Following significant changes have recently been introduced by MCA and SEBI:

A. MCA permits holding of annual general meeting (AGMs) and extraordinary general meetings (EGMs) through video conferencing (VC) or other audio-visual means (OAVM) till June 30, 2022

B. Co-investment by investors of AIF through portfolio managers

  • Registered Portfolio Manager to give prior intimation while unregistered Portfolio Managers to seek registration from SEBI;
  • Revised formats prescribed for reporting;
  • Exemption from fees and charges;
  • Direct on-boarding of clients by Portfolio Managers – exemptions.

C. Disclosure by Alternative Investment Funds (AIFs) and investor grievance mechanism

  • Investor Charter containing details of grievance redressal mechanism, responsibilities of the investors etc., to be disclosed in the PPM;
  • AIFs to disclose data on investor complaints received against AIFs and each of their schemes and the redressal status of these schemes.

D. Delisting pursuant to an Open Offer- Amendments to the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Code)

Key changes include the following:

  • Declaration of Intention to delist to be made in public announcement;
  • Eligibility requirements for delisting;
  • Disclosure of open offer price; delisting threshold to be met;
  • Compliances in case of an unsuccessful delisting offer- Public announcement and reduction in withdrawal period for shareholders, and opportunity for acquirers to make a further delisting attempt in case of an unsuccessful delisting;
  • Prohibition on delisting offer in case of a competing offer under the Takeover Code;
  • Reduction of shareholding of the acquirer where the shareholding of the acquirer exceeds the maximum permissible non-public shareholding.

The aforesaid changes have been analyzed in detail below:

A. Relaxation in holding of AGM and EGM through VC/OAVM

In furtherance of the earlier relaxation granted by MCA in respect of holding of AGM through VC/OAVM, MCA has now permitted companies whose AGMs are due in the year 2021, to conduct their AGMs before June 30, 2022, through VC/OAVM. It has been clarified that this relaxation should not be construed as conferring any extension of time for holding of AGMs by the companies under Companies Act, 2013 (CA2013). The relaxation has been granted vide General Circular No. 19/2021 dated December 8, 2021 ( available here).

MCA has further [vide General Circular No. 21/2021 dated December 14, 2021 ( available here)], permitted companies who are proposing to organize AGMs in 2022 for the financial year ended/ending any time before/on March 31, 2022, to use VC/OAVM as per the respective due dates by June 20, 2022. It has been clarified that this relaxation should not be construed as conferring any extension of time for holding of AGMs by the companies under CA2013.

In case of EGMs, MCA has permitted companies to hold EGMs through VC/OAVM or transact items through postal ballot till June 30, 2022. The extension has been given vide General Circular No. 20/2021 dated December 8, 2021 ( available here).

B. Co-investment by investors of AIF through portfolio managers

SEBI had recently amended (Portfolio Managers) Regulations, 2021 (PMS Regulations) to facilitate coinvestment by investors of Alternative Investment Funds (AIF) through the portfolio management route. In this regard, SEBI has issued the following clarification:

Procedure for undertaking of Co-investment portfolio management services | Registered Portfolio Manager to give prior intimation while unregistered Portfolio Managers to seek registration
  • A Manager of an AIF who is also a SEBI registered Portfolio Manager, and who intends to offer Co-investment services through portfolio management route, shall do so only under prior intimation to SEBI.
  • Any other Manager who is not a SEBI registered Portfolio Manager, and who intends to offer Co-investment services through portfolio management route, shall seek registration from SEBI as a Portfolio Manager in terms of the PMS Regulations. Pursuant to grant of registration, if this Portfolio Manager would like to offer portfolio management services other than Co-investment, the same shall be subject to compliance with all provisions of the PMS Regulations including eligibility criteria, and with the prior approval of SEBI.

Periodic reporting by Portfolio Managers | Revised formats prescribed for reporting
  • Portfolio Managers to submit a monthly report regarding their portfolio management activity, on SEBI Intermediaries Portal within 7 working days of the end of each month, as per the revised format provided by SEBI. This includes details of Co-investment offered by Portfolio Manager.
  • Portfolio Managers shall furnish a report to their clients on a quarterly basis, as per the revised format provided by SEBI, which includes details of Co-investment offered by Portfolio Manager. This includes details of Co-investment offered by Portfolio Manager.

The reporting requirements as per the revised formats will be applicable for monthly reports to SEBI and quarterly reports to clients, from the month of April 2022 onwards.

Fees and charges | Exemption from fees

 In respect of co-investment services, Portfolio Managers have been exempted from fees and charges specified under SEBI Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020.

Direct on-boarding of clients by Portfolio Managers

 The provisions with respect to direct on-boarding of clients by Portfolio Managers as specified under Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020, will not be applicable to Co-investment services.

The aforesaid procedure has been laid down vide SEBI Circular dated December 10, 2021 ( available here), effective from the date of enforcement of SEBI (Portfolio Managers) (Fourth Amendment) Regulations, 2021 (i.e. thirtieth day from November 9, 2021).

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