilities.

With this game-changing legislation, Indian firms can now directly list their shares on foreign stock exchanges, unfurling their sails and charting a course towards uncharted international waters. It’s like a seasoned captain finally being granted the freedom to explore the boundless oceans, with a treasure trove of riches awaiting those bold enough to heed the call.

The Siren’s Call: Why Brave the High Seas?

Ah, but what could possibly tempt these stalwart sailors to abandon the familiar shores of domestic markets and embark on such a perilous voyage? Well, me hearties, the allure of overseas listings is like the siren’s call, a seductive melody that no savvy mariner can resist. Let’s explore the tantalizing treasures that await those who heed this call:

1. Better Valuations: The Jewel in the Crown

Just like a precious gem shines brighter when set in the right crown, companies often fetch higher valuations on international exchanges compared to their domestic counterparts. It’s the ultimate jewel in the crown for any ambitious firm, a prize worth braving the treacherous seas for.

2. Wider Investor Base: Casting a Wider Net

Imagine your favorite seafood restaurant opening a new branch in a bustling harbor town – more hungry patrons to cater to! Similarly, overseas listings expose companies to a diverse array of global investors, expanding their shareholder base like a fisherman casting a wider net into fertile waters teeming with untold riches.

3. Global Brand Recognition: Unfurling the Company Flag

Listing on prestigious foreign exchanges is akin to unfurling your company’s flag on the global stage, a declaration of your arrival on the high seas of international commerce. It’s a stamp of approval that enhances reputation and credibility, making waves in the international business waters and turning heads of seasoned sailors far and wide.

4. Foreign Currency Inflows: A Favorable Wind

By tapping into foreign markets, companies can generate revenue in different currencies, providing a natural hedge against currency fluctuations. It’s like catching a favorable wind that propels their international expansion efforts forward, filling their sails with the promise of bountiful riches from distant shores.

5. Better Corporate Governance: Charting a Steady Course

Stringent listing requirements on international exchanges often translate into improved corporate governance standards, instilling greater confidence among investors. It’s like having a seasoned captain at the helm, ensuring a steady course through choppy waters and safeguarding the crew’s (read: shareholders’) interests with unwavering vigilance.

The Pioneers: Navigators Who Braved the Voyage

But fear not, me hearties, for this uncharted voyage has already been braved by a fearless crew of Indian corporate giants. Like seasoned navigators who have mapped the treacherous currents and charted safe passage, these homegrown success stories have listed on prominent foreign exchanges like the New York Stock Exchange (NYSE), setting an example for others to follow.

Infosys, HDFC, ICICI Bank, and Dr. Reddy’s Laboratories are just a few of the stalwart vessels that have unfurled their sails on the global seas, braving the unknown and returning with tales of triumph and untold riches. Their daring voyages have paved the way for others to follow, emboldening a new generation of Indian corporates to set sail and conquer the high seas of international capital markets.

So, what are you waiting for, me brave buccaneers? The winds of change are blowing, the seas are beckoning, and the promise of untold riches awaits those bold enough to chart their course towards global shores. Weigh anchor, hoist the mainsail, and let the adventure begin! The uncharted waters of global capital markets await.

Indian Companies Listed on Global Exchanges

As the chart illustrates, several prominent Indian companies like Infosys, HDFC, ICICI Bank, and Dr. Reddy’s Laboratories have listed their shares on the prestigious New York Stock Exchange (NYSE). These listings provide them with access to the vast US capital markets, increased visibility, and a diverse global investor base.

In addition to the NYSE, Indian companies have also explored the over-the-counter (OTC) market in the United States. Companies like Mahanagar Telephone Nigam Ltd and Yatra Online Inc. have listed on the prestigious OTCQX tier, which is the highest tier of the OTC market and requires companies to meet stringent disclosure and regulatory requirements.

The OTC Pink market, which is the lower tier of the OTC market, has also attracted several Indian companies. Companies like Axis Bank, Larsen & Toubro, Rediff.com, Reliance Industries, and Mahindra & Mahindra have listed on the OTC Pink – No Information category, which means they are not required to provide any financial or operational information to investors.

On the other hand, companies like Groupe Athena Inc. and State Bank of India have listed on the OTC Pink – Current Information category, which requires them to provide periodic financial and operational updates to investors.

It’s worth noting that while the OTC market offers a more accessible and less regulated path for companies to gain exposure to US investors, it also comes with higher risks and lower liquidity compared to major exchanges like the NYSE.

Overall, the chart highlights the diverse range of Indian companies that have sought overseas listings, ranging from large multinational corporations to smaller ventures, each pursuing their unique growth strategies and capital-raising objectives in the global markets.

The Regulatory Lighthouse: Guiding the Way

While the amendment has set the stage, the actual norms and regulations governing direct overseas listings are still being charted by the Ministry of Corporate Affairs and the Securities and Exchange Board of India (SEBI). Patience is key as these regulatory bodies act as lighthouses, guiding companies through the treacherous waters ahead.

The Global Ports of Call: A Diverse Tapestry of Destinations

Tokyo Stock Exchange: The Land of the Rising Opportunity

The Tokyo Stock Exchange (TSE) presents a prestigious opportunity for Indian companies seeking overseas listings and access to the Japanese capital markets. With its diverse market segments, stringent listing requirements, and well-established investor base, the TSE offers a platform for companies of varying sizes and growth stages to tap into the global arena.

Market Segments and Listing Requirements:

The TSE features several distinct market segments, each with its own set of eligibility criteria and listing requirements. Let’s dive into the specifics:

1. Main Market:

   – 1st Section:

     – Number of shareholders: 2,200 or more

     – Tradable shares: 20,000 units or more

     – Market capitalization of tradable shares: JPY 1 billion (USD 10m) or more

     – Ratio of tradable shares to listed shares: 35% or more

     – Market capitalization of listed shares: JPY 25 billion (USD 250m) or more

     – Number of years of business operation: 3 years or more

     – Shareholders’ equity: JPY 1 billion (USD 10m) or more

     – Amount of profits or market capitalization: [Ordinary profit] Total amount of JPY 500 million (USD 5m) or more in the last 2 fiscal years, OR [Market cap.] JPY 50 billion (USD 500m) or more, OR Sales: JPY 10 billion (USD 100m) or more

   – 2nd Section:

     – Number of shareholders: 800 or more

     – Tradable shares: 4,000 units or more

     – Market capitalization of tradable shares: JPY 1 billion (USD 10m) or more

     – Ratio of tradable shares to listed shares: 30% or more

     – Market capitalization of listed shares: JPY 2 billion (USD 20m) or more

     – Number of years of business operation: 1 year or more

     – Shareholders’ equity: JPY 1 billion (USD 10m) or more

     – Amount of profits or market capitalization: [Same criteria as 1st Section]

