SEBI : A Need for Revitalisation and Proper Justice

1. Volume XXV, No. 8, August, 2014 EDITORIAL SEBI : A Need for Revitalisation and Proper Justice The Securities and Exchange Board of India was constituted more than 20 years ago and has worked very effectively in a large number of areas to improve disclosures, investors' protection, investors' education, upgradation of capital market systems, rules and procedures. The important role played by SEBI in bringing Indian powers to search and seize are to be exercised with great care and only in very extreme circumstances and the rules need to be brought in to ensure adequate checks and balances. SEBI need to work in a non-intrusive manner as per the thinking of the Central Government as committed by FM in his Budget speech. The detailed regulations need to be in place and need clarity of jurisdiction between MCA, RBI and SEBI. It is however, very important for the government, including the legislature as well as judiciary to examine as to how far it is necessary to concentrate so much judicial and administrative power in one organization. CA Vinod Jain* Capital Market, among best capital markets in the world need very sincere appreciation. SEBI has not been able to ensure sustained confidence of the investors, intellectuals, bureaucrats as well as general public in the capital market. The society at large still has major apprehensions regarding risk of fraud and manipulation from the capital market. SEBI CURRENT POWERS SEBI is currently empowered to bring out all necessary rules, regulations and guidelines to protect the interest of investors and to regulate the capital market, market intermediaries, stock exchanges, companies raising debt and equity from the market as well as to regulate all kinds of raising of resources, except financial market, money market and foreign exchange market which is currently regulated by Reserve Bank of India. Lok Sabha has recently unanimously approved The Securities Laws (Amendment Bill) 2014 to provide more teeth to SEBI to enable them to take actions against promoters raising funds through ponzi scheme i.e. saving schemes, deposit schemes or collective investment scheme or other similar schemes collecting money from public at large, without proper registration, approval and compliance of regulatory procedures. SEBI has also been given power for search and seizure as well as attachment of assets. Powers to launch recovery proceedings, disgorgement of amount and seek call-data records in its investigations of securities-related offences has also been extended. The amendments brought about to SEBI Act are with a view to address cases like Sahara or Saradha Chit Fund and similar other cases mushrooming in different names and styles collecting money from public at large. The power to regulate such schemes was very well needed. The SEBI is empowered to undertake regular surveillance of the capital market and various participants including mutual The investors' grievances redressal and compensation to those who suffered losses due to market manipulation are not being adequately addressed. The permission to co locate broker servers, permitting algo trading, derivative rampant usage in highly excessive speculation and manipulation of market and not restricting the same to hedging, need for a positivity in regulatory approach and actions are some of the crucial areas which need visionary decision of Hon'ble FM and PM, in the interest of the country. contd...Pg.4 * Mr. Vinod Jain, FCA, FCS, FICWA, LL.B., DISA (ICA), Chairman, INMACS and Vinod Kumar & Associates. vinodjain@inmacs.com, vinodjainca@gmail.com, +91 9811040004

2. LATEST IN FINANCE 5.0 Development Finance Bodies may return for Infra funding The Finance Ministry is considering reviving Development Financial Institutions (DFIs) to meet the long-term financing needs of the infrastructure sector. IDBI, ICICI and IFCI promoted by Government had played a very significant role in Public Financial Institution (PFI) for development of basic private sector, industrial infrastructure for atleast four decades. Industrial Licence Validity extended to 3 years India Inc has hailed the government’s move to extend the validity period of industrial license to three years with a provision for further extension of two years as a measure for ease of doing business in India. Loans against Gold Ornaments and Jewellery for Non-Agricultural End-uses- Relaxed Banks, as per their Board approved policy, are now at liberty to decide upon the ceiling with regard to the quantum of loans. In this connection, it is also clarified that LTV of 75 per cent shall be maintained throughout the tenure of the loan for all loans extended against pledge of gold. LATEST IN FINANCE SCs / RCs – Clarifications –Willful Defaulters 1.0 Securitisation Companies (SCs)/Reconstruction Companies (RCs) should put up in their website, at quarterly intervals, the list of suit filed accounts of willful defaulters. 