1) Introduction of Special Situation Fund AIF (SSF AIF):
‘SSF’ has been defined to mean a Category I AIF that invests in special situation assets in accordance with its investment objectives and may act as a resolution applicant under the Insolvency and Bankruptcy Code, 2016 (IBC). Stressed Assets to included Stressed loans, defaults related to repayment of loans, bankruptcy assest etc. The guidelines were announced by SEBI on January 27 2022 to provide faster resolution to such assets.
2) Change in of Sponsor and/or Manager of AIF involving scheme of arrangement
To streamline the process of providing approval to the proposed change in control of the Sponsor and/or Manager of the AIF involving scheme of arrangement which needs sanction of National Company Law Tribunal (‘NCLT’) in terms of the provisions of the Companies Act, 2013, following has been decided:
- The application seeking approval for the proposed change in control of the Sponsor and/or Manager of the AIF to be filed with SEBI prior to filing the application with the NCLT;
- SEBI to grant in-principle approval upon being satisfied with compliance of the applicable regulatory requirements;
- The validity of such in-principle approval shall be three months from the date of issuance, within which the relevant application to be made to NCLT; and
- Within 15 days from the date of order of NCLT, the applicant to submit the requisite documents to SEBI for final approval.
- The aforesaid applies to all applications for which the scheme of arrangement is filed with NCLT on or after April 1 2022
3) Key changes / additions in the Master Direction on Foreign Investment in India
- The principle that “what cannot be done directly shall not be done indirectly” is now explicitly stated under the Downstream Investment. Accordingly, downstream investments which are treated as indirect foreign investment are subject to the entry routes, sectoral caps or the investment limits, as the case may be, pricing guidelines, and the attendant conditionalities for such investment as laid down in the NDI Rules.
- Valuation certificate issued by a Chartered Accountant or SEBI registered Merchant Banker or a practicing Cost Accountant cannot be older than 90 days from date of transfer.
- For cases where the original investment made in the investee entity was made as a resident but later the investor entity becomes FOCC, the same shall be reckoned as downstream investment from the date on which the investor entity becomes FOCC. Such downstream investment by the investor entity needs to comply with the applicable entry route and sectoral cap. (Requirement to comply with pricing and reporting guidelines has not been specified.)
4) List of additions in the current ITR forms:
|Schedule EI (ITR 5 & 6)||Additional disclosure of the income exempt under 10(23FB), 10(23FBA), 10(23FC), 10(23FCA), 10(23FE), 10(23FF) and 10(4D) are required|
|Residential status [ITR 2 & 3]|
|Assessee required to choose the relevant option of a residential status: (i) Resident and Ordinarily Resident; (ii) Resident but not Ordinarily Resident; and (iii) Non-Resident|
5) SEBI Consultation Paper | Disclosure of ‘Basis of Issue Price’ section in the IPO offer document
It has been observed by SEBI that the critical accounting ratios viz. earnings per share (EPS), price to earnings (P/E), return on net worth (RoNW) and net asset value (NAV) of the Company are typically descriptive of companies / issuers which are profit making and do not relate to a company / issuer that is loss making. Given the increase in filing of offer documents for IPOs by companies not having track record / not having operating profit in preceding three years, the aforementioned traditional parameters may not aid investors in taking investment decision w.r.t. loss making issuers.
SEBI has initiated consultation on alternate Key Performance Indicator (KPI) related disclosures for loss-making issuers such as:
- Disclosure of relevant KPIs including material KPIs made before the pre-IPO Investors during the 3 years prior to the IPO. Explanation of how these KPIs contribute to form the basis for issue price.
- Issuer Company shall disclose all material KPIs that have been shared with any pre-IPO investor at any point of time during the 3 years prior to IPO. However, for those KPIs which the issuer company deems are not relevant for the proposed IPO, the issuer shall provide adequate explanation for considering those KPIs as not relevant with proper cross reference to a table disclosing the said KPIs.
- KPIs stated by Issuer Company shall be described and defined clearly, consistently and precisely. KPIs should not be misleading.
- All KPIs to be certified / audited by statutory auditors.
- Comparison of KPIs with Indian listed peer companies and/ or global listed peer companies (wherever available) and the comparison of KPIs over time to be explained