2. Mothers:

   – Number of shareholders: 200 or more

   – Tradable shares: 2,000 units or more

   – Market capitalization of tradable shares: JPY 500 million (USD 5m) or more

   – Ratio of tradable shares to listed shares: 25% or more

   – Public offering: 500 trading units or more

   – Market capitalization of listed shares: JPY 1 billion (USD 10m) or more

   – Number of years of business operation: 1 year or more

   – Shareholders’ equity: –

   – Amount of profits or market capitalization: [Ordinary profit] JPY 100 million (USD 1m) or more, OR [Market cap.] JPY 5 billion (USD 50m) or more

3. JASDAQ Standard:

   – Number of shareholders: 200 or more

   – Market capitalization of tradable shares: JPY 500 million (USD 5m) or more

   – Public offering: 10 percent or more of 1,000 trading units

   – Shareholders’ equity: JPY 200 million (USD 2m) or more

   – Amount of profits or market capitalization: [Ordinary profit] JPY 100 million (USD 1m) or more

Listing Fees:

The TSE’s listing fees vary across market segments and can be a significant investment for companies seeking enhanced visibility and prestige.

For the prestigious First and Second Sections, companies can expect to pay:

– Listing examination fee: JPY 4 million

– Initial listing fee: JPY 15 million (First Section) or JPY 12 million (Second Section)

– Public offering/sales fee: Based on the number of shares offered and offering price

– Annual listing fee: JPY 0.96 to 4.56 million (First Section) or JPY 0.72 to 4.32 million (Second Section)

The Mothers and JASDAQ segments offer more cost-effective options, with initial listing fees starting at JPY 1 million and annual fees ranging from JPY 0.48 to 4.08 million (half for the first 3 years after listing on Mothers).

Taxation Landscape:

Companies listed on the TSE must also navigate Japan’s taxation policies, which can impact their overall profitability and cash flows. Some key tax rates to consider include:

– Corporate income tax rate: 23.2% (up to 30-34% including local taxes)

– Capital gains tax rate: 23.2% (up to 30-34% including local taxes)

– Dividend distribution tax: 20% (20.42% including surtax)

Foreign Companies Listed on the TSE:

While the TSE has traditionally been dominated by Japanese corporations, it has gradually opened its doors to foreign companies seeking access to Japanese investors and capital. Notable examples include:

– Tech Point Inc. (Electric Appliances, California, United States) – Listed on Mothers

– Beat Holdings Limited (Information & Communication, Cayman Islands) – Listed on JASDAQ

– MediciNova, Inc. (Pharmaceutical, United States) – Listed on 2nd Section

– YTL Corporation Berhad (Construction, Malaysia) – Listed on 1st Section

Benefits of Listing on the Tokyo Stock Exchange:

Beyond the substantial capital-raising opportunities, listing on the TSE offers Indian companies several key advantages:

– Smooth and diversified fundraising avenues

– Enhancement of corporate value and global brand recognition

– Improvement of internal management systems and employee motivation

– Access to a well-established and sophisticated investor base

As Indian enterprises chart their course towards global expansion, the Tokyo Stock Exchange presents a compelling destination – a gateway to the Japanese and broader Asian markets, coupled with stringent governance standards and international visibility. With careful navigation and adherence to the listing requirements, the rewards of this prestigious listing could prove invaluable for ambitious Indian corporations.

Listing Requirements

Taxation Landscape

Listing Fees

*Half fees for first 3 years after listing

Shanghai Stock Exchange: Uncharted Waters, Vast Potential

The Shanghai Stock Exchange is a relatively new frontier for foreign companies, having only recently opened its doors through the Shanghai-London Stock Connect program. While the specifics are still being mapped, this could be a golden opportunity for Indian firms to set sail towards the vast Chinese market, tapping into its immense potential.

Singapore Exchange: A Welcoming Harbor

The Singapore Exchange offers a welcoming harbor for foreign listings, boasting a streamlined fundraising process and a well-established investor base. The Mainboard and Catalist segments cater to companies of varying sizes and maturity levels, ensuring a comfortable berth for all seafaring enterprises.

London Stock Exchange: The Grand Dame of Bourses

And then there’s the grand dame of stock exchanges – the London Stock Exchange. With its reputation for high regulatory standards and global reach, a listing here could be the ultimate badge of honor for an Indian company seeking international validation. It’s like docking at the most prestigious port, a testament to a company’s seaworthiness on the global stage.

The Over-the-Counter (OTC) Route: A Shorter Coastal Voyage

For those seeking a more cost-effective and less regulated coastal voyage, the OTC market in the United States presents an intriguing alternative. Indian companies like Mahanagar Telephone, Yatra Online, Axis Bank, and even the esteemed Reliance have already ventured into this realm.

The OTC market offers three tiers: the prestigious OTCQX, the mid-tier OTCQB, and the more speculative OTC Pink. Each tier comes with its own set of disclosure requirements and eligibility criteria, allowing companies to choose the path that best aligns with their goals and resources – a coastal cruise or a longer voyage, the choice is theirs.

For ambitious Indian entrepreneurs seeking to go global, the traditional routes of major stock exchanges can seem like a daunting and distant dream. But what if there was an alternative path – one that offers a more accessible entry point to the vast American market? Enter the Over-the-Counter (OTC) market, a unique and often overlooked realm that presents a world of opportunities for Indian companies looking to make their mark on the international stage.

Picture this: you’re a homegrown Indian startup, brimming with innovative ideas and a burning desire to take your business to new heights. You’ve conquered the domestic market, but your sights are set on the glittering lights of the American dream. The NYSE and NASDAQ beckon, but the stringent listing requirements and intense scrutiny seem like insurmountable hurdles. That’s when the OTC market becomes your knight in shining armor, offering a more unconventional yet highly compelling route to global visibility.

Unlike the traditional exchanges, the OTC market operates in a decentralized fashion, with participants trading securities directly between two parties, sans the formalities of a central exchange or broker. It’s a realm where the rules are a little more relaxed, and the barriers to entry are lower – a perfect playground for smaller companies that might not yet meet the lofty criteria of the major leagues.

But don’t be fooled by its laid-back demeanor; the OTC market is far from a mere sideshow. It’s a thriving ecosystem where companies like Nestlé have chosen to list, lending credibility to this often-overlooked arena. And for Indian firms, the benefits are manifold: greater visibility in the vast American market, easier access to funding from theme-based institutional investors, and the invaluable opportunity to gauge customer feedback by showcasing their products on foreign soil.

At the heart of this unconventional world lies the OTC Markets Group, a veritable gatekeeper that operates the most substantial inter-dealer electronic quotation and trading system for OTC securities. With its three distinct tiers – OTCQX, OTCQB, and OTC Pink – the group offers Indian companies a smorgasbord of options, each with its own set of disclosure requirements and eligibility criteria.

