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This file contains major amendments related to PROFESSIONAL AS
WELL AS EXECUTIVE PAPERS. Please note that these amendments
mentioned hereunder also include important amendments which were
applicable to June 2016 exams.
YOU ALL ARE REQUESTED TO READ CAREFULLY EACH
AMENDMENTS AS NAME OF PAPERS ARE MENTIONED TO
RELEVANT AMENDMENTS (EXCEPT ECL /ILGL / TAX)
THE SUGGESTIONS INCLUDING TAXATION (EXECUTIVE / PROFESSIONAL) AND
OPEN BOOK FOR PROFESSIONAL EXAM WILL BE CIRCULATED SEPARATELY
TOMORROW THE 10TH DECEMBER, 2016.

Amendments related to COMPANY LAW (FOR BOTH

PROFESSIONAL / EXECUTIVE) & DUE DILIGENCE (FOR
PROFESSIONAL) & SECRETARIAL AUDIT PRACTICE (FOR
PROFESSIONAL)
INCORPORATION OF COMPANIES RELATED:

HUF/Karta cannot become partner or designated partner in LLP.

Central Registration Centres: Central Registration Centre is office for discharging or carrying
out the function of processing and disposal of applications for reservation of names under the
provisions of the Companies Act, 2013. However, for the time being, the Central Registration
Centre shall function under the administrative control of the Registrar of Companies, Delhi
(ROC Delhi), who shall act as the Registrar of Central Registration Centre until a separate
Registrar is appointed.
The Central Registration Centre shall process applications for reservation of Name i.e e-form INC-1
(Application for reservation of name) filed along with the prescribed fees as provided in Companies
(Registration of offices and fees) Rules, 2014.
The application may be approved or rejected as the case may be by the Registrar, Central Registration
centre.

CHANGES IN RULE 8 (PLEASE NOTE THAT IT WAS APPLICABLE FOR JUNE16 ALSO)

The name which is not in consonance with the principal objects of the company as set out in the
memorandum of association;
The proposed name is vague or an abbreviated name such as 'ABC limited' or '23K limited' or
abbreviated name based on the name of the promoters;

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The name which is intended or likely to produce a misleading impression regarding the scope or
scale of its activities which would be beyond the resources at its disposal.
Accordingly, now application for name can be made in case the proposed name is in the manner
mentioned above.
Also, apart from the above, the government has further amended the principal rules wherein:

If any company has changed its activities, which are not reflected in its name, shall not be
required to change its name in line with its activities.
Prior to this amendment, on change of its activities, the company was required to change its name
within a period of six months from the change of activities and comply with all the provisions as
applicable to change of name;
Prior to amendment, if the key word used in the name proposed was the name of a person other
than the name(s) of the promoters or their close blood relatives, No objection from such other
person(s) was required with the application for name. Also, in case the proposed name included
the name of relatives, proof of relation was required to be furnished, along with the significance
and proof thereof for use of coined words made out of the name of the promoters or their
relatives.

Three Times Resubmission:

According to sub-rule 12 of rule 36, the Registrar, on examining e-form INC-29, shall give
intimation to the applicant to remove the defects and resubmit the e-form within fifteen days from
the date of such intimation given by the Registrar. After the resubmission of the document, if the
registrar still finds that the document is defective or incomplete in any respect, he shall give one
more opportunity of fifteen days to remove such defects or deficiencies.
For name of Promoters, NOC etc. Three times for resubmission

SHARE CAPITAL RELATED

Buy-back of Securities: The offer for buy-back may remain open for a period less than fifteen
days provided that where all members of a company agree, the offer

For Government Companies: The debt to capital and free reserves ratio shall be 6:1 for
government companies within the meaning of clause (45) of section 2 of the Companies Act,
2013 which carry on non-banking finance institution activities and housing finance activities.
In the Companies (Share Capital and Debentures) Rules, 2014, (i) in rule 18, (PLEASE

NOTE THAT IT WAS APPLICABLE FOR JUNE16 ALSO)

- (a) In sub-rule (1), in clause (a) for sub-clause (iii) following sub-clauses shall be substituted,
namely:- (iii) Infrastructure Debt Fund Non-Banking Financial Companies as defined in clause
(b) of direction 3 of Infrastructure Debt Fund Non-Banking Financial Companies (Reserve Bank)
Directions, 2011; (iv) Companies permitted by a Ministry or Department of the Central
Government or by Reserve Bank of India or by the National Housing Bank or by any other
statutory authority to issue debentures for a period exceeding ten years.

