Temporary exemption withdrawal over ECS payment printing requirement after bank merger; entities advised to take note.
SEBI withdrew a prior temporary exemption that had allowed registrars, share transfer agents and issuer companies to omit printing bank name and account details on dividend, interest and other cash payment instruments for investors with erstwhile Global Trust Bank accounts who furnished ECS details; the exemption is withdrawn following GTB's merger with Oriental Bank of Commerce and exchanges, depositories and RAIN are advised to take note and resume standard ECS payment instrument requirements.

Implementation of Model Tripartite Agreement enforces compliance by brokers and sub-brokers; violations to attract regulatory action.
Adoption of the prescribed Model Tripartite Agreement and revised roles for brokers and sub-brokers is mandatory from the effective date; violations after that date will be viewed strictly and attract regulatory action. Subsidiaries of recognized stock exchanges registered as brokers and their sub-brokers are temporarily excluded pending separate provisions. Exchanges must notify member brokers and disseminate the requirements on their websites.

Retail investor allocation increased, reshaping book building categories and shortening the bidding period in public issues.
Amendments to the SEBI DIP Guidelines increase the allocation to Retail Individual Investors and reduce allocation to Non Institutional Investors, introduce a transitory allocation pattern when a mandatory large allocation to Qualified Institutional Buyers applies, raise the monetary threshold defining a Retail Individual Investor, shorten the book building bidding period to a narrower working day range, allow listed issuers to disclose price band or floor price one day before bid opening subject to specified disclosures, and require stock exchanges to display uniform category wise bid data for a minimum period after bid closure.

Corporate governance compliance extension allows listed companies additional time to meet revised Clause 49 requirements by year-end.
Extends the timetable for adopting the revised Clause 49 Listing Agreement requirements by allowing additional time for listed companies and applicants to attain compliance, recognising widespread unreadiness and directing stock exchanges and market participants to note the deferred compliance deadline until the end of the calendar year.

Compliance Test Report frequency changed to bi monthly; reports must reach the regulator promptly after each two month period.
SEBI requires that the Compliance Test Report (CTR) submitted by AMCs be furnished once every two months (instead of quarterly) and reach the regulator within 21 days after the end of the two month period; the April-May 2005 CTR must reach SEBI by June 21, 2005. The instruction is issued under the regulator's powers to protect investor interests and regulate the securities market and references prior circulars and an earlier CTR format revision.

FII investment sub-ceilings separation confirmed; corporate and government debt limits treated separately with allocation and rollover restrictions.
The circular confirms distinct, non fungible sub ceilings for Government and corporate debt applicable to FIIs under both 100% debt and 70:30 routes. No further investment or rollover in corporate debt is permitted until total corporate holdings fall within the corporate debt sub ceiling; redeemed corporate debt may be reallocated to Government debt, and Government debt investments by 100% debt FIIs/Sub Accounts are limited to their unutilized notified limits. FIIs/Sub Accounts exceeding allocated limits must refrain from fresh investments or rollovers until compliant.

Margin Trading Facility expanded to include eligible IPO securities with new margin forms, NOC process, and implementation reporting.
The circular expands Margin Trading Facility eligibility to IPO securities meeting derivatives-segment criteria, accepts fixed deposits and bank guarantees as cash-equivalent margins, and requires a written no-objection certificate from an existing broker with a 21-day objection window. It limits Approved Intermediaries in the Securities Lending and Borrowing scheme to Clearing Corporations/Houses, permits borrowing idle securities through depository accounts with random borrower selection, and mandates a market-determined borrowing mechanism; exchanges must amend rules, notify members, and report implementation.

Margin requirements tightened: comprehensive framework mandates liquid assets to cover MTM, VaR and extreme loss margins.
Members' liquid assets must at all times cover four requirements: MTM losses, VaR margins, Extreme Loss Margins and Base Minimum Capital. MTM margins are collected before the start of the next trading day and adjusted against cash/cash equivalents; VaR margins are collected upfront at trade time against total liquid assets; Extreme Loss Margins are collected in real time. All margins are applied to the gross open position of the member with no netting across different settlements. Detailed asset eligibility, haircuts, liquidity classification, exposure limits, and shortfall penalties are prescribed.

Stock exchanges must file revised Monthly Development Reports covering trading, funds, complaints, arbitration, governance, listing and inspections.
SEBI prescribes a revised Monthly Development Report format organized into four sections-Trading & Ancillary Details; Investor Complaints & Arbitration; Stock Exchange Administration; and Listing & Other Information-mandates monthly or quarterly reporting based on turnover thresholds, requires soft copy submission within seven days of month end, and specifies detailed operational, fund, regulatory, grievance, arbitration, governance, listing and inspection disclosures using completed settlement data and cumulative financial year figures.

Disqualification for re-election bars former governing board members after supercession; exchanges must amend rules and notify members.
Where a Governing Board has been superseded for governance failures, members who were on the Governing Board at the time of supercession shall be disqualified from re election to the Governing Board for two years from the date of expiry of the order of supercession. Stock exchanges must amend their rules to provide for this disqualification, notify and disseminate the provision to members, and report implementation status in the Monthly Development Report.

Dematerialisation charges reduced: investors exempted from account opening, credit and custody fees; issuers to bear annual custodial fees.
Dematerialisation charges are rationalised to exempt investors from BO account opening fees (except statutory levies), fees for crediting securities, and custody charges; custody fees will instead be payable by issuers to depositories on a per folio (ISIN) basis under prescribed slabs with minimum amounts and service tax, payable based on folio positions at financial year end and subject to penal interest for late payment.

SEBI DIP Guidelines amendments: standardized prospectus order, mandatory pre-issue ads, enhanced disclosures and removal of co-manager limits.
The amendments mandate a standard order of prospectus disclosures (Schedule VIIA and substituted Section I, Chapter VI) requiring specific cover page content including an Issuer's Absolute Responsibility clause, classified Risk Factors, a concise summary, structured general information, detailed capital structure and promoters' contribution disclosures, object and means of finance statements, basis for issue price with comparative accounting ratios, and expanded management, related party and financial statement disclosure obligations.

Reclassification from Trade for Trade to Normal Rolling requires exchanges to reassign eligible scrips and report compliance.
SEBI directs stock exchanges to reclassify securities listed in the annexure from the Trade for Trade Segment to the Normal Rolling Segment if those companies had established connectivity with both depositories before 30.09.2004 and no other specific grounds justify continuation in the Trade for Trade Segment; exchanges must report the action taken in the Monthly Development Report (Section II, item 13) for February 2005.

Renewal of Registration: intermediaries must cease activities after expiry unless renewed; clients must be transferred without additional cost.
Intermediaries must submit a complete renewal application three months before certificate expiry; absent a complete application by expiry they must cease intermediary activities, transfer client accounts to another registered intermediary before expiry, and may not undertake fresh business after expiry. No renewal can be sought post-expiry; post-expiry filings are treated as fresh registration applications. If renewal is refused or received late, the intermediary must cease activities and transfer clients within any specified period. Voluntary surrender requires prior transfer of client accounts, and clients must not bear additional costs. Incomplete applications are treated as no application.

UIN requirement for corporate investors requires registration, but entities with government as promoter are exempt under SEBI.
All corporate investors and their promoters and directors are required to obtain a Unique Identification Number (UIN) under the Central Database of Market Participants regime; however, where the President of India, the Central Government, or a State Government is a promoter of a corporate investor, that promoter is exempt from the UIN requirement.