2.0 BRICS Bank to be Set-up The decision to set up a USD 100 billion Development Bank by the BRICS countries is a strong signal to the rest of the world about the growing economic clout of Brazil, Russia, India, China and South Africa. 6.0 3.0 Govt developing flexible model to boost Infrastructure Road, transport and shipping minister Nitin Gadkari said he would sort all issues related to stuck road projects by August 15 and in future no road projects would be bid out without acquiring 80 per cent of the land. About 300 projects are being readied with all clearances. 7.0 4.0 Bank License Norms for Payment/Small banks Payment banks Small banks (vide RBI/2014-15/142, DBOD.No. BP.BC.27/21.04.048/ 2014-15) Flexible Structuring of Long Term Project Loans by bank for upto 25 years to Infrastructure and Core Industries The Reserve Bank of India (RBI) has clarified that it would not have any objection to banks’ financing of long term projects in infrastructure and core industries sector provided that only term loans to infrastructure projects and projects in core industries sector, (viz., coal, crude oil, natural gas, petroleum refinery products, fertilisers, steel (Alloy + Non Alloy), cement and electricity - some of these sectors such as fertilisers, electricity generation, distribution and transmission, etc. are also included in the Harmonised Master List of Infrastructure sub- sectors) - will qualify for such refinancing. At the time of initial appraisal of such projects, banks may fix an amortisation schedule (Original Amortisation Schedule) while ensuring that the cash flows from such projects and all necessary financial and non-financial parameters are robust even under stress scenarios. Who can set them NBFCs, corporate Resident individuals/ up? business correspo- professionals with 10 8.0 ndents, mobile tele- years of experience in phone companies, banking and finance, super-market chains NBFC’s and MFI’s What can they do? Provide payments and Undertake basic banking remittance services and activities of acceptance demand deposit of deposits and lending products to small to small farmers, small business and low- businesses, micro and income households small industries and unorganised sector entities What are the Payments banks will be The maximum loan size lending/deposit initially restricted to would be restricted to limits? holding a maximum 15% of its capital funds. balance of ` 1,00,000 per At least 50% of its loan customer. portfolio should constitute loans and advances of size up to `25 lakh Who will get Payments banks in the Professionals from preferences? under-banked states/ banking/financial sector, districts in the NBFCs and MFIs. Local Northeast, East and focus and ability to serve Central regions of the smaller customers will be country key criterion Contd... THE CHARTERED ACCOUNTANT WORLD – August 2014 2 2

3. EDITORIAL / LATEST IN FINANCE show cause notice, the power to undertake an enquiry, the power to undertake adjudication of an offence and also power to recommend punishment as well as power to ultimately impose harsh penalty and heavy fines remain concentrated in one institution i.e. SEBI. The investigating authorities, show cause issuer, enquiry officials, adjudicating authorities, punishing authorities are all working under the supervision and control of SEBI Chairman and Whole Time Member. EDITORIAL Contd... SEBI : A Need ... funds, venture capital funds REITs, Infrastructure Investment Trust, listed companies, besides all other capital market participants. SEBI is further empowered to investigate into the affairs of the capital market, to enable SEBI to monitor compliance of all regulatory guidelines and to ensure prevention of manipulation, fraudulent and unfair trade practices. The real issue is whether the role of SEBI as a prosecutor and also as judiciary, undertaking adjudication and awarding punishment is appropriate. The principles of natural justice may be adversely impaired. The conflict of interest between the prosecutor and adjudicator may effect free and