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Signing of Share certificate:

(PLEASE NOTE THAT IT WAS APPLICABLE FOR JUNE16 ALSO)

In rule 5, in sub-rule (3), (i) for the words issued under the seal of the company, the words
issued under the seal, if any, of the company shall be substituted; (ii) for clause (b), the
following clause (b) shall be substituted, namely: (b) the secretary or any person authorised
by the Board for the purpose: Provided that in case a company does not have a common seal, the
share certificate shall be signed by two directors or by a director and the Company Secretary,
wherever the company has appointed a Company Secretary: Provided further that, if the
composition of the Board permits of it, at least one of the aforesaid two directors shall be a person
other than a managing director or a whole-time director: Provided also that, in case of a One
Person Company, every share certificate shall be issued under the seal, if any, of the company,
which shall be affixed in the presence of and signed by one director or a person authorised by the
Board of Directors of the company for the purpose and the Company Secretary, or any other
person authorised by the Board for the purpose, and in case the One Person Company does not
have a common seal, the share certificate shall be signed by the persons in the presence of whom
the seal is required to be affixed in this proviso..

DEPOSITS:
Few more additions to exemption:
1. Any amount raised through compulsorily convertible secured Bonds or debentures shall be
redeemed now within 10 years. (earlier it was 5 years).
2. Any amount raised by issue of Non-Convertible Debentures (NCDs) not constituting a charge on
the assets of the company and listed on recognised stock exchange as per SEBI.
3. Any non-interest bearing amount received and held in trust;
4. Any amount received in the ordinary course of business
a) as an advance towards consideration for providing future services in the form of a warranty or
maintenance contract as per written agreement or arrangement, if the period for providing such
services does not exceed the period prevalent as per common business practice or five years, from
the date of acceptance of such service whichever is less;
b) as an advance received and as allowed by any sectoral regulator or in accordance with
directions of Central or State Government;
c) as an advance for subscription towards publication, whether in point or in electronic to be
adjusted against receipt of such publications;
5. After sub-clause (xiv), the following sub-clauses shall be inserted, namely: any amount received by way of subscription in respect of a chit under the Chit Fund Act, 1982
(40 of 1982);
any amount received by the company under any collective investment scheme in compliance with
regulations framed by the Securities and Exchange Board of India;

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an amount of twenty five lakh rupees or more received by a start-up company, by way of a
convertible note (convertible into equity shares or repayable within a period not exceeding five
years from the date of issue) in a single tranche, from a person.
Start-up company means a private company incorporated under the Companies Act, 2013 or
Companies Act, 1956 and recognised as such in accordance with notification number G.S.R.
180(E) dated 17th February, 2016 issued by the Department of Industrial Policy and Promotion,
Ministry of Commerce and Industry;

Filing Requirement for Deposits accepted:

Every eligible company shall obtain, at least once in a year, credit rating for deposits accepted
by it and a copy of the rating shall be sent to the Registrar of Companies along with the return
of deposits in Form DPT-3.

AUDITORS:
(PLEASE NOTE THAT IT WAS APPLICABLE FOR JUNE16 ALSO)

Section 13 of the Companies (Amendment) Act, 2015 modifies Section 143 of the Act to
prescribe a threshold for the reporting of frauds committed against the company.
For this purpose the Companies (Audit and Auditors) Amendment Rules, 2015 (Audit
Amendment Rules), were notified on December 15, 2015.
Under the earlier provisions, any fraud being committed against the company by its officers or
employees was required to be reported to the Central Government. Now a threshold of
` 1 crore has been inserted.
If the auditor does discover a fraud of ` 1 crore or above, then the auditor must report the fraud to
the board of directors or the audit committee of the company (as the case may be) not later than 2
days of discovery of the fraud. Then the board of directors or audit committee is required to give
its reply or observations to the auditor within 45 days, which is to be forwarded to the Central
Government, failing which, the auditor shall forward his own report to the central government
with a note mentioning that no reply or observations were received from the board of directors or
the audit committee of the company within the prescribed 45 days.
For a fraud below ` 1 crore, the auditor is required to report the fraud to the board of directors or
the audit committee not later than 2 days of its discovery specifying the name of the fraud
committed with a description of the same, the approximate involved and the parties involved in
the fraud. Then, in the report of the board of directors for that financial year, the abovementioned
details shall be provided along with the remedial action which was taken resultant to the fraud
which was committed.

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ACCOUNTS:
(PLEASE NOTE THAT IT WAS APPLICABLE FOR JUNE16 ALSO)

Section 14 of the Amendment Act amends Section 177 of the Companies Act, 2013 (Act) to
provide for prescribing rules to specify the manner of omnibus approval of related party
transactions by the audit committee of a company.
The Amendment Rules added a new Rule 6A to the Companies (Meeting of Board and its
Powers) Rules, 2014
The Amendment Rules state that all related party transactions are to be approved by the audit
committee of the company (an audit committee is required to be constituted by all public
companies with a paid-up share capital of Rs. 10 crores or more, all public companies with
turnover of Rs. 100 crores or more and all public companies with aggregate outstanding loans or
borrowings or debentures or deposits of more than Rs. 50 crores).
The new rule 6A sanctions omnibus approval by the audit committee subject to certain conditions
such as specification of the criteria for the omnibus approval which will include the maximum
value of transactions which can be made under the omnibus approval in a year. Also, the
maximum value of a single transaction under the umbrella omnibus approval is to be laid down.
The transactions which are entered into under such omnibus approval will be required to be
reviewed by the audit committee at certain intervals as decided at the discretion of the audit
committee.
The audit committee is also required to specify which kind of transactions cannot be subject to the
omnibus approval granted by it. For example, it can be specified that transactions with a particular
entity will not be covered under the omnibus approval despite it being below the annual limits and
the sub-set of the per transaction threshold. Further the audit committee is mandated to satisfy
itself that omnibus approval for repetitive transactions (for example periodical purchase of goods
or raw material from a related party) is in the interest of the company.
It is also required that the omnibus approval should specify the name of the parties, the nature and
duration of the transactions, the maximum amount of the transactions which can be entered into
and an indicative base price or the current contract price and the variation formula if the price is
required to be altered.
However, there is a proviso to this providing for an exception in the case where a related party
transaction is unforeseen and the details mentioned in the preceding paragraph above are not
available, then the audit committee may still make omnibus approval for such transactions, but
subject to a limit of Rs. 1 crore per transaction.
The Amendment Rules provide that omnibus approval will only be valid until the end of the
financial year in which it is granted and fresh approval will be required in the new financial year.

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The Amendment Rules go on to further state that no omnibus approval will be allowed in the case
of selling or disposing of the undertaking of the company. There is already a similar provision
requiring the passing of a special resolution at a meeting of the shareholders of the company for
any such transaction (related party or otherwise) under Section 180(1)(a) of the Act.
Undertaking is clarified to mean an undertaking in which the company has invested 20% or
more of its net worth (as per the last audited balance sheet) or an undertaking which generates
20% of the total income of the company in the immediately preceding financial year. However, it
must be noted that Section 180 only applies to public companies post the notification exempting
private companies from certain provisions of the Act dated June 5, 2015.

CSR RELATED:
(PLEASE NOTE THAT IT WAS APPLICABLE FOR JUNE16 ALSO)

Section 8 Companies are also required to follow CSR provisions. There is no specific exemption
given to Section 8 Companies regarding applicability of Section 135.
In case of a foreign company, the balance sheet filed under sub-clause (b) of sub-section 1 of
section 381 shall contain an Annexure regarding report on CSR.
While undertaking CSR initiatives under section 135 of the Companies Act,2013 CSR activities
shall not contravene any other prevailing laws of the land including Cigarettes and other Tobacco
Products Act (COTPA), 2003.
The Board of a company may decide to undertake its CSR activities approved by the CSR
Committee, through
(a) a company established under section 8 of the Act or a registered trust or a registered society,
established by the company, either singly or along with any other company, or
(b) a company established under section 8 of the Act or a registered trust or a registered society,
established by the Central Government or State Government or any entity established under an
Act of Parliament or a State legislature : Provided that- if, the Board of a company decides to
undertake its CSR activities through a company established under section 8 of the Act or a
registered trust or a registered society, other than those specified in this sub-rule, such company or
trust or society shall have an established track record of three years in undertaking similar
programs or projects; and the company has specified the projects or programs to be undertaken,
the modalities of utilisation of funds of such projects and programs and the monitoring and
reporting mechanism.

REMUNERATION RELATED:
(PLEASE NOTE THAT IT WAS APPLICABLE FOR JUNE16 ALSO)

MR-1 Form w.r.t. appointment of Chief Executive Officer (CEO), Company Secretary and Chief
Financial Officer (CFO) has been dispensed with.
The board's report shall include a statement showing the names of the top 10 employees in
terms of remuneration drawn and the name of every employee, who-

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(i)
if employed throughout the financial year, was in receipt of remuneration for that year
which, in the aggregate, was not less than one crore and two lakh rupees;
(ii) if employed for a part of the financial year, was in receipt of remuneration for any part of
that year, at a rate which, in the aggregate, was not less than eight lakh and fifty thousand
rupees per month;

DIVIDEND DISTRIBUTION POLICY: (SEBI LODR) FOR DUE

DILIGENCE PAPER AND SECRETARIAL AUDIT PAPERS TOO
(PLEASE NOTE THAT IT WAS APPLICABLE FOR JUNE16 ALSO)

The top five hundred listed entities based on market capitalization (calculated as on March 31 of
every financial year) shall formulate a dividend distribution policy which shall be disclosed in
their annual reports and on their websites.

FINANCIAL RESULTS: (SEBI LODR) - FOR DUE DILIGENCE PAPER

AND SECRETARIAL AUDIT PAPERS TOO
Regulation 33 - Financial results
The key changes, inter alia, include that instead of submission of Form A (for audit report with
unmodified opinion), the listed entity shall submit a declaration to that effect to stock exchange
while publishing the annual audited financial results.
Further, instead of submission of Form B (for audit report with modified opinion), listed entities
will be required to submit Statement on impact of audit qualifications

COST RECORDS AND COST AUDIT

(PLEASE NOTE THAT IT WAS APPLICABLE FOR JUNE16 ALSO)

COST RECORDS :
The Central Government is empowered to direct, by order, in respect of such class of companies
engaged in the production of such goods or providing such services as may be prescribed, direct that
particulars relating to the utilisation of material or labour or to other items of cost as may be prescribed
(given below in the tabular format) shall also be included in the books of account kept by that class of
companies:
Provided that the Central Government shall, before issuing such order in respect of any class of
companies regulated under a special Act, consult the regulatory body constituted or established under
such special Act.
a. Every company falling under Companies (cost records and audit) Rules, 2014 (as given below in the
tabular format) , including all units and branches thereof, shall, in respect of each of its financial year
commencing on or after the 1st day of April, 2014, maintain cost records in form CRA-1.

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However in case of item no. 12 and 24 to 32 under category B i.e. non-regulated items (as given below
in the tabular format) it shall apply in respect of each of its financial year commencing on or after the 1 st
day of April, 2015.
b. The cost records shall be maintained in such manner so as to enable the company to exercise, as far as
possible, control over the various operations and costs to achieve optimum economies in utilisation of
resources and these records shall also provide necessary data which is required to be furnished under
these rules.
Exception to the Cost Records requirements :
The requirement for cost records under these rules SHALL NOT BE APPLICABLE to a company
which is classified as a micro enterprise or a small enterprise including as per the turnover criteria under
Section 7(9) of the Micro, Small and Medium Enterprises Development Act, 2006.
Exception to the Cost Audit requirements :
The requirement for cost audit under these rules SHALL NOT BE APPLICABLE to a company covered
under the Rules if revenue from exports, in foreign exchange, exceeds 75% of its total revenue OR if it
is operating from a special economic zone.
COST AUDIT :
In a case the Central Government is of the opinion, that it is necessary to do so, it may, by order, direct
that the audit of cost records of class of companies, which are covered under sub-section (1) of Section
148 and which have a net worth of such amount as may be prescribed or a turnover of such amount as
may be prescribed, shall be conducted in the manner specified in the order.
Provided that the report on the audit of cost records shall be submitted by the cost accountant in practice
to the Board of Directors of the company.
a. The cost auditor shall forward his report to the Board of Directors of the company within a period of
180 days from the closure of the financial year to which the report relates and the Board of Directors
shall consider and examine such report particularly any reservation or qualification contained therein.
b. Every company covered under these rules shall, within a period of 30 days from the date of receipt of a
copy of the cost audit report, furnish the Central Government with such report along with full
information and explanation on every reservation or qualification contained therein, in form CRA-4.

