Corporate Affairs Minister Arun Jaitley said 1,707 listed companies, including public sector undertakings, do not have Women Directors

More than 2,000 listed and unlisted companies do not have a woman director on their boards, the government said on Friday (04.12.2015).

Corporate Affairs Minister Arun Jaitley said 1,707 listed companies, including public sector undertakings, do not have women directors.

Besides, there are 329 unlisted private and public sector firms without a woman director on their boards.

Prosecution has been launched against 121 defaulting unlisted companies (other than PSUs),” Jaitley said in a written reply to the Lok Sabha. 

Capital markets regulator Sebi had prescribed fines on listed companies, other than public sector undertakings (PSUs), between Rs 50,000 and Rs 1,42,000, depending on the period of default from April 1 – October 1, 2015.

Besides, a daily fine of Rs 5,000 is being imposed for continued violation after October 1.

“Sebi had requested the government to advise the concerned administrative Ministries to take appropriate steps for ensuring compliance by defaulting listed PSUs,” Jaitley said.

Thousands of corporates are required to have at least one woman director on their Boards under the provisions of the Companies Act, 2013, by end of March this year.

Certain class of listed and unlisted firms are required to comply with the woman director rules.

Every company having paid-up share capital of at least Rs 100 crore or a minimum turnover of Rs 300 crore is required to ensure compliance.

Most provisions of the Companies Act, 2013 came into effect from April 1, 2014.

RBI cancels license of 56 NBFC’s (Bajaj Finserv gives away license)

The Reserve Bank of India has cancelled a bulk of non-banking financial companies as those mostly little-known local lenders may have either violated regulatory norms or surrendered licence of their own.

The central bank has taken away “the certificate of registration of the 56 non-banking financial companies (NBFC’s), in exercise of the powers conferred on it”. “Following the cancellation of registration certificate, these companies cannot transact the business of a non-banking financial institution,” it said. Interestingly, Pune-based Bajaj Finserve has given away its licence.

“We now come under a classification “core investment company”, said Rajagopalan, President (Legal), Bajaj Finserv. “Since we do not have any public funds including deposits/borrowings as per the RBI regulations applicable to NBFC we are not required to be registered with RBI.”

“RBI do not regulate such companies and hence as required by RBI we have submitted the Registration certificate for cancellation,” he said.

BSE LISTING FEE INCREASED FROM 01.01.2016

A sudden steep rise in listing fee by BSE has taken aback the companies looking to migrate from regional stock exchanges (RSEs), and their shareholders.

Last week, BSE wrote to several companies that had already applied for direct listing, saying the processing fee for direct listing was revised with immediate effect to Rs 25 lakh. And, from January 1, further to Rs 50 lakh. In comparison, the processing fee of rivals Metropolitan Stock Exchange of India (MSEI) and National Stock Exchange (NSE) is Rs 3.5 lakh and Rs 1 lakh, respectively.

In an e-mail, responding to questions from this newspaper, a BSE spokesperson said they’d listed many more companies as compared to both rivals but had begun to have reservations about the quality of companies coming out of these regional bourses.

Of 244 such companies listed on BSE, eight have since been suspended and a little over half are under investigation. Approximately 30 per cent have issued preferential shares and a little over 15 per cent have seen their stock prices increase by about 500 per cent since their direct listing on BSE. The total market cap of these companies increased by Rs 4,930 crore.

“Given the heightened surveillance activities to avoid manipulative and tax avoidance practices using stock markets, Sebi (the Securities and Exchange Board of India) and other agencies have raised several questions on the lack of corporate governance in such companies. In view of the same, BSE has recently tightened its direct listing criterion, including increasing the initial listing fees, to avoid frivolous companies from listing and using (our) platform for price manipulation and tax avoidance schemes,” the spokesperson added.

However, many professionals feel a increase in fee might not necessarily result in an improvement of quality and people coming with an intention to manipulate might be more prepared to pay it than the genuine ones. “If the (genuine) companies will not get listed, the ultimate sufferer will be the investors,” Anang Shandilya, a practising company secretary, said in a letter to the finance ministry.

BSE said it was also changing several other aspects of its framework, to avoid frivolous companies from coming on its board. And, to have better regulations to ensure their platform was not used for any sharp practices. These include price bands ranging from daily to annual and risk-based sub-segments.

Shandilya has sought the Ministry’s intervention to roll back the fee raise, saying it had jumped 50 times from the Rs 1 lakh at the time Sebi issued its exit policy for RSEs. According to his letter, there are a little over 7,000 companies in 16 regional bourses.

Earlier this year, Sebi gave these companies 18 months to apply to any of the national exchanges for direct listing, failing which they are supposed to give direct exit options to shareholders. Ram Avtar Agarwal, 55, is a chartered accountant based in Agra. Due to the knowledge acquired through his profession, he has been investing in shares for nearly three decades. Agarwal said he owned shares of stocks listed in several RSEs and many of these were stuck. “Their principal investment value must be in Rs 10-12 lakh. These have been acquired over years. Their market value could be much more. But, since there is no trading, there is no price discovery,” he said.