fair trial, natural justice and appropriate punishment. SEBI has been making substantial and commendable efforts in the aforesaid directions. There are serious reservations amidst investors at large and more importantly among the learned intellectuals of the country about safety of their investments in the capital market. SEBI need to examine the major reasons behind such precarious situation and should initiate some real positive action to ensure at least reasonable safety of investment from manipulative practices and unfair trade. The purpose of this editorial note is not to levy any allegations on Hon'ble institution like SEBI but the entire purpose of this proposition or questioning is to ensure Contd..Pg.8 FREE ISSUE PRICING- NEED FOR CHECKS AND BALANCES LATEST IN FINANCE Contd... SEBI need to re-examine as to whether it is appropriate to continue complete freedom on issue pricing or the same is required to be regulated by independent valuation. In case full freedom of issue price is proposed to be continued, SEBI may consider mandatory allotment of additional shares, if the share price of public issue falls by more than 20% of the issue price, within 1st year of the issue. On the basis of weighted average price in the 1st year of issuance, the correct issue price can be determined. (Market is the best to determine the correct value-Price) and additional shares can be issued to the public shareholders, who bought such shares at an exorbitant higher price so that the average cost per share can be brought near to the real market value. This will dilute the promoters' holding and the promoters will be more careful in future. The promoters can also be given an option to subscribe additional shares at the same price, in case they do not wish to dilute the shareholding percentage. The tenor of the Amortisation Schedule should not be more than 80% (leaving a trail of 20%) of the initial concession period in case of infrastructure projects under Public Private Partnership (PPP) model; or 80% of the initial economic life. The bank offering the Initial Debt Facility may sanction the loan for a medium term, say 5 to 7 years. This is to take care of initial construction period and also cover the period at least up to the date of commencement of commercial operations (DCCO) and revenue ramp up. The repayment(s) at the end of this period (equal in present value to the remaining residual payments corresponding to the Original Amortisation Schedule) could be structured as a bullet repayment, with the intent specified up front that it will be refinanced by a set of banks. That repayment may be taken up by the same lender or a set of new lenders, or combination of both, or by issue of corporate bond, as Refinancing Debt Facility, and such refinancing may repeat till the end of the Amortisation Schedule. Mere extension of DCCO would not be considered as restructuring subject to certain conditions, if the revised DCCO falls within the JUDICIAL MECHANISM SEBI is rightly empowered to make rules, regulations and guidelines, to undertake surveillance and also to undertake a detailed investigation into any manipulated, fraudulent and unfair trade practices. The government and the judiciary need to consider as to whether it is appropriate that the power to issue Contd... A JOURNAL OFALL INDIA CHARTERED ACCOUNTANTS’ SOCIETY A JOURNAL OFALL INDIA CHARTERED ACCOUNTANTS’ SOCIETY 3 3

4. LATEST IN FINANCE / CAPITAL MARKET / FEMA period of two years and one year from the original DCCO and the entire project debt amortisation is scheduled within 85% of the initial economic life of the project or the concessional period. The Amortisation Schedule of a project loan may be modified once during the course of the loan (after DCCO) based on the actual performance of the project. The above structure will apply to new loans to infrastructure projects and core industries projects sanctioned after the date of this circular. These InvITs can be listed on the stock exchanges, will get tax benefits and will invest the funds collected from investors in infrastructure projects, including PPP (Public Private Partnership). The SEBI guidelines state that the proposed holding of an InvIT in the underlying assets shall be not less than ` 500 crore, and the offer size of the InvIT shall not be less then ` 250 crore at the time of initial offer of units. The aggregate consolidated borrowing of the InvIT and the underlying SPVs shall never exceed 49 per cent of the value of InvIT