“We are exploring all the legal recourses,” a source from Infinite India told VCCircle.

Private equity fund Infinite India Investment Management may take Maytas Properties to court. “We are exploring all the legal recourses,” a source from Infinite India told VCCircle.

In February last year, real estate fund Infinite India, had invested Rs 600 Cr in Maytas Properties in form of compulsory convertible debentures. The lock-in period for the investment was three years and Infinite was planning an exit through IPO. Infinite India is a joint venture between JM Financial and US-based SRS Fund.

“Maytas Properties has breached the terms of the Investment Agreement with the funds advised/managed by us. Following this, we are looking at options in consultation with legal counsels to exercise rights under the Investment Agreement,” an Infinite India spokesperson told The Time of India. On December 16,2008, Satyam had announced acquisition of 100% stake in Hyderabad-based Maytas Properties for $1.3 billion and a 51% in public listed firm Maytas Infra for $300 million.This was dropped the next day. Maytas had not informed Infinite about its deal with Satyam.

Both Maytas Properties and Maytas Infrastructure have also come under investigation as the Ramalinga Raju is also one of the promoters of these firms. Also now Raju’s Satyam scam seems to be getting bigger and deeper. The prosecution has accused Raju of creating fictitious salary accounts, and he may have diverted those funds to buy property for Maytas.

Source : VCCircle.com

In a move to protect the interest of investors, the Securities and Exchange Board of India (Sebi) has asked a high-level committee to suggest guidelines for the power of attorney (PoA) that investors issue in favour of their brokers. The agreements that are signed between brokers and investors are also up for review.

The committee consists of representatives from stock exchnages, depositories, investors’ associations and Sebi representatives.

The regulator has said that there should be a standard PoA and that it will amend the broker-client agreements based on the committee’s recommendations. Sebi and the stock exchanges have received numerous complaints from investors regarding the misuse of the PoA by their brokers. Investors have been saying that they have signed the client and KYC forms without properly knowing/reading them.

Clients generally issue PoA in favour of brokers who can debit demat accounts without waiting for specific delivery instruction. PoAs should be specific, but brokers get their clients to sign general PoAs, and in most cases clients don’t know about this, a source close to the development said.

A general PoA allows brokers to sell shares meant for investments and credit in the cash segment to pay mark-to-market margins for derivatives. There were cases where brokers have prematurely recovered finances provided against the shares without investors’ permission.

After the January 2008 crash, the National Stock Exchange through its arbitration department has received thousands of complaints related to the derivatives segments. About 1,700 complaints are still pending.

In many cases, brokers, involving some well-known names, have sold cash market holdings of clients without their knowledge for paying deficiency in MTM required for derivatives transactions.

The source said that the regulator has issued a proposal to ensure that PoAs are issued separately and are specific and not general in nature.

The Securities and Exchange Board of India (SEBI) and the Serious Fraud Investigation Office (SFIO) could not get access to the former bosses of Satyam Computer Services, B. Ramalinga Raju, his brother Rama Raju and Srinivas Vadlamani, by a court here on Friday on technical grounds.

The Sixth Additional Chief Metropolitan Magistrate D. Ramakrishna rejected the SEBI’s application to record the Raju brothers’ statement and refused to admit a similar petition by SFIO unless it specified the correct legal provisions to examine them.

The market regulator had been waiting to meet the Rajus since their arrest on January 9, but defence counsel opposed its plea, claiming that the petition was not maintainable and the court had no jurisdiction in such matters.

The CID on Thursday night arrested D. Gopalakrishnam Raju, general manager of SRSR Advisory Services, a constituent of the promoter group of Satyam. He was alleged to have arranged land deals for the Rajus.

The prosecution argued in the court that the brothers held property all over the country and that Satyam’s annual statements falsely reflected fixed deposits in BNP Paribas since 2004. It submitted a letter issued by the bank denying holding FDs in the company’s name.

Mr. Ramalinga Raju and Mr. Srinivas were sent back to jail at the end of their five-day police custody which, according to A. Siva Narayana, Additional Director General of CID, gave the investigators several leads to help crack the Satyam fraud case. The judicial remand of the three was extended by the court up to February 7.

