Sebi And Fema Act - Final 1
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SEBI and FEMA Act ANOOP K SRIVASTAVA ANURAG MANGAIN HARDIK GANDHI RONAK PANCHAL SACHIN MOGHE VINAYAK DAVE
SIMSR MFM Ist SEM
1
FOREIGN EXCHANGE MANAGEMENT ACT 1999 INTRODUCTION HISTORY GENERAL INFORMATION PROVISIONS AND OPERATIONAL RESPONSIBILITY ENFORCEMENT DIRECTORATE ALLIED ACTS MAIN OBJECTIVES CASE STUDIES
SIMSR MFM Ist SEM
2
Introduction to FEMA
The objective of the Act is to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
SIMSR MFM Ist SEM
3
History of FEMA
Foreign Exchange Management Act (FEMA) replaced Foreign Exchange Regulation Act of 1973 (FERA) in India was repealed on 1 June, 2000.
Exchange Control Act, during the second world war
Foreign Exchange Regulation Act in 1947. Why FERA was replaced by FEMA? Foreign Exchange Reserve Position Rules and Regulations for Fera Under FERA,
SIMSR MFM Ist SEM
4
Negative impact of FERA
HOW HAWALA TRADING EFFECTED INDIAN ECONOMY
Indian rupee rates Vs. U.S. dollar were as under. Year 1981Rs. 8 per dollar.
Year 1991Rs. 18 per dollar.
Year 1999Rs. 43 per dollar. SIMSR MFM Ist SEM
5
General Information How different is FEMA from FERA?
Objective Transactions in Capital Account and Current Account. Civil/Criminal Prosecution Who is resident in India ? Credit Cards, Debit cards etc.
EXTENSION/APPLICABILITY OF THE ACT SIMSR MFM Ist SEM
6
CLASSIFICATION OF TRANSACTIONS
CAPITAL ACCOUNT TRANSACTIONS: Transactions that alter the domestic assets and liabilities of a person resident in India or a person resident outside India in relation to his country. CURRENT ACCOUNT TRANSACTIONS: Transactions which do not fall under the ambit of capital account transactions are considered as current account transactions.
SIMSR MFM Ist SEM
7
FEMA PROVISIONS & OPERATIONAL RESPONSIBILITY
Provisions under FEMA Act Administration of FEMA Provisions Authorized Person Responsibilities of Authorized Person
SIMSR MFM Ist SEM
8
FEMA 1999 ENFORCEMENT DIRECTORATE
Established by Central Govt to investigate due adherence to the provisions of the Act by market participants. Concerned with enforcement of the provisions of the Act to prevent leakage of foreign exchange occurring through various malpractices. Directorate of Enforcement is responsible for detection of cases relating to violation and performance of adjudicatory functions to curb malpractices. SIMSR MFM Ist SEM
9
ENFORCEMENT DIRECTORATE ORG SET UP AND FUNCTIONS ORGANISATIONAL SET UP :
Head Quartered at New Delhi. 7 Zonal Offices headed by deputy directors, 1 each in 4 metros & Jalandhar, Ahmedabad & Bangalore. 9 sub zonal offices headed by Assistant Directors at Agra, Srinagar, Jaipur, Varanasi, Trivandrum, Calicut, Hyderabad, Guwahati & Goa. 1 Unit at Madurai headed by Chief Enforcement Officer. 3 Special Directors of Enforcement and 1 Additional Director of Enforcement. SIMSR MFM Ist SEM
10
ENFORCEMENT DIRECTORATE FUNCTIONS
To collect and develop intelligence relating to violation of provisions of FEMA. To conduct searches of suspected persons, conveyances and premises for seizing incriminating materials. To enquire into and investigate suspected violations or provisions of FEMA. To adjudicate cases of violations of FEMA for levying penalties and also for confiscating the amounts involved in contraventions. To realise penalties in departmental adjudication. SIMSR MFM Ist SEM
11
CONTRAVENTION AND PENALTIES
Penalty of upto 3 times of the sum involved in each contravention where such amount is quantifiable. Penalty of upto Rs 2 lakhs where the amount is not quantifiable. In case of continuing contravention, further penalty of Rs 5,000.00 for every day after the first day of contravention Confiscation of currency, security or any other money or property in respect of which the contravention has taken place. Civil imprisonment for failure to make full payment of the penalty imposed within 90 days from the notice of payment.
SIMSR MFM Ist SEM
12
FEMA 1999 ALLIED ACTS
COFEPOSA – Conservation of Foreign Exchange & Prevention of Smuggling Activities Act, 1974. SAFEMA – The Smuggling & Foreign Exchange Manipulation (Forfeiture of Property) Act, 1976. Foreign Contribution (Regulation) Act, 1976.
SIMSR MFM Ist SEM
13
Main Objectives of FEMA Act
Controls dealings in foreign exchange Restrains any person resident in India from dealing in foreign exchange Deals with capital account transactions. Deals with export of goods and services. Casts the responsibility on the persons resident Pertains to the establishment of Directorate of Enforcement and the empowers it to control voilation of the act SIMSR MFM Ist SEM
14
CAPITAL ACCOUNT CONVERTIBILITY
What is CAC Prerequisite of CAC Evolution of CAC in India Economic Scenario Reasons for Introduction of CAC in India Benefits and Drawbacks of CAC
SIMSR MFM Ist SEM
15
CASE SYUDY 1
Vodafone(Briton) A Foreign company
Takes over
HTIL(Whampoa group of Li-Ka Shing. Hong Kong A foreign company
67% Essor group Hutchison Essor Indian Company
SIMSR MFM Ist SEM
Asim Ghosh-12% A.Singh and other companies (Minority)
16
Case Study – Contd…..
ED Has Issued 715 notices for violation of FEMA in last three years Appolo Hospitals Case Against Vijay Mallya Reliance Industries Limited Yum Restaurants
SIMSR MFM Ist SEM
17
SEBI SECURITIES EXCHANGE BOARD OF INDIA
SIMSR MFM Ist SEM
18
HISTORY OF STOCK MARKET & SEBI First Stock Exchange made in 1602 and East India Company was the first company to purchase shares. Bombay Stock Exchange was established in 1875 Earlier stock exchanges were dealing in commodities market
SIMSR MFM Ist SEM
19
PRIOR TO SEBI……
Securities Contracts (Regulation) Act 1956 was formed to control stock markets and securities in India IT was an Act which empowers Central Govt to recognize stock exchanges and has total control over it. Exchanges have to submit periodical returns or govt may call for direct enquiries
SIMSR MFM Ist SEM
20
HOW SEBI CAME IN TO PICTURE
The World Bank and the International Monetary Fund (IMF) have introduced a benchmark i.e., Financial Services Assessment Programme (FSAP) The mission of SEBI is to make India as one of the best securities market of the world and SEBI as one of the most respected regulator in the world.
SIMSR MFM Ist SEM
21
Objectives and Functions of SEBI
Objectives of SEBI: It tries to develop the securities market. Promotes Investors Interest. Makes rules and regulations for the securities market. Functions Of SEBI: Regulates Capital Market Checks Trading of securities. Checks the malpractices in securities market. It enhances investor's knowledge on market by providing education. It regulates the stockbrokers and sub-brokers. To promote Research and Investigation SIMSR MFM Ist SEM
22
CASE STUDIES
SEBI has directed Dipak Patel (U.S.A Passport No.209189753 ), Portfolio Manager of M/s Passport India Investment (Mauritius) Ltd, Kanaiyalal Baldev Patel (PAN AEWPP1442H ), Anandkumar Baldevbhai Patel (PAN AACFB8866B ) and Bhoomi Industries (PAN AACFB8866B) not to buy, sell or deal in any securities, directly or indirectly till further directions in this regard. SIMSR MFM Ist SEM
23
CASE STUDIES
SEBI has directed Dipak Patel (U.S.A Passport No.209189753 ), Portfolio Manager of M/s Passport India Investment (Mauritius) Ltd, Kanaiyalal Baldev Patel (PAN AEWPP1442H ), Anandkumar Baldevbhai Patel (PAN AACFB8866B ) and Bhoomi Industries (PAN AACFB8866B) not to buy, sell or deal in any securities, directly or indirectly till further directions in this regard. SIMSR MFM Ist SEM
24
SIMSR MFM Ist SEM
1
FOREIGN EXCHANGE MANAGEMENT ACT 1999 INTRODUCTION HISTORY GENERAL INFORMATION PROVISIONS AND OPERATIONAL RESPONSIBILITY ENFORCEMENT DIRECTORATE ALLIED ACTS MAIN OBJECTIVES CASE STUDIES
SIMSR MFM Ist SEM
2
Introduction to FEMA
The objective of the Act is to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
SIMSR MFM Ist SEM
3
History of FEMA
Foreign Exchange Management Act (FEMA) replaced Foreign Exchange Regulation Act of 1973 (FERA) in India was repealed on 1 June, 2000.
Exchange Control Act, during the second world war
Foreign Exchange Regulation Act in 1947. Why FERA was replaced by FEMA? Foreign Exchange Reserve Position Rules and Regulations for Fera Under FERA,
SIMSR MFM Ist SEM
4
Negative impact of FERA
HOW HAWALA TRADING EFFECTED INDIAN ECONOMY
Indian rupee rates Vs. U.S. dollar were as under. Year 1981Rs. 8 per dollar.