assets. However, this may exclude any debt infused by the InvIT in the underlying SPV and further, for any borrowing exceeding 25 per cent of the value of InvIT assets, requirement of credit rating and unit holders approval has been made mandatory. The draft guidelines in respect of Real Estate Investment Trust (REITs) have been approved by SEBI. (vide RBI/2014-15/126, DBOD.No.BP.BC.24/21.04.132/2014-15) Levy of Foreclosure Charges/Pre-payment Penalty on Floating Rate Loans – NBFC barred 9.0 The Reserve Bank of India has decided thatas a measure of customer protection and also in order to bring in uniformity with regard to prepayment of various loans by borrowers of banks and NBFCs, it is advised that NBFCs shall not charge foreclosure charges/pre- payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect. FEMA 1.0 LRS – Can be used to acquire Real Estate outside India It was decided vide A.P. (DIR Series) Circular No. 138 dated June 3, 2014, to increase the limit of Liberalised Remittance Scheme (LRS) for all resident Indian Indivisiual to USD 125,000 per financial year (April-March) from USD 75,000. Further, it is clarified that the Scheme can now be used also acquisition of immovable property outside India. (videRBI/2014-15/121 DNBS (PD).CC.No.399/03.10.42/2014- 15 dated July 14, 2014) 10.0 Navratna, Miniratna PSUs can park surplus funds with MFs, PSBs Public sector enterprises such as Navratnas and Miniratnas are allowed to invest 30 per cent of their surplus funds in SEBI-regulated public sector mutual funds; however, they must park at least 60 per cent of excess funds with public sector banks. CAPITAL MARKET (vide RBI/2014-15/132, A.P. (DIR Series) Circular No. 5) Issue of Partly Paid Shares and Warrants by Indian Company to Foreign Investors permitted Eligible instruments and investors Partly paid equity shares and warrants issued by an Indian company in accordance with the provision of the Companies Act, 2013 and the SEBI guidelines, as applicable, shall be eligible instruments for the purpose of FDI and foreign portfolio investment (FPI), Foreign Institutional Investors (FIIs)/Registered Foreign Portfolio Investors (RFPIs) subject to compliance with FDI and FPI schemes. Partly paid equity shares The pricing of the partly paid equity shares shall be determined upfront and 25% of the total consideration amount (including share premium, 1.0 Expanding the Framework of Offer for Sale (OFS) of Shares through Stock Exchange Mechanism Any non-promoter shareholder of eligible companies holding at least 10% of share capital may also offer shares through the OFS mechanism subject to guidelines. Seller shall announce intention of sale of shares latest by 5 pm on T-2 day (T day being the day of the OFS) to the stock exchange. Stock exchanges shall inform the market immediately upon receipt of notice. SEBI finalises Draft Norms for Infra Investment Trusts Taking forward a proposal made in the Union budget, the Securities and Exchange Board of India (SEBI), came out with draft guidelines for Infrastructure Investment Trusts (InvITs), which will enable creation of a new investment product for arranging long-term financing for infrastructure projects. 2.0 ? 2.0 ? THE CHARTERED ACCOUNTANT WORLD – August 2014 THE CHARTERED ACCOUNTANT WORLD – August 2014 4 4

5. FEM A / DIRECT TAXATION In case of unlisted companies if any), shall also be received upfront. The balance consideration towards fully paid equity shares shall be received within a period of 12 months. The time period for receipt of the balance consideration within 12 months shall not be insisted upon where the issue size exceeds rupees five hundred crore. However, the investee company shall appoint a monitoring agency on the same lines as required in case of a listed Indian company under the SEBI (ICDR) Regulations. Warrants ? The issue and transfer of shares including compulsorily convertible preference shares and compulsorily convertible debentures with or without optional clauses shall be at a price worked out as per any internationally accepted pricing methodology on arm’s length basis. Thus, the guiding principle will be that the non-resident investor is not guaranteed any assured exit price at the time of making such investment/agreement and shall exit at a fair price computed as above at the time of exit subject to lock-in period requirement as applicable. DISCLOSURE IN FINANCIAL STATEMENT An Indian company taking on record in its books any transfer of its shares or convertible debenture by