The government has just strengthened SEBI’s hands further by permitting the market regulator to impose a fine of up to Rs. 25 Crore if bourses do not follow its directions. The recently – issued Securities Laws (Amendment) Ordinance 2004, says that if a stock exchange fails or neglects to furnish periodical returns to SEBI, or fails to make or amend its rules or by-laws as directed by the regulator, SEBI can slap a penalty of up to Rs. 25 crore.

Last year, the government gave SEBI power to impose higher penalties, as part of its efforts to help the market regulator act decisively against wrongdoers. In addition to that, the government is now increasing SEBI’s penal powers and expanding its scope.

The ordinance also says that SEBI can slap a penalty of up to Rs. 25 crore on companies that dematerialise more than the issued securities or deliver in the stock exchanges securities that are not listed or where no trading permission has been given by the stock exchange. It adds that failure to pay the penalty imposed by SEBI could lead to imprisonment for up to 10 years

Go to top

The California Public Employee’s Retirement System (CalPERS), the largest pension fund in the US, has invested over US $100 million in the domestic market since April 2004. The fund, which made an entry into the country early this year, has made investments in the pharma, manufacturing and IT sectors. It has also invested another US $10-15 million by way of private equity investment. “We have made over $100m investment in the Indian markets,” said Priya Mathur, Vice Chairperson, investment committee trustee CalPERS, who is currently in India. She did not comment on how much more CalPERS is likely to bring into India this year. The fund has invested close to US $ 2 billion in emerging markets last year. “We have three emerging market fund managers who make the investment decision. If they find an opportunity, they will invest.”

“We are looking at investing in local corporate debt if the market develops, but it is an immature market right now,” she said. The daily volumes in the Indian corporate debt market average about Rs.100 crore.

Go to top

All Indian audit firms – including the big four – could soon be mandated by law to separate their audit and consultancy outfits. The government has initiated a discussion on whether it should amend corporate law to mandate separation of the two arms to eliminate conflict of interest. However, a final decision on the contentious issue is pending as the government may not want the proposed change in law to result in undue hardship for domestic audit firms. Local consultancy and audit firms are small in size and have to face severe competition; a harsh rule may be detrimental to their growth, said a government source.

Observers say local audit firms will be hit more because some of the global auditors- PriceWaterhouseCoopers, KPMG and E&Y – have already begun the process of separating their audit firms from the consulting arm. This is mandated by the newly adopted Sarbannes Oxley Act, which came into being in the US after accounting scams were unearthed in companies like Enron, Worldcomm and others. Hence, the global auditors are pretty much prepared for legal changes in the Indian company law, said a source. The global auditors essentially have a partnership firm with unlimited liability conducting the audit functions. Another company with limited liability runs the consulting business.

Go to top