2. 1. What is Investment?
2. Who is an Investor?
3. Investor Avenues for Investor
4. Types of Investor
5. Investor Rights & Obligation
6. Legislature Governing Capital Market and International Market in
India
7. Compliances for the benefit of Investor
8. Investor Protection available in India
9. Investor Grievance Redressal cell
10. Case Law (Oral Discussion)
INDEX
3. Needs of Investment
Earn return on your idle resources
Generate a specific goal in life
Make a provision for an uncertain
future
Golden Rules for investment
Invest early
Invest regularly
Invest for long tern and not for short
term
WHAT IS INVESTMENT?
INVESTMENT IS MONEY YOU EARN PARTLY SPENT AND THE REST
SAVED FOR MEETING FUTURE EXPENSE.
4. WHO IS AN INVESTOR?
AN INVESTOR IS A PERSON WHO ALLOCATES CAPITAL WITH THE
EXPECTATION OF A FUTURE FINANCIAL RETURN.
5.
6. Individuals gambling in games of
chance.
Individual investors
(including trusts on behalf of
individuals, and umbrella companies
formed by two or more to pool
investment funds)
Collectors of art, antiques, and
other things of value
Angel investors (individuals and
groups)
Sweat equity investor
Venture capital and private
equity funds, which serve as investment
collectives on behalf of individuals,
companies, pension plans, insurance
reserves, or other funds.
Businesses that make investments,
either directly or via a captive fund
Investment trusts, including real estate
investment trusts
Mutual funds, hedge funds, and other
funds, ownership of which may or may
not be publicly traded (these funds
typically pool money raised from their
owner-subscribers to invest in
securities)
Sovereign wealth funds
Retail investor Institutional investor
TYPES OF INVESTORS
THERE ARE TWO TYPES OF INVESTORS
7. ‘Qualified Institutional Buyer’ shall mean:
public financial institution
scheduled commercial banks;
mutual funds;
foreign institutional investor registered
with SEBI;
multilateral and bilateral development
financial institutions;
venture capital funds registered with
SEBI.
foreign Venture capital investors
registered with SEBI.
state industrial Development
Corporations.
insurance Companies registered with the
Insurance Regulatory and Development
Authority (IRDA).
provident Funds with minimum corpus
of Rs. 25 crores & pension Funds with
minimum corpus of Rs. 25 crores)
Qualified Institutions Placement means
when listed issuer issues equity share or
securities convertible into equity shares to
Qualified Institutions Buyer only in terms
of provision of chapter VIII of SEBI
(ICDR) Regulations, It is called a QIP.
Qualified Institutional Buyer Qualified Institutional Placement
8. FOREIGN INVESTORS
Venture capitalist – SEBI registered foreign venture capital investor can invest in an Indian
venture capital undertaking or venture capital fund.
Foreign Institutional Investor - Foreign Institutional Investor can individually purchase up
to 10% and collectively up to 24% of the paid share capital of an Indian company.(this limit
of 24% of the paid-up share capital can be increase to sectoral cap/statutory limit to Indian company by
passing Board resolution/shareholder resolution as applicable)
Non resident Indians - NRI may, without limit, purchase on non-repatriation basis:
Entry Strategies for Foreign Investor
By Incorporating a Company under Companies Act 1956/2013 (as applicable)
A wholly owned subsidiary
Joint venture Company
By Unincorporated Company
Liaison office
Project office
Branch office
9. INVESTOR RIGHTS & OBLIGATIONS
Investor’s Rights
Right to:
Get a copy of KYC and other
documents executed.
Get best price.
Get contract note for trades executed.
Get the details of charges levied.
Receive funds and securities on time.
Receive statement of accounts from
trading member.
Ask for settlement of accounts.
Suing a company for wrongful acts
e.g.class-action lawsuit.
Inspect Corporate Books and records
Obligation to:
Read Risk Disclosure Document.
Possess a valid contract or
purchase/sale note
Deliver securities with valid documents
and proper signatures.
Execute Know Your Client (KYC)
documents and provide supporting
documents.
Understand the voluntary conditions
being agreed with other party
Pay funds and securities for settlement
on time.
Investor’s Obligations
10. The Securities Exchange Board of
India Act, 1992
The Securities Contract (Regulation)
Act, 1956
The Depositories Act, 1996
The Companies Act and Rules
Consolidated FDI Policy
Ministry of Finance Notification
Circular issued by GOI
Foreign Currency Exchangeable
Bonds Scheme, 2008
FCCB and Ordinary Share Scheme
1993 as amended
Reserve Bank of India, Regulations /
Circulars issued by RBI
Companies Act & Rules
Listing Agreement
Legislation governing Indian
Capital Market
Legislations governing
International Market
11. COMPLIANCES FOR THE BENEFIT INVESTOR
Control over Issue Capital: A major initiative of liberalization was the repeal of
the Capital Issues (control) Act, 1947 in May 1992. In the interest of Investors,
SEBI issued Disclosure and Investor protection (DIP) guidelines.
Establishment of Regulator: To provide assurance that it is safe to undertake
transaction in securities market
Screen Based Trading (SBTS): where member can punch into the computer
quantities of securities and the price at which he likes to transact and transaction is
executed as soon as it finds a matching sale or buy order from a counter party.
Risk Management: A number of measure were taken to manage the risks in the
market so that the participant are safe and market integrity is protected. The trading
cycle varied from 14 days for specified securities to 30 days for others and
settlement took another fortnight. Olling Settlement on T+5 basis was introduced
in phases. All scrips moved to rolling settlement from December 2001. T+5 gave
way to T+3 from April 2002 and T+2 from April 2003.
12. Depositories Act: The earlier settlement system gave rise to settlement risk. This
was dude to the time taken for settlement and due to the physical movement of
paper, Easy transferability of shares.
Derivatives: To assist market participants to manage risks better through hedging,
speculation, and arbitrage.
Security Market Awareness: In January 2003, SEBI launched a nation-wide
Securities Market Awareness Campaign that aims at educating investors about the
risks associated with the market as well as the rights and obligation of investors.
Corporate Governance: To improve the standards of Corporate Governance,
SEBI amended Clause 49 of the Listing Agreement. The major changes in the new
clause 49 include amendments/additions to provisions relating to definition of
Independent Director, strengthening the responsibilities of audit committee,
improving quality of financial disclosure, including those pertaining to related party
transactions and proceeds from public/rights/preferential issue, requiring board to
adopt formal code of conduct, requiring CEO/CFO certification of financial
statements and improving disclosure to shareholders. Certain non-mandatory
clauses like whistle blower policy and restriction of the term of Independent
Directors have also been included.
13. Debt Listing Agreement: in order to further develop the corporate debt market,
SEBI prescribed a model debenture listing agreement for all debenture securities
issued by an issuer irrespective of the mode of issuance
Minimum Public Shareholding: in order to maintain uniformity and also for the
purpose of continues listing, it was decided to amend SEBI (DIP) Guidelines, 2000
providing minimum public shareholding of 25% in case of all listed entities barring
few exceptions.
Gold Exchange Traded Funds in India - SEBI appointed committee for
introduction of Gold Exchange Traded Fund in India. The SEBI mutual fund
regulations,1996 were amended notification was issued on January 2006 permitting
mutual funds to introduce GETFs in India subject to certain investment
restrictions.
Guidelines for issue of Indian Depository Receipts (IDRs) - SEBI Issued
Guidelines on disclosures and related requirements for companies desirous of
issuing IDRs in India. SEBI also prescribed the listing agreement for entities issuing
IDRs.
14. Mandatory requirement of PAN for opening and operating Demat Accounts –
PAN was made mandatory for all demat accounts, opened after April 01, 2006,
pertaining to all categories including minors, trusts, foreign corporate bodies, banks,
corporates, FIIs and NRIs.
Grading of Initial Public offering (IPOs) – Grading of all IPO was mandatory. The
grading would be done by credit rating agencies, registered with SEBI. The grading
would be disclosed in the prospectus, abridge prospectus and in every advertisement for
IPOs.
Setting up of SME Exchange: SEBI decided to put in place a framework for setting
up new exchange or separate platform of existing stock exchange having national wide
terminal of SME.
Business Responsibility Reports – SEBI Inserted clause 55 in the Equity Listing
Agreement, mandating inclusion of Business Responsibility Reports as part of Annual
Report.
Separate link is available on Ministry of Corporate Affairs -
http://www.iepf.gov.in/ empowering business and protecting investor. Where in
investor services compliance relating to unpaid & unclaimed dividend, debenture,
deposits
15. INVESTOR
PROTECTION
SEBI has commenced processing of Investor grievance against the intermediaries in a
centralized web-based complaint redressal system, ‘SCORES’ at http://scores.gov.in
The rating symbols and definitions of CRA was standardize
The KYC registration Agency (KRA) Regulations were notified. Code of conduct, Data
security etc.
Information of companies to be placed on website, Separate tab is provided for on the
companies website.
Ministry of Corporate affairs provide separate portal for protection of investor and
investor awareness Programme.
http://investindia.gov.in promoting foreign investments in India in a focused,
comprehensive, and structured manner while acting as a first reference point to provide
quality input and support services to the prospective foreign investors.
16. SEBI provide platform for investor at SCORE http://scores.gov.in/ where investor
can register their Complaint.
Ministry of Corporate Governance provide separate link for investor protection and
awareness http://www.iepf.gov.in/
http://investindia.gov.in/ this portal is particularly made for promoting foreign
investment in India. To provide quality input and support services to the prospective
foreign investor.
For Insurance Companies IRDA has provided grievance cell https://www.irda.gov.in
two separate form are available one is for General Insurance& Health and other is for
Life Insurance.
For Mutual Fund units, Association of Mutual Funds In India provide redressal of
investor grievance through SEBI Redressal system (SCORES) Platform.
INVESTOR GRIEVANCE REDRESSAL SCHEME