way of sale from a resident to a non-resident and a non-resident to a resident shall disclose in its balance sheet for the financial year, in which the transaction took place, the details of valuation of share or convertible debentures, the pricing methodology adopted for the same as well as the agency that has given/certified the valuation. (A.P. - DIR Series, Circular No. 86 dated January 9, 2014, issued by RBI) ? The pricing of the warrants and price/conversion formula shall be determined upfront and 25% of the consideration amount shall also be received upfront. The balance consideration towards fully paid up equity shares shall be received within a period of 18 months. The price at the time of conversion should not in any case be lower than the fair value worked out, at the time of issuance of such warrants, in accordance with the extant FEMA Regulations and pricing guidelines stipulated by RBI from time to time. Thus, Investee company shall be free to receive consideration more than the pre-agreed price. The reporting of issue or transfer of partly paid shares shall be made in form FC-GPR and form FC-TRS respectively. Non-Resident Indians (NRIs) shall also be eligible to invest on non-repatriation basis in partly-paid shares and warrants issued by Indian companies in accordance with the provisions of the Companies Act/ SEBI guidelines / Income tax provisions, as applicable. Investments by NRIs in partly-paid shares and warrants on non- repatriation basis shall also be subject to terms and conditions stipulated in Schedule 4 to Notification No. FEMA. 20/2000-RB dated 3rd May 2000, as amended from time to time. DIRECT TAXATION ? 1.0 Govt. yet to take a View on Continuance of GAAR Post-2015 The Revenue Secretary, Government of India has said that the new government still needs to take a view on GAAR and will clarify its stand shortly. No Pass-through Status for Alternative Investment Funds The Central Board of Direct Taxes hasstated that in cases where the trust deed neither names the investor nor specifies the beneficial interests, the entire income of the fund would become liable to be taxed at the maximum marginal rates in the hands of trustees. Section 37(1), read with section 28(i), of the Income-tax Act, 1961 - Business expenditure - Allowability of (Corporate guarantee) In the ITAT Mumbai Bench 'B' it was held that where assessee furnished guarantees to different banks against extension of credit facilities to its JV company, in view of fact that JV did not perform well and said guarantee came to devolve ? 2.0 3.0 Foreign Direct Investment (FDI) in India - Issue/Transfer of Shares or Convertible Debentures - Revised pricing guidelines In case of listed companies The non-resident investor shall be eligible to exit at the market price prevailing on the recognised stock exchanges subject to lock-in period as stipulated, without any assured return. 3.0 ? A JOURNAL OFALL INDIA CHARTERED ACCOUNTANTS’ SOCIETY 5

6. DIRECT TAXATION / CORPORATE & ECONOM IC LAWS / INSURANCE on assessee which was settled at a discount by way of one time settlement (OTS) entered into with creditors, amount so paid under OTS could not be allowed as business expenditure or business loss will need to be construed with reference only to the contract or arrangement for which the said ‘Special Resolution’ is being passed. 3.0 Companies Law: Private firms seek more Exemptions LML Ltd. vs. Joint Commissioner of Income-tax, Special Range-3, Mumbai [2014] 46 taxmann.com 377. A large number of unlisted private companies have sought relief from the stringent provisions of the new company laws as part of their feedback sought by the ministry of corporate affairs, which is reviewing exemptions that can be granted to private companies. Note :- The decision would be different if guarantee commission charged Section 115JB: Minimum Alternate Tax - Amount withdrawn from Provision 4.0 The Cochin Bench of ITAT has held that in terms of section 115JB it is only amount withdrawn from provision made for meeting unascertained liabilities and credited to profit and loss account which is liable to be deducted from net profit while computing book profit. 4.0 Central Council of Cost Accountants of India resigns The row over the Cost Audit Rules introduced under the Companies Act has reached a flash point as the entire central council of the Institute of Cost Accountants of India (ICAI) submitted its resignation to Finance Minister Arun Jaitley, who also has the charge of the corporate affairs ministry. Amid concerns raised by cost accountants over provisions in the new Cost Records and Audit Rules, the government set up an expert committee to look into this matter. Assistant Commissioner of Income-tax, Circle-1 (1), Kochi vs. Covema Filaments Ltd. [2014] 47 taxmann.com 52. 