Board holds out hope

The Satyam Board said a new Chief Executive Officer and a Chief Financial Officer would be appointed next week. The Directors had narrowed the shortlist for these positions to the final three and the CEO finally chosen would be a leader of “global standing and recognition.”

The Board, which met under the chairmanship of Tarun Das, also made several positive announcements. It said funding arrangements to meet the operational needs, including staff salaries, would be announced on Wednesday. It would soon take a decision on the investment banker.

Interestingly, commenting on the doubts cast on the company’s head count, the Board said “prima facie, there appears no basis to doubt the same. The independent investigation process is expected to reaffirm this fact in the coming weeks”.

Source : ET

 Non-resident Indian (NRI) means a ‘person resident outside India’ who is a citizen of India or is a ‘person of Indian origin’. Under the Foreign 
Exchange Management Act, 1999 (FEMA), a person who is not a ‘person resident in India’, as defined under Section 2 (v) of the Act is considered a ‘person resident outside India’.

‘Person of Indian Origin’ (PIO) means a citizen of any country other than Bangladesh or Pakistan, if he at any time held an Indian passport; or, he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955; or the person is a spouse of an Indian citizen, or a person referred to in sub-clause (a) or (b).

An investment by a PIO in Indian securities is treated just as investments by nonresident Indians and requires the same approvals, and enjoys the same exemptions. NRIs can purchase existing shares or debentures of Indian companies by private arrangement. The Reserve Bank permits NRIs to purchase shares or debentures of existing Indian companies on non-repatriation basis. An undertaking about nonrepatriation is to be given.

NRIs can also obtain loans abroad against a collateral of shares or debentures of Indian companies. The authorised dealers have been permitted to grant loans or overdrafts abroad to NRIs through their overseas branches and correspondents against a collateral of the shares or debentures of Indian companies held by them, provided the shares or debentures were acquired on a repatriation basis.

An NRI or PIO can open a demat account with any depository participant (DP). He needs to mention the category (’NRI’ as compared to ‘resident’) and the sub-type (’repatriable’ or ‘non-repatriable’) in the account opening form collected from the DP. No permission is required from the RBI to open a demat account. However, credits and debits from the demat account may require general or specific permissions as the case may be, from designated banks. Further, no special permission is required by an NRI for dematerialisation or rematerialisation of securities.

Holding securities in demat only constitutes change in form and does not need any special permission. However, only those physical securities which already have the status as NR-repatriable or NR-nonrepatriable can be dematerialised in the corresponding depository accounts.
The securities purchased under repatriable and nonrepatriable category cannot be held in a single demat account. An NRI must open separate demat accounts for holding ‘repatriable’ and ‘non-repatriable’ securities.

As per Section 6(5) of FEMA, an NRI can continue to hold the securities which he had purchased as a resident Indian, even after he has become a non-resident Indian, on a non-repatriable basis.

In case a NRI becomes a resident in India, he is required to change the status of his holding from nonresident to resident. It is the responsibility of the NRI to inform the change of status to the designated bank branch, through which the investor had made the investments in the Portfolio Investment Scheme and the DP with whom he has opened the demat account. Subsequently, a new demat account in the resident status will have to be opened, and the securities should be transferred from the NRI demat account to the resident account, and then the NRI demat account should be closed.

NRIs are also permitted to make direct investments in shares or debentures of Indian companies, and in units of mutual funds. They are also permitted to make portfolio investments i.e. purchase of share or debentures of Indian companies through stock exchanges. These facilities are granted both on repatriation and non-repatriation basis.

Further, NRIs can purchase securities by subscribing to a public issue. The issuing company is required to issue shares to the NRI on the basis of specific or general permission from the RBI. Therefore, individual NRIs need not obtain any permission to receive bonus or rights shares.

Source : Economic times

Brokerages have begun handing out free demat and broking accounts in their bid to encourage equity investments among retail investors. Best & worst stocks of ‘08

Though such a generous marketing idea increases the burden on account books of brokers by about Rs 300 per fresh account opened, it will go a long way to strengthening the retail investor base of brokers, industry sources opine.

A whole lot of brokers – including large ones like Nirmal Bang and India Infoline – are offering free demat and broking account. Investors need to only pay margin money (which also has been reduced, 40 – 60% in some cases) and registration charges (around Rs 500) while opening free demat and trading accounts.