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COMPANIES (COST RECORDS AND AUDIT) RULES, 2014
APPLICABILITY OF COST RECORDS AND COST AUDIT:

Sectors
Companies engaged in the production of
following goods or providing following
services
Regulated Sectors
Telecommunication
services
made
available to users by means of any
transmission or reception of signs, signals,
writing, images and sounds or intelligence
of any nature (other than broadcasting
services) and regulated by the Telecom
Regulatory Authority of India
Generation, transmission, distribution and
supply of electricity regulated by the
relevant regulatory body or authority
under the Electricity Act, 2003
Petroleum products regulated by the
Petroleum and Natural Gas Regulatory
Board
Fertilisers
Drugs and Pharmaceuticals;
Sugar and industrial alcohol

Cost Records
Companies having an
overall turnover from
all its products and
services of Rs. 35
Crore or more during
the
immediately
preceding financial
year.

Cost Audit
Companies
having an overall
turnover from all
its products and
services of Rs.
50 Crore or more
during
the
immediately
preceding
financial year
AND
The
aggregate
turnover of the
individual
product
or
products
or
service
or
services
for
which
cost
records
are
required to be
maintained is Rs.
25 Cr or more.

B. Non-regulated Sectors
1. machinery and mechanical appliances
used in defence, space and atomic energy
sectors excluding any ancillary item
(Explanation For the purposes of this
sub-clause, any company which is
engaged in any item or items supplied
exclusively for use under this clause, shall
be deemed to be covered under these
rules.)
2. turbo jets and turbo propellers;
3. arms and ammunitions
4. propellant powders; prepared explosives
(other than propellant powders), safety
fuses, detonating fuses, percussion or
detonating
caps,
igniters,
electric
detonators
5. radar apparatus, radio navigational aid
apparatus and radio remote control
apparatus

Companies having an
overall turnover from
all its products and
services of Rs. 35
Crore or more during
the
immediately
preceding financial
year.

Companies
having an overall
turnover from all
its products and
services of Rs.
100 Crore or
more during the
immediately
preceding
financial year
AND
The
aggregate
turnover of the
individual
product
or
products
or
service
or
services
for
which
cost
records
are

A.
1.

2.

3.

4.
5.
6.

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6. Tanks and other armoured fighting
vehicles, motorised, whether or not fitted
with weapons and parts of such vehicles,
that are funded (investment made in the
company) to the extent of ninety per cent.
or more by the Government or
Government Agencies
7. Port services of stevedoring, pilotage,
hauling, mooring, re-mooring, hooking,
measuring, loading and unloading services
rendered by a Port in relation to a vessel
or goods regulated by the Tariff Authority
for Major Ports
8. Aeronautical services of air traffic
management, aircraft operations, ground
safety services, ground handling, cargo
facilities and supplying fuel rendered by
airports and regulated by the Airports
Economic Regulatory Authority
9. Steel
10. Roads and other infrastructure projects
corresponding to para No. (1) (a) as
specified in Schedule VI of the
Companies Act, 2013
11. Rubber and allied products being
regulated by the Rubber Board
12. Coffee and tea
13. Railway or tramway locomotives, rolling
stock, railway or tramway fixtures and
fittings, mechanical (including electro
mechanical) traffic signalling equipments
of all kind
14. Cement
15. Ores and Mineral products
16. Mineral fuels (other than Petroleum),
mineral oils etc.
17. Base metals
18. Inorganic chemicals, organic or inorganic
compounds of precious metals, rare-earth
metals of radioactive elements or isotopes,
and Organic Chemicals
19. Jute and Jute Products
20. Edible Oil
21. Construction Industry
22. Companies engaged in health services viz.
functioning as or running hospitals,
diagnostic centres, clinical centres or test
laboratories

required to be
maintained is Rs.
35 Cr or more.