5.0 Section 2(22): Deemed dividend - Loans or Advances to Shareholder The High Court of Karnataka has held that deemed dividend is to be taxed in hands of shareholder, whose name is entered in register of shareholder and, not in hands of beneficiary firm. Commissioner of Income-tax, Bangalore vs. Namdhari 5.0 Cheque Bouncing: SC settles law on where to File a Complaint The Supreme Court (SC) ruled that a complaint about a bounced cheque must only be filed at the place where the bank dishonoured it, settling doubts raised by its own earlier conflicting judgments on the jurisdiction of a magistrate. Seeds [2014] 46 taxmann.com 441. CORPORATE & ECONOMIC LAWS 1.0 Company Law Settlement Scheme 2014 (CLSS 2014) 6.0 Gifted Property need not be handed over The Supreme Court has stated that a gift of property would not be invalid if the possession is retained by the donor. The judgment said that there is no provision in law that ownership in property cannot be gifted without transfer of possession of such property. Companies who have not filed their annual reports, financial statements and related documents due for filing on or before 30/06/2014 can file these documents before 15/10/2014 and avail of the following: ? Pay only 25% of Payable additional Fee and INSURANCE ? Immunity from Prosecutions ? Directors will also not be disqualified u/s 164 (2) of the Companies Act 2013 1.0 Corporate Bond Market- Permission to Insurers for membership in SEBI approved Stock Exchanges for proprietary trading Insurers are now allowed to become a proprietary trading member of a SEBI approved stock exchange for carrying out trades in the debt segment. 2.0 India Inc gets relief on Related Party Transactions The Ministry of Corporate Affairs clarified the term ‘Related Party’ referred in the Section 188 THE CHARTERED ACCOUNTANT WORLD – August 2014 6

7. INDIRECT TAXATION / TELECOM As a first step, it is proposed to implead ICAI in the aforesaid matter as ICAI is not a party to the said case. INDIRECT TAXATION 1.0 Manner of distribution of Common Input Service Credit under rule 7(d) of the Cenvat Credit Rules, 2004 Credit of service tax attributable to service used by more than one unit shall be distributed pro rata on the basis of the turnover of such units during the relevant period to the total turnover of all its units, which are operational in the current year, during the said relevant period. 4.0 Section 73A: Recovery of sums collected in excess of duty/tax The New Delhi Bench of CESTAT has held that where Service tax collected by builders from buyers is deposited with Revenue by contractor being job worker for builders, revenue cannot be allowed to receive service tax again in respect of same construction activities from buyer by taking resort to section 73A. 2.0 Impact of FIAT India Case-Central Excise The Hon’ble Supreme Court, in the Fiat India case, has cautioned against drawing general conclusions and inferences, quoting the truism stated by Lord Halsbury that “a case is only an authority for what it actually decides and not for what may seem to follow logically from it”. After examination of the issue as to whether the declared transaction value can be rejected in all cases where the transaction value is lower than the manufacturing cost and profit, the Ministry has clarified vide Circular No. 979/03/2014-CX dated 15th January, 2014 that mere sale of goods below the manufacturing cost and profit cannot be taken as the sole basis for rejecting the transaction value. The Supreme Court, in the Fiat India case, has not ruled that the subsidy component provided by the Government would tantamount to consideration flowing from the buyer to the seller and therefore, should be included in the assessable value of an excisable good in terms of the extant Valuation Rules. It is, therefore, clarified by Central Board of Excise & Custom (CBEC) that in respect of fertilizers for which subsidy is provided by the government, the excise duty will be chargeable on the MRP and not on the subsidy component provided by the Government. Announcement on Court Verdict Pronounced on 6 August 2014, by the Lucknow Bench of the Allahabad High Court on VAT With reference to the order passed by the