The OTCQX, the crème de la crème of the OTC realm, demands adherence to stringent U.S. securities laws and the sponsorship of a third-party financial adviser. It’s a stage reserved for the most seasoned players, where penny stocks, shell companies, and bankruptcy-bound entities need not apply.

For those still finding their footing, the OTCQB – the “Venture Market” – beckons with its more forgiving embrace. Here, early-stage companies can list, provided they meet the minimum bid price test and undergo annual verification to ensure legitimacy.

And then there’s the OTC Pink, the most speculative tier of them all, where financial disclosure is optional, and the rules are more relaxed. It’s a realm where companies can dip their toes into the OTC waters without the burden of excessive regulatory scrutiny.

Already, several Indian heavyweights have ventured into this unconventional territory, with names like Mahanagar Telephone, Yatra Online, Axis Bank, Larsen & Toubro, and even the mighty Reliance gracing the ranks of the OTC Pink – a testament to the growing allure of this alternative path.

So, for those Indian entrepreneurs with an insatiable thirst for global recognition and a willingness to break free from convention, the OTC market presents an intriguing opportunity – a chance to plant their flag on American soil without the constraints of traditional exchanges. It’s a journey that promises visibility, liquidity, and the potential for growth, all while allowing companies to forge their own path and write their own rules.

Embrace the unconventional, fellow trailblazers, for in the realm of the OTC market, the boundaries are limitless, and the opportunities are ripe for the taking.

Navigating the Tides: Taxation and Listing Requirements

As Indian companies embark on this exciting odyssey, they’ll need to navigate the intricate tides of regulations, taxation policies, and listing requirements across different markets. From the corporate tax rates and capital gains taxes in Japan to the disclosure norms of the OTC markets, each destination presents its own set of challenges – treacherous currents that must be skillfully maneuvered.

Anchors Aweigh! The Journey Ahead

So, corporate seafarers, unfurl your sails and chart your course! The world is your vast ocean, and the stage is set for a new era of Indian companies going truly global. The adventure has just begun, and the treasures that await those who brave these uncharted waters are boundless.

With steadfast determination, a keen eye for opportunity, and an unwavering commitment to excellence, Indian enterprises can rise to the occasion, leaving an indelible mark on the international business landscape. Anchors weigh, and may the winds be ever in your favor!

The post Enroute to London: List Your Company Direct into Global Market appeared first on MUDS.

How would you feel if you find ₹ 1,000 in your jeans that you forgot about? Happy, right?

Now imagine if you find 1,000 shares of TCS bought during its IPO. Congratulations! You have hit a jackpot of 1 Crore Rupees.

How Did This Happen?

Tata Consultancy Service Ltd. (“TCS”) is India’s No. 1 multinational company specializing in Information Technology (“IT”) and Consultancy Services. It has expanded manifolds since its establishment. In April 2018, it became the first IT company to cross the milestone of $100 Billion in terms of market capitalization. TCS became the second Indian company to reach this milestone after Reliance Industries Ltd. (“RIL”). TCS has been consistent in its over-arching performance. Even in the times of Covid-19, it did not fail to impress with its numbers. In March 2020, TCS, again became the most valued Indian firm with the market capitalization of ₹ 6,82,408.68 crores, beating RIL by ₹ 6,959.73 crores. In September this year, it became the first IT company and the second Indian company after Reliance Industries Limited to reach the milestone of ₹ 9 trillion in terms of market capitalization. In October, it became the world’s most valuable IT company surpassing Accenture.

When everyone was recovering from the setback of COVID-19 pandemic, it continued to generate profit and dividends for its investors. For the first two quarters of the year 2020-21, the shares of TCS provided an aggregated dividend of ₹17 per share to its shareholders. So, if you or your deceased relative had bought 1,000 shares in 2004, i.e., during its IPO, then you could have received a dividend of ₹ 68,000 in the first two quarters of this year alone.

Now, you must be wondering, that how come a dividend of ₹ 17 per share for 1,000 shares yielded an income of ₹ 68,000. It should have yielded an income of only ₹ 17,000. The following calculation will clear your confusion and help you to understand how the 1,000 shares bought in 2004 are worth more than ₹ 1Crore today.

Calculation

• Suppose you bought 1,000 shares of TCS in 2004.
• On 28^th July 2006, the company issued bonus shares in the ratio of 1:1.

[Bonus Shares are the shares issued by the company to its shareholders as fully paid up shares without any cost. In simpler words, these shares are a gift from the company to its shareholders].

Issuing bonus shares at a 1:1 ratio means, that for every share owned by a shareholder, the company will issue another share in his name. This means that if you had 1,000 shares, it has now become 2,000 shares.

• On 16^th June 2009, the company again issued the bonus shares in the ratio of 1:1. This means that your 2,000 shares have become 4,000 shares.
• Since,

Dividend Received x No. of Shares = Total Dividend

Therefore,

₹ 17 x 4,000 shares = ₹ 68,000

• Now, the price of 1 TCS share, as of 17^th November 2020, is ₹ 2,673. Thus, the value of your shares as of date is,

₹ 2,673 x 4,000 shares = ₹ 1,06,92,000 (One Crore Six Lakhs Ninety-Two Thousand)

• The above amount is only the price of the shares. We have not calculated the dividends that you have received so far.
• TCS is known for paying its investors handsomely. Till date, the company has paid an aggregate dividend of ₹ 518.5 per share.

Now you can calculate your dividends accordingly.

So, if you had invested in 1,000 shares of TCS in 2004, then you would have become a Crorepati today. Now the real issue is, you know that you are the rightful owner of the TCS shares, but you are not in the possession of the same because they are held by the Government of India. This happens because of the Government’s rule that if a dividend remains unclaimed for seven years or more, then it has to be transferred to the Investor Education and Protection Fund (“IEPF”). The government introduced the concept of IEPF in 2016 to address the issue of such ‘forgotten shares’.

Investor Education and Protection Fund

You might find it hard to believe but it is very common for people to forget about their shareholdings in companies. There could be many reasons for the same, such as:

• Sometimes, an individual invests a very small amount in a company and forgets about it.
• Sometimes, people buy shares in a company without assigning a nominee. When they die, the shares remain unclaimed as the heirs of the deceased do not even know about the existence of such shares.
• Sometimes, the heirs of the deceased person do know about the shares. But due to a family dispute regarding the share in the property, the company’s shares become part of the dispute, and hence, remain unclaimed.

There could also be some other reasons that could lead to investors forgetting about them. Due to this, in almost every company they have these dormant shares without anyone showing ownership.