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23. Companies engaged in education services,
other than such similar services falling
under philanthropy or as part of social
spend which do not form part of any
business
24. Milk Powder
25. Insecticides
26. Plastics and Polymers
27. Tyres and Tubes
28. Paper
29. Textiles
30. Glass
31. Other machinery
32. Electricals and electronic machinery
33. Production, import and supply or trading
of following medical devices namely
Cardiac stents,
Drug Eluting Stents,
Catheters, Intra Ocular Lenses, Bone
Cements, Heart Valves, Orthopaedic
Implants,
Internal
Prosthetic
Replacements, Scalp Vein Set, Deep
Brain Stimulator, Ventricular peripheral
Shud, Spinal Implants, Automatic
Impalpable
Cardiac
Deflobillator,
Pacemaker (temporary and permanent),
patent ductus arteriosus, atrial septal
defect and ventricular septal defect
closure device, Cardiac Re-synchronize
Therapy, Urethra Spinicture Devices,
Sling male or female, Prostate occlusion
device; and Urethral Stents.
(Provided that requirement for cost
records for item 33 shall not apply to
foreign companies having only liaison
offices)

Also note that following Sections notified so accordingly study new provisions:

1. NCLT and NCLAT Related Matters

(Please note that only powers related to CLB / some powers related
to CG are now vested to NCLT / NCLAT)
(The powers to wound up companies / Sick companies / BIFR are
still with the respective statutory authorities)
2. SPECIAL COURTS RELATED
3. SECTION 125 IEPF

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Amendments related to CAPITAL & SECURITIES

MARKET (FOR EXECUTIVE)
Changes with respect to willful defaulters:
Definition of Wilful defaulters:
"Wilful defaulter" means an issuer who is categorized as a wilful defaulter by any bank or
financial institution or consortium thereof, in accordance with the guidelines on wilful
defaulters issued by the Reserve Bank of India and includes an issuer whose director or
promoter is categorized as such.
SEBI has amended the SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations:
These amendment regulations, inter alia, provide following:
Definition of wilful defaulter has been included in regulations;
No person who is a wilful defaulter will make a public announcement of an open offer for
acquiring shares or enter into any transaction that would attract obligation to make a public
announcement of an open offer for acquiring shares.
SEBI has amended the SEBI (Issue of Capital and Disclosure Requirements) Regulations:
These amendment regulations, inter alia, provide following:
Definition of wilful defaulter has been included in regulations;
No issuer will make a public issue of equity securities, if the issuer or any of its promoters
or directors is a wilful defaulter;
No issuer will make a public issue of convertible debt instruments, if the issuer or any of its
promoters or directors is a wilful defaulter or it is in default of payment of interest or
repayment of principal amount in respect of debt instruments issued by it to the public for a
period of more than six months;
SEBI has amended the SEBI (Issue and Listing of Debt Securities) Regulations:
These amendment regulations, inter alia, provide following:
Definition of wilful defaulter has been included in regulations;
No issuer will make any public issue of debt securities if as on the date of filing of draft
offer document or final offer document as provided in these regulations: - the issuer or the
person in control of the issuer or its promoter or its director is restrained or prohibited or
debarred by the SEBI from accessing the securities market or dealing in securities; - the

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issuer or any of its promoters or directors is a wilful defaulter or it is in default of payment of
interest or repayment of principal amount in respect of debt securities issued by it to the
public for a period of more than six months.
SEBI has amended the SEBI (Issue and Listing of Non-Convertible Redeemable
Preference Shares) Regulations:
Definition of wilful defaulter has been included in regulations;
No issuer will make a public issue of nonconvertible redeemable preference shares if as on
the date of filing of draft offer document or final offer document as provided in these
regulations: - the issuer or the person in control of the issuer or its promoter or its director is
restrained or prohibited or debarred by the SEBI from accessing the securities market or
dealing in securities; or - the issuer or any of its promoters or directors is a wilful defaulter or
it is in default of payment of interest or repayment of principal amount in respect of nonconvertible redeemable preference shares issued by it to the public for a period of more than
six months.
SEBI has amended the SEBI (Issue of Capital and Disclosure Requirements) Regulations:
CHAPTER VI-A CONDITIONS AND MANNER
OPPORTUNITY TO DISSENTING SHAREHOLDERS