Lucknow Bench of the Allahabad High Court in the matter of Tax Lawyers Association & Anr. v/s State of U.P. & Ors. whereby only registered advocates are permitted to appear before the Authority under the VAT Act in the State of U.P., The Institute of Chartered Accountants of India is seized of the matter and taking all steps to ensure that the status quo ante is restored in the matter and interest of the profession is preserved. Jaipuria Infrastructure Developers (P.) Ltd. vs. Commissioner of Service Tax, Delhi, [2014] 46 taxmann.com 432. TELECOM 1.0 TRAI releases its Recommendations for a New DTH Licensing Regime The period of DTH license to be increased from 10 years to 20 years, renewable by 10 years at a time. One time entry fee to be retained at Rs. 10 crore. Existing license fee to be reduced from 10% of Gross Revenue (GR) to 8% of Adjusted Gross Revenue (AGR) in line with the telecom licenses. The existing DTH licensees to be permitted to migrate to new regime at any time during the currency of their existing licenses. ? ? ? ? FINANCIAL INDICATORS Current Rate* Month Ago 3 Month 6 Month 3 Month LIBOR (%) 3 Month MIBOR (%) SENSEX NIFTY CRR (%) REPO (%) REVERSE REPO (%) Gold (per 10 gm) Silver (per kg) Crude (USD/bbl) ` vs USD ` vs Euro ` vs 100 Yen ` vs RMB ` vs Pound MCX Aluminium MCX Copper 0.24 8.97 25329.14 25,373 22994.23 20334 7568.55 7,568 4 4 8 8 7 7 28576.00 28,677 29725.00 29881 43800.00 45,903 41251.00 44585 105.02 108.67 61.14 60.28 81.94 81.82 60.93 59.18 9.91 9.70 102.57 103.01 124.20 112.90 430.00 427.65 0.23 8.79 0.22 9.17 0.24 9.52 6858.80 4 8 7 6053 4 8 7 3.0 107.97 60.04 82.49 58.93 9.64 101.03 103.15 405.05 108.35 62.34 85.06 61.03 10.29 102.36 103.95 444.45 *As on 10th August 2014 (Sources: MoneyControl, NSE, BSE, RBI, MCX) A JOURNAL OFALL INDIA CHARTERED ACCOUNTANTS’ SOCIETY A JOURNAL OFALL INDIA CHARTERED ACCOUNTANTS’ SOCIETY 7 7

8. Date of Printing : 12th August, 2014 R.N.I. No. 50796/90 Posting Date: 14/15 August, 2014 Registration No. DL(c)-01/1268/2012-14 Licenced to post without prepayment No. U-(C)-82/2012-14 EDITORIAL SEBI can consider recommending constitution of multilevel Investors' Courts on the lines of consumer courts at national, regional and district level. Contd... SEBI : A Need ... higher credibility to the entire exercise being undertaken by SEBI and to ensure internal control on possibility of misuse of power. so that appropriate action can be initiated against erring unscrupulous promoters and market participants and justice reach near the investors and not concentrated at Mumbai. It is therefore very important that the power to issue show cause notices, the power to make enquiries, power to make adjudication and most importantly power to levy penalty are decided by independent judiciary. It is important that the entire judicial power, being currently exercised by Adjudicating Officer and Whole Time Member of SEBI are all assigned to an independent judicial system. CONFIDENTIALITY: SEBI also need to consider that various investigations, show cause notices, adjudication and punishments are kept completely confidential at least till the final penalty is levied. In case the investigation or interim actions are made public, even innocent persons credibility and image can get adversely impacted, specially if at same stage it is determined that the person or company was not actually guilty. Transparency needs balancing in the interest of justice. It is also very necessary that investors are adequately compensated for the loss incurred by them due to fraudulent and manipulative practices. ?Contact details : Dharampal (9013363257) All India Chartered Accountants’ Society - CFO World 909, Chiranjiv Tower, 43, Nehru Place, New Delhi-110019. Ph: 26223712, 26228410, 26226933 E-m ail:aicas.cfo@gm ail.com / cfoworld@gm ail.com ? EDITOR: Pankaj Gupta, LLB, FCS E-m ail: pankajguptafcs@gm ail.com ? PUBLISHED & PRINTED: At New Delhi by Satish Chandra, Adm inistrative Officer, on behalf of All India Chartered Accountants’ Society, 4696, Brij Bhawan, 21A, Ansari Road, Darya Ganj, New Delhi-110 002 Phone 23265320, 23288101 E-m ail : aicas.cfo@gm ail.com Printed at: EIH Ltd., Unit : Printing Press, No. 7, Sham Nath Marg, Delhi-110054. Views expressed by contributors are their own and the Society does not accept any responsibility. If undelivered, please return to : All India Chartered Accountants’ Society 4696, Brij Bhawan 21A, Ansari Road, Darya Ganj, New Delhi-110 002 THE CHARTERED ACCOUNTANT WORLD – August 2014 8