Earlier, the companies were obligated to transfer such unclaimed dividends to the government funds. The government would use such funds under various public policies for welfare schemes and developmental works. However, when the government saw that later, people are coming to claim their dividends, it decided to set up IEPF. It acts as a platform, where people can approach and claim their shares in various companies by filing an application. It acts as a one-stop solution, as people do not have to go to different companies one by one to claim their shares and dividends earned on the said shares. In order to claim the recovery of shares and to claim the refund of the unclaimed dividends from the IEPF, an individual has to apply for the same to the managing authority of the fund manager.

Provisions Governing IEPF

IEPF is governed by the Companies Act, 2013 and Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. Under these laws, once a company declares the dividend, then it has to be claimed by the shareholder within 30 days of such declaration. If the dividend remains unclaimed, then the company shall transfer such unclaimed dividend to a special account, opened by the company, called ‘Unpaid Dividend Account’.

After transferring the amount to the ‘Unpaid Dividend Account’, the company, within 90 days, has to publish a list of all the shareholders along with their unclaimed dividend on their website. After that, if a person wants to claim the dividend, then he has to apply to the company for the payment of the unclaimed dividend.

If a person fails to claim the dividend for a consecutive period of 7 years, then the company is obliged to transfer the unclaimed dividend to the IEPF. Along with the amount, the company is also obliged to transfer such shares in the name of the IEPF.

Note: The shares transferred in the name of the IEPF are the shares on which the dividend has been declared by the company, but the shareholder has failed to claim the same for a consecutive period of 7 years.

Unclaimed Dividend & Unclaimed Shares of TCS

From the Annual Reports of a company, we can see the transfer status of the unclaimed dividend and unclaimed shares to the IEPF.

Funds & Shares transferred to the IEPF

According to the Annual Report 2019-2020 of the company, TCS has transferred the following unpaid dividend and unclaimed shares to the IEPF during the Financial Year of 2020:

Source: https://www.tcs.com/content/dam/tcs/investor-relations/financial-statements/2019-20/ar/annual-report-2019-2020.pdf

The company in the previous financial year has transferred Two Crores Forty-Six Lakhs Seventy Thousand Rupees (₹ 2,46,70,000/-) of the unclaimed dividend, along with Fifty-Four Thousand Seven Hundred Eighty-Six (54,786) shares in the IEPF. From the above table, it can be deduced that the company has a huge chunk of unclaimed dividends and unclaimed shares in the IEPF. The shareholders must look into their investment history to look for such unclaimed shares and claim their dividends from IEPF.

Funds & Shares to be transferred to the IEPF

The Annual Report 2019-2020 also provides the outstanding unclaimed dividend and the dates by which an investor can approach the Company’s Registrar or the Transfer Agent to claim the funds. After the expiry of the stated dates, TCS will be forced to transfer such dividends, along with the shares, to the IEPF.

The following tables provide the information regarding the date of declaration of dividends and the last date by which the shareholders can claim the dividends.

1. For shareholders of Tata Consultancy Service Limited (TCS):

The above table provides the deadlines for the shareholders of the TCS, to claim their dividends by applying to the Company’s Registrar or the Transfer Agent. After the due dates, provided in the 3^rd column, TCS will be forced to transfer the funds to the IEPF, along with the respective shares.

• For shareholders of erstwhile TCS e-Service Ltd. which has merged with the company:

TCS e-Service Ltd. was merged with TCS Ltd. The shares of such shareholders are treated differently. Therefore, the above table provides the deadlines for the shareholders of the erstwhile TCS e-Service Ltd., to claim their dividends by applying to the Company’s Registrar or the Transfer Agent. After the due date, provided in the 3^rd column, TCS will be forced to transfer the funds to the IEPF, along with the respective shares.

• For shareholders of erstwhile CMC Ltd. which has merged with the company:

CMC Ltd. was merged with TCS Ltd. The shares of such shareholders are treated differently. Therefore, the above table provides the deadlines for the shareholders of the erstwhile CMC Ltd., to claim their dividends by applying to the Company’s Registrar or the Transfer Agent. After the due dates, provided in the 3^rd column, TCS will be forced to transfer the funds to the IEPF, along with the respective shares.

An investor can check the status of their unclaimed dividend, declared by TCS, from https://www.tcs.com/unclaimed-dividend-details-from-february-10-2014-to-january-31-2020

For more information, visit https://www.tcs.com/content/dam/tcs/investor-relations/financial-statements/2019-20/ar/annual-report-2019-2020.pdf

Unclaimed Shares & Lost Dividend under IEPF

If the shares are not claimed within the 7 years, does it mean you will lose all your dividend income along with your shares?

As stated above, earlier, it used to happen that the government would utilize such funds for the public welfare, and the investor loses the rights over such income as well as shares. Therefore, the companies used to advise the investors to claim their dividend to prevent the loss of the dividend income and the shares. But now, with the introduction of IEPF, an investor does not lose his/ her right over the dividend and the shares. Then what is the reason for the companies advising you to claim dividends before the shares go into IEPF?

The reason why the companies still advise the investors to claim their dividend from the company by applying to the Company’s Registrar or the Transfer Agent, rather than claiming the refund of shares and the dividend amount from the IEPF, is that the process of claiming the refund of dividend and the shares from IEPF is tedious and cumbersome. IEPF takes time to refund the money and the shares to the rightful owner. The reason this is that the authority wants to ensure that the shares are transferred to the rightful owner. Thus, the claim applications go through heavy scrutiny before approval from IEPF authority.

Procedure to Claim Dividend and TCS Shares from IEPF Authority

TCS shareholders, whose shares and the unclaimed dividend has been transferred to the IEPF for they did not claim their dividend for the consecutive period of 7 years, as provided under Section 124 of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, can claim their shares or unclaimed dividend amount from IEPF Authority.

Step 1: Contact TSR Darashaw Ltd.

The shareholder has to contact TSR Darashaw Ltd., which is the Company Registrar/ Transfer Agent of TCS. The shareholder has to obtain all the information like the year wise dividend entitlement, and all the shares transferred to the IEPF Authority.

Step 2: Download IEPF 5

The shareholder then has to visit the website of the IEPF Authority, http://www.iepf.gov.in/IEPF/refund.html, and download the Form IEPF 5. Then he has to fill in the form and upload it back on the website. This will be the online application filed by the shareholder.

Note: An individual can file one form in one financial year. However, he can make multiple claims in a single form. Thus, remember to put all the claims in one form.

Step 3: Physical Application

The shareholder then has to take a printout of the online form and send it to the Nodal Officer at the Registered Office of TCS, Mumbai. The application should be sent along with the required documents, which are self-attested (including the witnesses).