OF

PROVIDING

EXIT

Applicability.
69A. (1) The provisions of this Chapter shall apply to an exit offer made by the promoters or
shareholders in control of an issuer to the dissenting shareholders in terms of section 13(8)
and section 27(2) of the Companies Act, 2013, in case of change in objects or variation in the
terms of contract referred to in the prospectus.
(2) The provisions of this Chapter shall not apply where there are neither identifiable
promoters nor shareholders in control of the listed issuer.
Definitions.
69B. For the purpose of this Chapter:
(a) dissenting shareholders means those shareholders who have voted against the resolution
for change in objects or variation in terms of a contract, referred to in the prospectus of the
issuer; (b) frequently traded shares shall have the same meaning as assigned to it in the
Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011. (c) relevant date means date of the board meeting in which the proposal
for change in objects or variation in terms of a contract, referred to in the prospectus is
approved, before seeking shareholders approval.

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Conditions for exit offer.
69C. The promoters or shareholders in control shall make the exit offer in accordance with
the provisions of this Chapter, to the dissenting shareholders, if:
(a) the public issue has opened after April 1, 2014; and
(b) the proposal for change in objects or variation in terms of a contract, referred to in the
prospectus is dissented by at least ten per cent. of the shareholders who voted in the general
meeting; and
(c) the amount to be utilized for the objects for which the prospectus was issued is less than
seventy five per cent. of the amount raised (including the amount earmarked for general
corporate purposes as disclosed in the offer document).
Eligibility of shareholders for availing the exit offer
69D. Only those dissenting shareholders of the issuer who are holding shares as on the
relevant date shall be eligible to avail the exit offer made under this Chapter.
Exit offer price.
69E. The exit price payable to the dissenting shareholders shall be the highest o the
following: (a) the volume-weighted average price paid or payable for acquisitions, whether
by the promoters or shareholders having control or by any person acting in concert with them,
during the fifty-two weeks immediately preceding the relevant date;
(b) the highest price paid or payable for any acquisition, whether by the promoters or
shareholders having control or by any person acting in concert with them, during the twentysix weeks immediately preceding the relevant date;
(c) the volume-weighted average market price of such shares for a period of sixty trading
days immediately preceding the relevant date as traded on the recognised stock exchange
where the maximum volume of trading in the shares of the issuer are recorded during such
period, provided such shares are frequently traded;
(d) where the shares are not frequently traded, the price determined by the promoters or
shareholders having control and the merchant banker taking into account valuation
parameters including book value, comparable trading multiples, and such other parameters as
are customary for valuation of shares of such issuers.
Manner of providing exit to dissenting shareholders.
69F. (1) The notice proposing the passing of special resolution for changing the objects of the
issue and varying the terms of contract, referred to in the prospectus shall also contain
information about the exit offer to the dissenting shareholders.

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(2) In addition to the disclosures required under the provisions of section 102 of the
Companies Act, 2013 read with rule 32 of the Companies (Incorporation) Rules, 2014 and
rule 7 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 and any other
applicable law, a statement to the effect that the promoters or the shareholders having control
shall provide an exit opportunity to the dissenting shareholders shall also be included in the
explanatory statement to the notice for passing special resolution.
(3) After passing of the special resolution, the issuer shall submit the voting results to the
recognised stock exchange(s), in terms of the provisions of regulation 44(3) of the Securities
and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015. (4) The issuer shall also submit the list of dissenting shareholders, as
certified by its compliance officer, to the recognised stock exchange(s).
(5) The promoters or shareholders in control, shall appoint a merchant banker registered with
the Board and finalize the exit offer price in accordance with these regulations.
(6) The issuer shall intimate the recognised stock exchange(s) about the exit offer to
dissenting shareholders and the price at which such offer is being given.
(7) The recognised stock exchange(s) shall immediately on receipt of such intimation
disseminate the same to public within one working day.
(8) To ensure security for performance of their obligations, the promoters or shareholders
having control, as applicable, shall create an escrow account which may be interest bearing
and deposit the aggregate consideration in the account at least two working days prior to
opening of the tendering period.
(9) The tendering period shall start not later than seven working days from the passing of the
special resolution and shall remain open for ten working days.
(10) The dissenting shareholders who have tendered their shares in acceptance of the exit
offer shall have the option to withdraw such acceptance till the date of closure of the
tendering period. (11) The promoters or shareholders having control shall facilitate tendering
of shares by the shareholders and settlement of the same through the recognised stock
exchange mechanism as specified by SEBI for the purpose of takeover, buy-back and
delisting.
(12) The promoters or shareholders having control shall, within a period of ten working days
from the last date of the tendering period, make payment of consideration to the dissenting
shareholders who have accepted the exit offer.
(13) Within a period of two working days from the payment of consideration, the issuer shall
furnish to the recognised stock exchange(s), disclosures giving details of aggregate number of
shares tendered, accepted, payment of consideration and the post-offer shareholding pattern

