MKB & Associates

Company Secretaries
(Private & Confidential)
Corporate Update Bulletin: 1

1. Note on amendment in ICDR regulations

SEBI on 12th November 2010 has notified Securities and Exchange Board of India (Issue
of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2010. The
main features of the same are as under:

• Inclusion of insurance funds set up and managed by the Department of Posts,

India in the definition of Qualified Institutional Buyer;
• Monetary limit of bids in case of retail individual investors has been enhanced
from one lakh rupees to two lakh rupees;
• The definition of Retail Individual Shareholder has been amended to include only
one who applies or bids for specified securities for a value of not more than two
lakh rupees
• A requirement of making public announcement by the issuer either on the date of
filing the draft offer document with the Board or on the next day has been brought
in, in one English national daily newspaper with wide circulation, one Hindi
national daily newspaper with wide circulation and one regional language
newspaper with wide circulation at the place where the registered office of the
issuer is situated, disclosing to the public the fact of filing of draft offer document
with the Board and inviting the public to give their comments to the Board in
respect of disclosures made in the draft offer document
• In case of Rights Issue, sub-regulation (7) has been added to Regulation 54 stating
about the payment option as under:
“(7) The issuer shall give only one payment option out of the following to
all the investors -
(a) part payment on application with balance money to be paid in
calls; or
(b) full payment on application:
Provided that where the issuer has given the part payment option to
investors, such issuer shall obtain the necessary regulatory approvals to
facilitate the same.”

• Limit for reservation for employees alongwith rights issue has been enhanced
from one lakh rupees to two lakh rupees.
• Additional obligation for Merchant Bankers inserted as regulation 60(14):
“(14) The merchant bankers shall submit a compliance certificate in the
format specified in Part D of Schedule XIII (format specified), for the
period between the date of filing the draft offer document with the Board
and the date of closure of the issue, in respect of news reports appearing in
any of the following media:
 (a) newspapers mentioned in sub-regulation (3) of regulation 9;
(b) major business magazines;
(c) print and electronic media controlled by a media group where the
media group has a private treaty/shareholders’ agreement with the
issuer or promoters of the issuer.”
• It has been clarified by adding an Explanation that where any person belonging to
promoter(s) or the promoter group has sold his equity shares in the issuer during
the six months preceding the relevant date, the promoter(s) and promoter group
shall be ineligible for allotment of specified securities on preferential basis.
• Stricter norms have been put in place for person belonging to promoter(s) or the
promoter group who has previously subscribed to warrants of an issuer but failed
to exercise the warrants. They shall become ineligible for issue of specified
securities of such issuer on preferential basis for a period of one year from the
date of expiry of the tenure of the warrants or the date of cancellation of the
warrants
• Certain changes has also been made in Schedule VIII and XIII (Part D added)

2. Note on amendment in ICDR regulations

• The Ministry Of Corporate Affairs, Government of India has notified a revision in

the Additional Filing Fees for late filing of Forms under the Act (except Form
5).This is notified under Section 611(2) of the Companies Act,1956 and shall be
effective from 5th December,2010. The revised additional fee structure is given
below:

PERIOD OF DELAY FIXED RATE OF ADDITIONAL FEE

Upto 30 days Two times of normal filing fees.
More than 30 days and upto 60 days Four times of normal filing fees.
More than 60 days and upto 90 days Six times of normal filing fees.
More than 90 days Nine Times of the normal filing fees.

It may be pertinent to note that as per the existing additional fee structure, the
maximum additional fees upto Nine times was payable when the delay was for a
period more than two years. As such, the proposed additional fee structure will act
as a deterrent for Companies who could not complete their filings in time.