The required documents need to be attached are:

• Original Indemnity Bond: Duly signed by the claimant, joint holder, and two witnesses:
  • Amount less than 10,000: On a plain paper
  • Amount more than 10,000: On a non-judicial stamp paper of the value prescribed under the Stamp Act.
• Original Advance Stamp Receipt: Duly signed by the claimant, joint holder, and two witnesses.
• Proof of Entitlement
• Copy of Client Master List
• Copy of Aadhar Card
• Copy of PAN Card
• Copy of Passport, in case of NRIs
• Original Cancelled Cheque Leaf
• In case any joint holder is deceased, a notarized copy of the death certificate to be attached
• Other optional documents, (if any)

Note: All the above documents are required to be self-attested by the claimant and the joint holder (if any).

Step 4: Verification by TCS

TCS will then verify the details of the application, along with the claim and the various documents attached. It will then make a Verification Report and file it, along with the original documents and physical application filed by the claimant, with the IEPF Authority.

Step 5: Comment by the IEPF Authority

The IEPF Authority, based on the application, documents attached, and the report submitted, will give its decision. It can do either of the three things:

• Approve the claim and initiate the refund.
• Ask the shareholder to resubmit the required documents, in case of any discrepancy or any document not being legible
• Reject the claim

Step 6: What to do next?

• If the IEPF Authority asks the shareholder to resubmit the documents, then the shareholder has to send the said documents to the Nodal Officer at the Registered Office of TCS, Mumbai. The Nodal Officer will then forward the documents to the IEPF Authority.
• If the IEPF Authority rejects the claim, then the shareholder will have to repeat all the steps from starting and keep in mind the mistakes he had made while filing the first application.

For more information, visit https://www.tcs.com/content/dam/tcs/pdf/discover-tcs/investor-relations/faq/steps-to-claim-dividend-shares-iepf.pdf

Why do You Need Legal Help?

As seen above, filing an application for the refund of unclaimed dividends and lost shares to the IEPF Authority could be a tricky and tedious task. To ease out the process and ensure that there is no mistake in the application, one requires the help of a legal professional. Filing the application requires a certain degree of technical knowledge. Hiring a legal professional will suit you the best as he will do all the tasks; from collecting the information from the company about the dividend and shares to filing the said application.

If the shares are involved in the family dispute, then you definitely require legal help. Shares get involved in the family dispute when a shareholder, as stated above, dies without assigning a nominee or does not include the shares in his will. Now, every one of his kin would want a right over such shares, especially when the value of those shares is huge. No family member of a deceased person will want to let go of the shares of TCS that were bought by him in 2004. Therefore, a claimant needs to hire a legal professional or approach a legal firm to manage all the disputes related to ownership of the shares. A lawyer knows all the laws regarding the partition of the family assets, and he can provide you with the best deal.

To Conclude….

So, we have seen how the shares of TCS have increased in value over the period. If you just came to know that some TCS shares exist in your name, then it is the best time to redeem them, along with the dividend accumulated over time. Who knows, maybe you will become the next millionaire. It is also advised that you go through the tables provided above and find the expiry date by which you can claim the dividend. After identifying the date, apply for the dividend claim as soon as possible with the Company Registrar/ Transfer Agent, i.e., TSR Darashaw Ltd. Thus, avoiding the shares to be transferred to the IEPF. However, if your shares are already transferred to the IEPF, find a legal expert as soon as possible, and apply to the IEPF Authority for the refund of the unclaimed dividend and the recovery of the transferred shares.

The post Recovery of Lost Shares of TCS from IEPF Can Make You a Multimillionaire! appeared first on MUDS.

“The intent of the Code cannot be questioned and the hurdles arising can be said to be teething problems as it is in its infancy.”

– Kritika Chabbra (Market Analyst, MUDS Management Pvt. Ltd.)

The Insolvency and Bankruptcy Code, 2016 (Code) is a Codification of Sections of various previous Acts to deal with corporate insolvency and bankruptcy. Hailed as a comprehensive economic reform, IBC was hailed as the fastest and most effective tool to recover bad debt.

In its initial years itself, things turned out to be otherwise as diverse cases were caught in the ambiguity or lack of clarity in the Code. One such issue that popped up in many cases was that the Code had no provision of withdrawal of an application after it has been admitted or after the Corporate Insolvency Resolution Process (CIRP) has been passed.

The silence of Section 12 on Withdrawal

The Code permits withdrawal of a case only before the admission of the petition but not afterward. Section 12 was completely silent on this and the rationale behind this being that a collective mechanism commences once the resolution process is triggered, and this naturally places all creditors at par.

Thus, to permit the applicant or a bunch of applicants to settle the dispute post-admission would adversely impact the interests of other creditors, whereas, the resolution process would have protected the rights and interests of all creditors.

NCLAT’s Refusal to Intervene

The first case that raised the issue of withdrawal after admittance was of Lokhandwala Kataria Construction Private Limited Vs Nisus Finance and Investment Managers LLP.

An application was filed by the financial creditor, Nisus Finance and Investment under section 7 of the Code and was admitted by the National Company Law Tribunal (NCLT), Mumbai Bench.

Appealing against the order passed by the NCLT, the appellant approached National Company Law Appellate Tribunal (NCLAT) praying to set aside the order of NCLT. It further stated that the parties had settled the dispute between themselves and the part amount had already been paid.

NCLAT refused to oblige and observed that “before admission of an application under Section 7, it is open to the Financial Creditor to withdraw the application but once it is admitted, it cannot be withdrawn and is required to follow the procedures laid down under Sections 13, 14, 15, 16 and 17 of I&B Code, 2016. Even the Financial Creditor cannot be allowed to withdraw the application once admitted, and matter cannot be closed till claim of all the creditors is satisfied by the corporate debtor.”

Apex Court: Decoding the Code!

In the very first year, cases pertaining to this matter, reached the Supreme Court and the burden of judicial uprightness lay on its shoulders. It was up to the Apex Court to decode the intricacies and at the same time balance the judgement in a way as to keep the essence and spirit of the Code intact.

After the plea of Nisus Finance and Investment was turned down by the NCLAT, the aggrieved approached the Supreme Court. In the absence of any provision under the Code, the Supreme Court exercised its power under Article 142 of the Constitution of India and allowed settlement.

Article 142 of the Constitution gives the power to the Supreme Court to “pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it.”

After this judgement the Apex Court delivered a similar decision in at least two more cases:

1) Sysco Industries  

2) Uttara Foods and Feeds

Insertion of 12A: IBC’s Unique Withdrawal Policy

On the recommendation of the Apex Court, Section 12A along with Regulation 30A and 36A was inserted by the Insolvency and Bankruptcy (Second Amendment) Act, 2018 with retrospective effect from 06.06.2018.

This step was taken on the recommendation of the Insolvency Law Committee Report that was submitted in March 2018 and which laid down provisions to withdraw application made under section 7, 9 or 10 on a settlement, even if CIRP has been initiated.

Different Stages of Withdrawal Applicability

After the implementation of 12A an application under Sections 7 or 9 or 10 can be withdrawn at four stages and the matter can be settled between the parties.

The four stages are:

1. Before admission of application under Sections 7 or 9 or 10

2. After admission but before the constitution of a committee of creditors (CoC)

iii. After constitution of CoC but before issue of invitation for expression of interest

1. After issue of invitation for expression of interest

#Withdrawal application before admission of application u/s 7, 9 or 10:

Rule 8. Withdrawal of application: The Adjudicating Authority may permit withdrawal of the application made under rules 4, 6 or 7, as the case may be, on a request made by the applicant before its admission.

In the matter of Lokhandwala Kataria Construction Private Limited Vs. Nisus Finance and Investment Managers LLP the Apex Court made it quite clear that that in view of Rule 8 of the Code (Application to Adjudicating Authority) Rules, 2016, NCLAT could not utilise the inherent power recognised by Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 to allow a compromise after the matter has been admitted.

#Allow withdrawal of application/CIRP after admission of application u/s 7,9 or 10:

Chapter II: Corporate Insolvency Resolution Process (CIRP)

Section 12A was inserted by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 (w.e.f. 06.06.2018).

Section 12A: The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety per cent. Voting share of the committee of creditors, in such manner, as may be prescribed.

Regulation 30A of CIRP Regulation 2016, which was amended on 25.07.2019, lays down the guidelines of the process of making an application under section 12A.

Following steps are to be considered for withdrawal of an application:

Case Laws

Withdrawal of CIRP after the issue of invitation for Expression of Interest [Regulation 30A (1)]: In the case of Brilliant Alloys Private Limited Vs Mr S. Rajagopal & Ors. the Supreme Court sanctioned withdrawal of CIRP even after the issue of invitation for expression of interest. Furthermore, it set aside the order of NCLT that opined that regulation 30A has to be read along with the main provision section 12A, which contains no such stipulation.

Withdrawal of CIRP when a Committee of Creditors (CoC) is not yet constituted: The Supreme Court in the matter of Swiss Ribbons Pvt. Ltd. & Anr. Vs Union of India & Ors. specified that at any stage where the CoC is not yet constituted, a party can approach the NCLT directly.

Withdrawal of CIRP if Corporate Debtor is an MSME: In the case of Saravana Global Holdings Ltd. & Anr. Vs. Bafna Pharmaceuticals Ltd. & Ors NCLAT held that the company being MSME, it is not essential for the CoC to follow all the procedures under the CIRP.

“Since the insertion of Section 12A to the Code, the latest data shows that the number of cases withdrawn under it has gone up tremendously.”

–Shweta Gupta, Founder and CEO, MUDS

The post Can a Settlement Come in Record if Nclt Bench Have Passed CIRP Order? appeared first on MUDS.

Bonus shares capitalizes a part of reserves (retained earnings) to bring:

1. A price of share back to a more manageable amount, thus enhancing its market ability. The number of shares held by each shareholder increases, the value of the total shareholding remains the same as before the bonus issue.
2. The percentage of holding also remain intact.

The concept is similar to a rights issue, except that bonus shares are created by transferring money from a company’s reserves into its equity capital (capitalization of reserves). This is useful for a company that have cash reserve and capitalized its profit.

Companies issue bonus shares to increase its Equity base and reduce the price per shares. It encourage retail participation to buy Shares. But the overall capital remains the same even if bonus shares are declared.

For example, the company declare Bonus shares in the ratio of 1:4, i.e., every member will have 5 Shares now against 1 shares held in the Company. These are company’s accumulated earnings which are not given out in the form of dividends, but are converted into free shares.

There was no specific section or provision under the Companies Act, 1956 dealing with Bonus Shares. As per SEBI Act, unlisted Private Limited Companies and Public Limited Companies were free to issue Bonus Shares if there were sufficient reserves to match the issue of Bonus Shares.
To bring in sanctity to the Issue of Bonus Shares, The Companies Act, 2013 has introduced Section 63 to deal exclusively with Bonus Shares.

Issue of bonus shares is covered under Section 63 of the Companies Act, 2013 read with rule 14 of The Companies (Share Capital and Debentures) Rules, 2014.

Source for issue of Bonus Shares:

As per Section- 63(1) a company may issue fully paid up bonus shares to its members out of following:

1. Free reserves.
2. Securities Premium Account.
3. Capital Redemption Reserve Account.

Source from which Bonus Shares can’t issue:

1. No issue of bonus shares shall be made capitalizing reserves created by the revaluation of assets. (Company can’t issue Bonus Shares out of reserve create from revaluation of assets).
2. The Company shall not issue shares in lieu of Dividend.

Procedure For Issue Of Bonus Shares

1. Call the Board Meeting
   • As per Section 173(3): Issue Notice of atleast 7 days for calling meeting of Board of Directors.
2. Hold the Board Meeting
   • Check the Quorum as per Section 174(1): Quorum for the Meeting of Board of Directors is 1/3rd of total strength of Board or 2 directors, whichever is higher.
   • Place before the Board Resolution for issue of Bonus Shares.
   • Pass Board Resolution for issue of shares.
   • Decide the Ration of Shares offering to share holders.
   • Fixing the date, time, and venue of the general meeting and authorizing a director or any other person to send the notice for the same to the members.
   • Provisions of the Section 101 of the Companies Act 2013 provides for issue of notice of EGM in writing to below mentions atleast 21 days before the actual date of the EGM :
     • All the Directors
     • Members
     • Auditors of Company
   • The notice shall specify the place, date, day and time of the meeting and contain a statement on the business to be transacted at the EGM.
   • Authorize a director to do all the work relating to issue notice of right issue.
3. File MGT-14:
   • File e-form- MGT-14 with in 30 days of Passing of Board Resolution for issue of shares.
4. Convene A General Meeting:
   • Check the Quorum.
   • Check whether auditor is present, if not. Then Leave of absence is Granted or Not. (As per Section- 146).
   • Pass Ordinary Resolution for bonus shares.
5. Call the Board Meeting:
   As per Section 173(3): Issue Notice of atleast 7 days for calling meeting of Board of Directors.
6. Filling of e-Forms File PAS-3:
   • File e-form PAS-3 with in 30 days of passing of Board Resolution for allotment of shares.
7. Issue Share Certificates:
   • Company will issue share certificate to the share holders with in 2 month from the date of allotment of shares and payment of Stamp duty on the same.

Note For Issue Of Bonus Shares

1. Check whether Authorized capital is sufficient for issue of Bonus Shares, if not, need to alter capital Clause of MOA
2. Check Provision for Bonus issue in Article of Association of Company, if not, need to alter AOA of the Company.
3. All the shares are fully paid-up, in case of partly paid-up, them first make them fully paid-up.
4. No Default of any payment of interest or principal in respect of fixed deposit or debt securities.

Conditions For Issue Of Bonus Shares

• Articles must contain provision for issue of bonus shares [As per Section-63(2) (a)].
• Bonus issue must be authorised by the members of the company (by passing of Ordinary Resolution) on recommendation of Board.
• Company should not have defaulted in payment of interest or principal in respect of fixed deposits or debt securities issued by it and no defaulted in respect of the payment of statutory dues of the employees, such as, contribution to provident fund, gratuity and bonus.

It was rightly said by Ralph Waldo Emerson– “Every Wall is a Door”
Thus, take a step forward to open the door for the new FDI norms.

Shweta Gupta from MUDS MANAGEMENT is recognized among the most-respected, knowledgeable and yes, pocket-friendly as well.

Why not give them a call right now at +91 9599653306 and start a conversation immediately.

The post Capitalisation Of Reserves Through – Bonus Issue appeared first on MUDS.

Definition as per SEBI―Alternative  Investment  Fund, AIF Regulations 2012, means  any  fund  established  or  incorporated  in India in the form of a trust or a company or a limited  liability  partnership  or  a body corporate which, is a privately   pooled investment vehicle which collects funds from investors, whether  Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors; and (ii) is not covered under the  Securities and Exchange Board of  India (Mutual Funds)   Regulations,   1996,   Securities and Exchange Board of India (Collective   Investment   Schemes)   Regulations,   1999   or   any   other regulations of the Board to regulate fund management activities:

Provided that the following shall not be considered as Alternative  Investment Fund for the purpose of these regulations –

1. Family  trusts  set  up  for  the  benefit  of   relatives‘  as  defined  under Companies Act, 1956;
2. ESOP  Trusts  set  up  under  the  Securities  and  Exchange  Board  of  India (Employee Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines, 1999 or as permitted under Companies Act, 1956;
3. Employee  welfare  trusts  or  gratuity  trusts  set  up  for  the  benefit  of employees;
4. Holding  companies‘  within  the  meaning  of  Section  4  of  the  Companies Act, 1956;
5. Other special purpose vehicles not established by fund managers, including securitization trusts, regulated under a specific regulatory framework;
6. Funds  managed  by  securitization  company  or  reconstruction  company which is registered with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; and
7. Any such pool of funds  which is directly regulated by  any other regulator in India;

Registration Compulsory after commencement of the Act:

Within the period of six months from the commencement of the Act all the existing fund failing within this definition required to get apply for the registration of the same. This period can be extended for the further period up to a maximum of twelve months from the date of commencement of the act provided that existing schemes will be allowed to complete their agreed tenure, such funds shall not raise any fresh monies other than commitments already made till registration is granted.

Exemption to the Investment firms:

1. Existing funds, which do not propose to accept any fresh commitments after commencement of these regulations shall not be required to obtain registration under these regulations subject to submission of information on their activities to the Board in the manner as may be specified.
2. If such existing funds are not able to comply with conditions specified, they may apply for exemption to the SEBI from strict compliance with these regulations and the SEBI upon examination may provide such exemptions or issue such instructions as may be deemed appropriate.
3. Venture Capital Fund (VC) registered with SEBI Act shall continue to be regulated by the said regulation till the existing fund wound up and not launch any new scheme after notification. The existing fund will not increase target corpus of the fund or Scheme. The VC may seek re-registration subject to the approval of 2/3 of the investor’s value of their investments. See how to register as a venture capital fund.

No entity or person will act as an Alternative Investment Fund unless it has obtained a certificate of registration from the Board, any person or entity fails to make application
for grant of a certificate within the period specified therein shall cease to carry on any activity as an Alternative Investment Fund.

CATEGORIES UNDER AIF

The person or entity can seek registration under following categories:

A. Category I Alternative Investment Fund, which invests in start-up or early stage ventures or social ventures or SMEs or infrastructure or other sectors or areas which the government or regulators consider as socially or economically desirable and shall include venture capital funds, SME Funds, social venture funds, infrastructure funds and such other Alternative Investment Funds as may be specified;

Explanation
─ For the purpose of this clause, Alternative Investment Funds which are generally perceived to have positive spillover effects on economy and for which the Board or Government of India or other regulators in India might consider providing incentives or concessions shall be included and such funds which are formed as trusts or companies shall be construed as ―venture capital company or ―venture capital fund as specified under sub-section (23FB) of Section 10 of the Income Tax Act, 1961

B. Category II Alternative Investment Fund‖ which does not fall in Category I and III and which does not undertake leverage or borrowing other than to meet day-to-day operational requirements and as permitted in these regulations

Explanation
─ For the purpose of this clause, Alternative Investment Funds such as private equity funds or debt funds for which no specific incentives or concessions are given by the government or any other Regulator shall be included.

C. Category III Alternative Investment Fund‖ which employs diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives.

Explanation
─ For the purpose of this clause, Alternative Investment Funds such as hedge funds or funds which trade with a view to make short-term returns or such other funds which are open-ended and for which no specific incentives or concessions are given by the government or any other Regulator shall be included.

How to get registered as an Alternative Investment Fund

1. The Applicant for grant of registration as an Alternative Investment Fund under SEBI (Alternative Investment Funds) Regulations, 2012 should make an application to SEBI in Form A as provided in the Regulations along with all the necessary documents.
2. Generally on receipt of Application, the applicant will receive a reply from SEBI within 21 working days. The time taken for registration however, depends on how fast the requirements are complied with by the applicant.
3. The applicant is advised to go through the SEBI (Alternative Investment Funds) Regulations, 2012 for checking the eligibility criteria and such other details which may help expedite the registration process.
4. The applicant must mention in the covering letter as to whether:
   1. It is registered with SEBI as a Venture Capital Fund. If yes, provide details.
   2. It has been undertaking the activities of an AIF prior to such application. If yes, provide details.
   3. It is applying for registration of a new fund.
5. As an integral part of the registration process, the applicant will submit the following
   1. Form An appropriately filled, numbered, duly signed and stamped.
   2. Application fees of Rs.1,00,000/- by way of bank draft in favour of “The Securities and Exchange Board of India”, payable at Mumbai.
6. The applicant shall also make an online application in terms of the guidelines as prescribed by SEBI from time to time.

Grant of Certificate of Registration

1. SEBI shall take into account requirements as specified in the Regulations for the purpose of considering grant of registration. If satisfied that the applicant fulfills the requirements as specified in the Regulations, SEBI shall approve the application and inform the applicant of the same.
2. On receipt of approval from SEBI, the applicant must pay registration fee of Rs.5,00,000/- (If applicant is not registered with SEBI as a Venture Capital Fund) / Re- registration fees (If applicant is registered with SEBI as a Venture Capital Fund) of Rs. 1,00,000/- to SEBI by way of bank draft in favour of “The Securities and Exchange Board of India”, payable at Mumbai.
3. On receipt of registration/ re-registration fees, SEBI will grant the applicant the certificate of registration as an Alternative Investment Fund.