“It is but very natural for brokers to reduce fresh account opening charges; investors are not very keen to trade in equities now. Several brokerages have gone one step ahead and announced cut in margin money (used to be in the range of Rs 5,000 to 10,000) as well. By doling out such freebies, brokers are spending about Rs 300 (per account opened) from their pockets,” said the retail equities head of Mumbai-based listed brokerage.

Though free demat and trading accounts are beneficial to investors, investment experts are already sounding the alert bugle. “Investors should look out for hidden charges or implied trade restrictions. In many cases, free accounts are offered for a specific period, say six months to one year. There are also brokerages that offer free demat and broking accounts, with exceptionally higher margin requirements. There could also be restrictions (in fineprint) with regards to how trades are done (online or call-based, cash market or F&O segment and number of trades done),” a Mumbai-based investment advisor said.

As per records with depositories, the number of fresh investor accounts has seen a near-60% drop when compared to accounts opened in January.

Precisely an year ago, when market was extremely bullish and there were a batch of hi-profile public issues waiting to hit the market, large-sized brokerages opened 6,000 to 10,000 fresh demat accounts on an average in a single day. Now, there are hardly 1,000 demat accounts opened in a single day, brokers said.

Source : Economic times

Introduction

NSDL has launched SMS Alert facility for demat account holders whereby investors can receive alerts for debits (transfers) to their demat accounts, credits for IPO and offer for sale allotment, sub-division and bonus. Alerts are also sent in case the instructions given by investors for debiting their demat accounts fail due to insufficient balance. Under this facility, investors can receive alerts, a day after such debits (transfers) take place or debit instruction failing as the case may be and on the same day when such credits take place. These alerts are sent to those account holders who have provided their mobile numbers to their Depository Participants (DPs). Alerts for debits are sent, if the debits (transfers) are up to five ISINs in a day. In case debits (transfers) are for more than five ISINs, alerts are sent with a message that debits for more than five ISINs have taken place and that the investor can check the details with the DP or on IDeAS website, if the investor is an IDeAS subscriber.

Benefits

1.      Investors will get to know about debits and credits for IPO and offer for sale allotment, sub-division, bonus and failed debit instructions due to insufficient balance without having to call-up their DPs.

2.      Investors need not wait for receiving Transaction Statements from DPs to know about such debits and credits.

3.      In case of any discrepancy, the investor can approach its DP for clarification sooner.

Charges

No charge is levied by NSDL on DPs for providing this facility to investors.

Registration

This facility is available to investors who request for such a facility and provide their mobile numbers to the DPs. In case mobile numbers already given have changed, investors need to inform their DPs about the new numbers by way of written requests. Investors who have not yet provided their mobile numbers to their DPs can also avail this facility by intimating their mobile numbers to their DPs and submit a written request for this facility. This facility is not available to investors who have registered mobile numbers originating outside India.

Thus, this facility will be available to the investors provided they have given their mobile numbers to their DPs and the DPs have captured the numbers in the computer system and have also enabled (ticked) the SMS flag in their system.

Contact

The investors may contact their respective DPs in case they do not receive SMS alert inspite of registering for this facility. Those investors who have provided their mobile numbers to their DPs but do not wish to avail this facility may also inform their DPs.

For further details / information investors may contact:

Investor Relationship Cell

National Securities Depository Limited

4^th Floor, A Wing, Trade World, Kamala Mills Compound

Senapati Bapat Marg, Lower Parel, Mumbai – 400 013.

Tel.: (022) 2499 4200 / 4090 4200 Fax: (022) 2497 6351

Email: relations@nsdl.co.in

Investor Accounts Active with PAN : 90,34,714
 
DP Service Centres : 8,575
 
Demat Custody Value 29,53,357 Rs. crore (US$ 606 billion)

As directed by SEBI, Depositories had issued directions to Participants making Permanent Account Number (PAN) compulsory for all categories of demat account-holders including minor, trust, foreign corporate body, banks, corporate, FIIs and NRIs. This came into effect in respect of all demat accounts that were opened on or after April 1, 2006. Further, from January 1, 2007 onwards, the existing account holders are not allowed to operate the accounts, if they do not complete the PAN verification process.

The latest position (as of December 31, 2008) in this regard is as follows: