Recent trends in Indian Capital Market and highlights of the new Companies Act, 2013

2. Index
 Types of Financial Market
 Capital Market- Nature and Role
 Capital Market Reforms
 Recent Developments
 Reforms Post 2000
 The Companies Act, 2013- New rule of the game.
 Conclusion
 References

3. Types of Financial Market
Financial
Market
Capital
Market
Primary
Market
Secondary
Market
Money
Market
Long term,
Governed
by SEBI
Short term,
Governed by
RBI
New
Securities
Issued
Issued Security
trade

4. The market where investment instruments like bonds,
equities and mortgages are traded is known as the capital
market.
The primal role of this market is to make investment from
investors who have surplus funds to the ones who are running
a deficit
Capital Market deals in long term capital securities (Equity or
Debt) offered by private business companies or the govt. of
India
Governed and regulated by Securities and Exchange Board of
India (SEBI).

5. NATURE and ROLE OF CAPITAL
MARKET
 It Has Two Segments
 It Deals In Long-Term Securities
 It Performs Trade-off Function
 It Creates Dispersion In Business Ownership
 It Helps In Capital Formation
 It Helps In Creating Liquidity

6. Creates investment opportunities for small investors
Government raises capital for development projects
Barometer for the economy

7. Capital Market Reforms
 Objectives
 Improving Market Efficiency
 Enhancing Transparency
 Preventing Unfair Trade Practices
 Integration with International Markets
 Actions
 Liberalize
 Regulate
 Develop

8. Recent Developments in Capital
Markets in India
 The 1990s have witnessed the emergence of securities
market as a major source of finance for trade and
industry in India.
 Thus the Govt. of India and
SEBI has undertaken number
of measures in order to
improve the working of Indian stock market to
make it more progressive and vibrant.

9. Capital Market-Reforms
 Each scam has brought in reforms - 1992 / 2001
 Screen based Trading through NSE, Jan 2003
 Capital adequacy norms stipulated
 Setting up of Private Mutual Funds
 Dematerialization of Shares - risks of fraudulent paper
eliminated
 Entry of Foreign Investors
 Investor awareness programs
 Rolling settlements
 Inter-action between banking and exchanges

10.  SEBI ACT,1992
 Protect-Promote-Regulate
 Disclosure and Investor Protection Guidelines (DIP)
 Access to International Capital Markets:
I. American Depository Receipts (ADRs),
II. Global Depository Receipts (GDR), Foreign Currency Convertible
Bonds (FCCBs) and External Commercial Borrowings (ECBs).
 Free Pricing
 Book Building
 Screen Based Trading
 Internet Trading-Mobile Trading
 Establishment of Creditors Rating Agencies
 Credit Rating Information Services of India Limited CRISIL (1988)
 Investment Information and Credit Rating Agency of India Limited
ICRA(1991) and Credit Analysis and Research Limited CARE were set up
to assess the financial health of different financial institution.
 Investor’s Education and Protection Fund (IEPF), 1991

11. Contd.
 Reforms in Primary Market and Mutual Funds to bring more
transparency and accountability.
 Introduction of depository concept (Electronic Mode).
 Stricter vigilance and market surveillance mechanism.
 Introduction of buy-back of shares and its regulation.
 Steps for practicing good corporate governance practice.
 Trading in Options, Futures and Derivatives.
 Rolling settlements at Stock Exchanges.
 Empowerment of shareholders through legislative changes
in Companies Act, 1956.
 Better transparency and disclosure through Listing
Agreement.
 EDIFR - Electronic Data Filing and Retrieval System
 Price Stabilization Fund

12. Commodity trading
 Multi Commodity Exchange
(MCX)
 Setting up of Clearing
Corporation of India Limited
(CCIL), Venture funds etc.
have resulted into tremendous
growth of Indian Capital Market.
 Delisting frameworks- The Securities Laws
(Amendment) Act,2004 amended the SCRA
that stock exchange may delist the securities after recording
reasons

13. Reforms Post 2000
 Corporatization of exchange memberships
 Banning of Badla / ALBM
 Introduction of Derivative products - Index / Stock
Futures & Options
 Reforms/Changes in the margining system
 STP - electronic contracts
 Margin Lending
 Securities Lending

14. The Companies Act,2013
 The Companies Act 2013 is an Act of the Parliament of
India which regulates incorporation of a company,
responsibilities of a company, directors, dissolution of
a company
 It is divided into 29 chapters containing 470 sections.
 The Act has replaced The Companies Act, 1956 after
receiving the assent of the President of India on 29
August 2013.
 The Act came into force on 12 September 2013
 A total of another 184 sections came into force from 1
April 2014.