Post- Registration compliance

1. Once registered, the AIF must comply with the reporting requirements as specified by SEBI from time to time.
2. The AIF must regularly check the SEBI website for any updation/ circulars/ guidelines issued from SEBI from time to time with respect to the AIF activity.
3. The AIF must intimate to SEBI any material change in the details already furnished to SEBI within a reasonable period of time.

Post- Registration compliance

1. “The applicant” means the entity seeking registration as an Alternative Investment Fund
2. Application which is incomplete or without the necessary documents/ information/declarations would not be accepted and would be treated as not filed. However, intimation to this effect will be provided to the applicant within a reasonable period of time.
3. Applications involving policy decisions or other considerations might get delayed in processing and in getting registration approvals.Venture capital fund registration gives your aspirations & ideas wings to make your venture work. Venture Capital is a kind of private equity capital offered by outside investors to new businesses. Thus, to foster this process, Muds Management is there to assist you through the in’s & out’s of venture capital fund registration. Contact us for more details
4. Documents/annexure submitted along with the application need to be numbered and duly signed.
5. In case of an Authorized signatory, please submit an authorization letter from the Directors/Trustees/Designated Partners of the Fund.
6. The application in Form A, application fees along with all the necessary information as enumerated above will be addressed to

The Deputy General Manager,

Division of Funds-1,

Investment Management Department, Securities and Exchange Board of India (SEBI), SEBI Bhavan,

Plot No. C4-A, “G’ Block,

Bandra Kurla Complex, Bandra (East), Mumbai – 400051

RECENT AMENDMENT IN THE AIF FUND:

Securities Exchange Board of India (“SEBI”) in its Board Meeting on 23rd November 2016 has approved the following amendments to the SEBI (Alternative Investment Funds) Regulations, 2012 with respect to ‘Angel Funds’. Broadly the proposed amendments are as follows:

1. The upper limit for number of angel investors in a scheme is increased from 49 to 200.
2. The definition of start-up for Angel Funds investments will be similar to the DIPP definition as given in the DIPP start-up policy. Accordingly, Angel Funds will be allowed to invest in start-ups incorporated within five years.
3. The requirements of minimum investment amount by an Angel Fund in any venture capital undertaking is reduced from 50 lakhs to 25 lakhs.
4. The lock-in requirements of investment made by Angel Funds in the venture capital undertaking is reduced from 3 years to 1 year.
5. Angel Funds are allowed to invest in overseas venture capital undertakings upto 25% of their investible corpus in line with other AIFs.

The above proposed amendments will come into effect upon necessary amendments in the SEBI (Alternative Investment Funds) Regulations, 2012.

It was rightly said by Ralph Waldo Emerson– “Every Wall is a Door”
Thus, take a step forward to open the door for the new FDI norms.

Shweta Gupta from MUDS Management is recognized among the most-respected, knowledgeable and yes, pocket-friendly as well.

Why not give a call right now at +919599653306  and start a conversation immediately.

The post Registration of Venture Capital/Angel Fund under AIF Regulations appeared first on MUDS.

Now you can raise fund through investors in Stock Exchange. Yes, stock exchange are no exclusive engine for Tatas, Birlas or Ambanis to take their business to next level. Stock Exchanges in India have introduced separate platforms to support SME’s.

SME are differentiated platforms opened by stock exchanges in India to help SMEs raise funds in the stock market.

Following are 2 SME platforms of India’s most preferred stock exchanges:-

● BSE (India’s oldest stock exchange) offers a platform called BSE SME for SME’s
● NSE (India’s largest stock exchange) offers a platform called EMERGE for SME’s

Interestingly, 80 companies raised staggering Rs.811 crore through IPO’s in 2016-17. This is more than 2x jump from the preceding fiscal where 46 companies tapped the IPO route and garner Rs.304 crore in 2015-16.

Top 3 reasons why funds are being raised include:-

1. Business Expansion Plans
2. Working Capital Requirements
3. Other General Corporate Purposes

While Delhi contributed 3 SME listings. Gujarat dominates the chart with 33 companies, followed by 15 from Maharashtra, 10 Rajasthan and 4 from West Bengal. SME IPO has slowly gained interest from the industry. Is it really worth it ?

Funding Benefits through SME IPO :-

1. Ready access to Capital and Financial Opportunities
2. Premium Valuation of the company
3. Entry & Exit Platforms for PE / Other Investors
4. Efficient Risk Distribution for Investors
5. Utility as M&A Currency

Tax Benefits of SME IPO:-

1. Zero Long Term Capital Gains Tax
2. Zero Tax on Fresh Equity Infusion in the company
3. Zero Tax on Distressed Business Purchase

Other Benefits:-

1. Company Profile Building
2. Incentive Mechanism for Employees
3. Benchmarking Fair Value of SME businesses

Economic Times reported in June 2017 that SMEs outshine the main companies. While IPO index has risen by 42% in last 12 months, SME platform has risen 52%. Thus, SMEs from the following 8 industries should explore this option which dominated the charts in past 2016-17:-

1. Finance
2. Media & Entertainment
3. Real Estate & Infrastructure
4. Manufacturing
5. Agriculture
6. Aquaculture
7. Food & Processing
8. IT & IT-enables service

With such visible benefits in front of us, annual fees worth minimum Rs. 25,000 or 0.01% of full Market Capitalization (whichever is higher) should not hurt the SMEs who are eligible.

Eligibility Criteria for SME IPO (SEBI Guidelines)

● Maximum post issue capital should be Rs 25 crores.
● Minimum number of members required for issue should be 50.
● Minimum application and trading lot size should be Rs 1,00,000/-
● Post listing, no minimum number of members required to be continued
● Minimum 3 years of period is required for Market Making
● 100% Underwriting with Merchant Bankers to underwrite 15% in their own accounts

Eligibility Criteria for SME IPO (BSE Guidelines)

● Net Tangible assets of minimum INR 3cr in accordance to latest audited financial results
● Net Worth of minimum INR 3cr in accordance to latest audited financial results (excluding revaluation reserves)
● Track record of distributable profits for minimum 2 years out of immediate preceding 3 financial years (excluding extraordinary income) in accordance to Section 123 of Companies Act 2013

It was rightly said by Ralph Waldo Emerson– “Every Wall is a Door”
Thus, take a step forward to open the door for the new FDI norms.

Shweta Gupta from MUDS MANAGEMENT is recognized among the most-respected, knowledgeable and yes, pocket-friendly as well. Why not give them a call right now at +91 9599653306 and start a conversation immediately.

The post 360-Industry Insight on SME IPO appeared first on MUDS.