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of the issuer and a report by the merchant banker that the payment has been duly made to all
the dissenting shareholders whose shares have been accepted in the exit offer.
Offer not to exceed maximum permissible non-public shareholding.
69G. In the event, the shares accepted in the exit offer were such that the shareholding of the
promoters or shareholders in control, taken together with persons acting in concert with them
pursuant to completion of the exit offer results in their shareholding exceeding the maximum
permissible non-public shareholding, the promoters or shareholders in control, as applicable,
shall be required to bring down the non-public shareholding to the level specified and within
the time permitted under Securities Contract (Regulation) Rules, 1957.
SEBI has amended Securities and Exchange Board of India (Delisting of Equity Shares)
Regulations, 2009
Exemptions provided to small companies in relation to obligations under Chapter IV, which
deals with "exit opportunity" to be given to the public shareholders during delisting.
Amongst the conditions to be satisfied by small companies to avail of the exemption from
compliance with Chapter IV of the Delisting Regulations, the SEBI Notification now requires
that the equity shares of the company traded on each recognised stock exchange is less
than 10% of the total number of shares, during the 12 months preceding the date of the
board meeting approving the delisting of shares, as opposed to the earlier requirement that
the equity shares of the company were not traded in any recognised stock exchange for a
period of 1-year immediately preceding the date of board meeting.
In consideration to the exit price offered to the public shareholders during such delisting, it
cannot be less than the floor price determined as per the Delisting Regulations read with the
relevant provisions of and the Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011 ("Takeover Regulations") pertaining
to
the
determination
of
offer
price
for
infrequently
traded
shares.
Prior to the amendment, such price could not be less than the price arrived at in consultation
with the merchant banker.
SEBI has amended (Depositories and Participants) Regulations
In the Securities and Exchange Board of India (Depositories and Participants) Regulations,
1996, after regulation 35A the following regulation shall be inserted, namely,Wind-down Plan.
35B. Every depository shall devise and maintain a wind-down plan in accordance with
guidelines specified by the Board. Explanation.- For the purpose of this regulation, 'winddown plan' means a process or plan of action employed, for transfer of the beneficial owner
accounts and other 2 operational powers of the depository to an alternative institution that
would take over the operations of the depository in scenarios such as erosion of networth of
the depository or its insolvency or its inability to provide critical depository operations or
services.

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SEBI has amended Securities and Exchange Board of India (Foreign Portfolio Investors)
Regulations
As per changes introduced, Regulation 22(2) introduces a requirement for foreign portfolio
investors (FPIs) to ensure that any transfer of offshore derivative instruments issued by or on
behalf of it, is made subject to the following conditions:

Such offshore derivative instruments are made subject to fulfilment of sub-regulation (1); and
Prior consent of the FPI is obtained for such transfer, except when the persons to whom the
offshore derivative instruments are to be transferred to are pre-approved by the foreign
portfolio investor.
The amended regulation will restrict the transfer of participatory notes (p-notes) or offshore
derivative instruments (ODIs) to entities authorised to use them and only following consent
from the FPI. P-notes are issued by SEBI registered FPIs to other overseas entities seeking
exposure to the Indian markets without themselves registering directly with SEBI.