15. The provisions of this Act shall
apply to:
 Companies incorporated under this Act or under any previous
company law
 Insurance companies, except in so far as the said provisions are
inconsistent with the provisions of the Insurance Act, 1938 or the
Insurance Regulatory and Development Authority Act, 1999
 Banking companies, except in so far as the said provisions are
inconsistent with the provisions of the Banking Regulation Act,
1949
 Companies engaged in the generation or supply of electricity,
except in so far as the said provisions are inconsistent with the
provisions of the Electricity Act, 2003
 Any other company governed by any special Act for the time
being in force, except in so far as the said provisions are
inconsistent with the provisions of such special Act

16. CONCEPTS
 FORMATION OF THE COMPANY
 REGISTERED OFFICE OF THE COMPANY
 ALTERATIONS
 RECTIFICATION OF NAME OF COMPANY
 AUTHENTICATION OF DOCUMENTS,
PROCEEDINGS AND CONTRACTS
 EXECUTION OF BILLS OF EXCHANGE

17.  OPC - Only 1 member (should be an Indian citizen
and resident) At least 1 Director
 Small Company -Not a public company . Paid up
capital not more than INR 5m and turnover according
to latest P&L does not exceed INR20m
 Private Limited - Company members (2 to 200),
minimum two Directors .Restriction on transfer of
shares
 Public Company - Minimum 7 members, minimum 3
directors .Limits placed on remuneration paid to the
Directors

18. HIGHLIGHTS-
 One Person Company (OPC)
 Woman Director
 Resident Director
 Accounting Year
 Loans to director
 Articles of Association
 Financial year
 Appointment of Statutory Auditors
 Limit on a number of members
 Share capital
 CSR
 Mergers and amalgamations
 Revival and Rehabilitation of sick company

19. CHALLENGES
 TRANSITION OF COMPANIES TO COMPLY WITH
THE COMPANIES ACT
 LACK OF CLARITY IN CERTAIN PROVISIONS
(The Act provides that foreign companies in India need to furnish incorporation
papers, among others, to the Registrar of Companies, display their names
indicating country of origin, etc., but since the term “foreign company” is not
defined clearly, it has created confusion leaving interpretation problems between
former laws and the Act.)
 THREATENING THE BASIC CONCEPT OF CSR

20. 268142
214
139373
29334
204
1022011
0
Summary Statistics of Indian Companies (March 31st, 2015)
COMPANIES CLOSED DORMANT COMPANIES
INACTIVE COMPANIES COMPANIES UNDER PROCESS FOR CLOSURE
ACTIVE IN PROCESS ACTIVE COMPANIES

21. 0
20000
40000
60000
80000
100000
120000
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Registration of Companies Limited by Shares during Financial
Year 2009-10 to 2014-15
No. of Companies Authorized Capital Column1

22. 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000
Northern Region
Eastern Region
Western Region
Southern Region
Registration of New Companies during 2014-15
Column1 Column2 Series 1

23. 0
200000
400000
600000
800000
1000000
1200000
Active Companies 1956-57 to 2014-15
Total number of companies Column1 Column2

24. CONCLUSION
 There has been little progress outside the equity
market and the corporate bond market
1. because regulatory guidelines severely restrict the
ability of banks and other financial institutions
to invest in corporate bonds.
 Volatility of the market has increased over the years.
 Retail investors have been running away from not
only the equity market, but also from mutual funds.
 Only 3.5 million Indians – from a total working
population of 321 million invest in stocks.

25. REFERENCES
 http://www.sebi.gov.in/
 www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf
 www.finmin.nic.in/the_ministry/.../capital_market.
 https://rbi.org.in/Scripts/PublicationsView.aspx?id=16167
 www.finance.mapsofworld.com
 www.articles.economictimes.indiatimes.com
 www.economicsdiscussion.net/india/sebi/...and...capital-market-reforms/11075
 http://www.igidr.ac.in/conf/money1/mfc-11/BhanuMurthy_KV_Amit.pdf
 http://www.mondaq.com/india/x/306004/Corporate+Commercial+Law/Highlights+On+
New+Indian+Companies+Act+2013
 http://www2.deloitte.com/content/dam/Deloitte/in/Documents/tax/thoughtpapers/in-
tax-companies-act-2013-fresh-thinking-for-a-new-start-noexp.pdf
 http://www.mhcolaw.com/admin/public/uploads/Highlights%20-
%20Companies%20Act%202013.pdf


26. Submitted by-
Rashmie Parmour
(Roll No.8601)
Niyati Purandare
(Roll No.(8611)