He points to shares of Jullundhar Auto, originally listed on the Delhi Stock Exchange. Though there was hardly any trading activity, Agarwal used to get offers for his shares at Rs 20 and 30. “I didn’t sell because I was not sure of the price. Today, the shares are listed on a national exchange and are trading at around Rs 200 and I’m still holding on to these,” he said. The rest of his portfolio has not been as lucky, as these have not been able to get to the big three bourses. S D Jain, a Delhi-based chartered accountant says sums of about Rs 1 crore belonging to a dozen of his clients are stuck.

According to Sebi guidance, companies may list on any of the three national bourses. However, due to more stringent criteria (minimum paid-up capital of Rs 10 crore), NSE listed only eight of these companies. While it did not comment, MSEI, youngest of the three bourses, said it had listed about 110 companies. Their spokesperson said, “Few of these companies have a good business track record as well as financial health. As these companies were listed at RSEs, there was no trading in the securities of these companies for a number of years. After getting exposure of a nationwide stock exchange, these companies have the potential to do better because of wider participation of investors.”

BSE, which initially courted these companies, has listed 244 such. Anjali Aggarwal, partner, Capital Market and Stock Exchange Services, said: “For the purpose of direct listing, BSE has issued relaxed norms, mandating a minimum paid-up capital of Rs 1 crore and a net worth of Rs 3 crore. These relaxed norms are an investor-friendly move, making a large chunk of RSE-listed companies eligible for BSE direct listing.” She suggested a slab system for fees based on a company’s paid-up capital or net worth could help.

PAN mandatory on Rs 50,000 Cash payments, Hotel, Foreign Travel Bills

Quoting PAN will be mandatory from January 1 for opening all bank accounts except Pradhan Mantri Jan Dhan Yojana accounts as the government tightened disclosure norms to check generation of domestic black money.

In keeping with the government’s thrust on financial inclusion, opening of a no-frills bank account such as a Jan Dhan account will not require PAN. Other than that, the requirement of PAN applies to opening of all bank accounts including in co-operative banks.

PAN will also be mandatory on purchase of immovable property of Rs 10 lakh. This will be a relief to small home buyers as previously the government had proposed to make PAN quoting mandatory for purchase or sale of Rs 5 lakh.

Unveiling the new norms, Revenue Secretary Hasmukh Adhia said purchasing of jewellery or bullion, a major source of blackmoney, quoting of PAN would be required if the sum involved is Rs 2 lakh per transaction.

Currently, it is required for transaction of Rs 5 lakh and above.

PAN will also be mandatory for cash payment made to settle hotels bills or for buying foreign travel tickets of Rs 50,000.

The PAN requirement for non-luxury cash transactions will be Rs 2 lakh. However, in a relief to small investors, the requirement of furnishing PAN for making post office deposit of over Rs 50,000 has been dispensed with.

PAN would also be mandatory for cash payments of more than Rs 50,000 for cash cards or prepaid instruments as well as for acquiring shares of unlisted companies for Rs 1 lakh and above.

The relief also includes discontinuation of requirement of PAN for installation of basic landline or cellphone connection.

In Lok Sabha, Finance Minister Arun Jaitley said the government will soon issue a notification making quoting of PAN mandatory for all cash and card transactions beyond Rs 2 lakh.

The limit is double of Rs 1 lakh that he had proposed in his Budget for 2015-16.

“An issue is being raised with regard to black money…. Very shortly we will be placing the notification that if you deal in cash of more than Rs 2 lakh, a PAN number would be necessary,” he said replying to debate in the Lok Sabha on Supplementary Demands for Grants.

Adhia said a distinction has been made in case of hotel and foreign travel bills of Rs 50,000 as they are luxury spending.

All other cash transactions would attract the PAN requirement if they are above Rs 2 lakh.

The Rs 2 lakh limit for disclosure of PAN card is an “interim measure” and ultimate goal is to lower it Rs 1 lakh, Adhia said.

To bring balance between burden of compliance on legitimate transactions and the need to capture information relating to high value transaction, he said, the money limits have now been raised to Rs 10 lakh from Rs 5 lakh for sale or purchase of immovable property, to Rs 50,000 from Rs 25,000 in the case of hotel or restaurant bills paid at any one time, and to Rs 1 lakh from Rs 50,000 for purchase or sale of shares of an unlisted company.

The changes will take effect from January 1, 2016.

Adhia said all other regulation for quoting of PAN like making cash deposit of more than Rs 50,000 or purchase of bank draft/pay orders/bankers cheque of equal denomination on a single day, payment of life insurance premium of Rs 50,000 on a year will continue as previously.

There has been a relaxation in case of immovable property as previously it was proposed to make PAN mandatory for purchase or sale of Rs 5 lakh.

The Supreme Court-appointed Special Investigation Team (SIT) on Black Money had recommended that quoting of PAN should be made mandatory for all sales and purchase of goods and services where the payment exceeds Rs 1 lakh.

This was also reflected in Jaitley’s budget speech on February 28.

“The government has since received numerous representations from various quarters regarding the burden of compliance this proposal would entail. Considering the representations, it has been decided that quoting of PAN will be required for transactions of an amount exceeding Rs 2 lakh regardless of the mode of payment,” he said.

The changes in the rules, he said, are expected to be useful in widening the tax net by non-intrusive methods. “They are also expected to help in curbing black money and move towards a cashless economy.”