Year 1991Rs. 18 per dollar.
Year 1999Rs. 43 per dollar. SIMSR MFM Ist SEM
5
General Information How different is FEMA from FERA?
Objective Transactions in Capital Account and Current Account. Civil/Criminal Prosecution Who is resident in India ? Credit Cards, Debit cards etc.
EXTENSION/APPLICABILITY OF THE ACT SIMSR MFM Ist SEM
6
CLASSIFICATION OF TRANSACTIONS
CAPITAL ACCOUNT TRANSACTIONS: Transactions that alter the domestic assets and liabilities of a person resident in India or a person resident outside India in relation to his country. CURRENT ACCOUNT TRANSACTIONS: Transactions which do not fall under the ambit of capital account transactions are considered as current account transactions.
SIMSR MFM Ist SEM
7
FEMA PROVISIONS & OPERATIONAL RESPONSIBILITY
Provisions under FEMA Act Administration of FEMA Provisions Authorized Person Responsibilities of Authorized Person
SIMSR MFM Ist SEM
8
FEMA 1999 ENFORCEMENT DIRECTORATE
Established by Central Govt to investigate due adherence to the provisions of the Act by market participants. Concerned with enforcement of the provisions of the Act to prevent leakage of foreign exchange occurring through various malpractices. Directorate of Enforcement is responsible for detection of cases relating to violation and performance of adjudicatory functions to curb malpractices. SIMSR MFM Ist SEM
9
ENFORCEMENT DIRECTORATE ORG SET UP AND FUNCTIONS ORGANISATIONAL SET UP :
Head Quartered at New Delhi. 7 Zonal Offices headed by deputy directors, 1 each in 4 metros & Jalandhar, Ahmedabad & Bangalore. 9 sub zonal offices headed by Assistant Directors at Agra, Srinagar, Jaipur, Varanasi, Trivandrum, Calicut, Hyderabad, Guwahati & Goa. 1 Unit at Madurai headed by Chief Enforcement Officer. 3 Special Directors of Enforcement and 1 Additional Director of Enforcement. SIMSR MFM Ist SEM
10
ENFORCEMENT DIRECTORATE FUNCTIONS
To collect and develop intelligence relating to violation of provisions of FEMA. To conduct searches of suspected persons, conveyances and premises for seizing incriminating materials. To enquire into and investigate suspected violations or provisions of FEMA. To adjudicate cases of violations of FEMA for levying penalties and also for confiscating the amounts involved in contraventions. To realise penalties in departmental adjudication. SIMSR MFM Ist SEM
11
CONTRAVENTION AND PENALTIES
Penalty of upto 3 times of the sum involved in each contravention where such amount is quantifiable. Penalty of upto Rs 2 lakhs where the amount is not quantifiable. In case of continuing contravention, further penalty of Rs 5,000.00 for every day after the first day of contravention Confiscation of currency, security or any other money or property in respect of which the contravention has taken place. Civil imprisonment for failure to make full payment of the penalty imposed within 90 days from the notice of payment.
SIMSR MFM Ist SEM
12
FEMA 1999 ALLIED ACTS
COFEPOSA – Conservation of Foreign Exchange & Prevention of Smuggling Activities Act, 1974. SAFEMA – The Smuggling & Foreign Exchange Manipulation (Forfeiture of Property) Act, 1976. Foreign Contribution (Regulation) Act, 1976.
SIMSR MFM Ist SEM
13
Main Objectives of FEMA Act
Controls dealings in foreign exchange Restrains any person resident in India from dealing in foreign exchange Deals with capital account transactions. Deals with export of goods and services. Casts the responsibility on the persons resident Pertains to the establishment of Directorate of Enforcement and the empowers it to control voilation of the act SIMSR MFM Ist SEM
14
CAPITAL ACCOUNT CONVERTIBILITY
What is CAC Prerequisite of CAC Evolution of CAC in India Economic Scenario Reasons for Introduction of CAC in India Benefits and Drawbacks of CAC
SIMSR MFM Ist SEM
15
CASE SYUDY 1
Vodafone(Briton) A Foreign company
Takes over
HTIL(Whampoa group of Li-Ka Shing. Hong Kong A foreign company
67% Essor group Hutchison Essor Indian Company
SIMSR MFM Ist SEM
Asim Ghosh-12% A.Singh and other companies (Minority)
16
Case Study – Contd…..
ED Has Issued 715 notices for violation of FEMA in last three years Appolo Hospitals Case Against Vijay Mallya Reliance Industries Limited Yum Restaurants
SIMSR MFM Ist SEM
17
SEBI SECURITIES EXCHANGE BOARD OF INDIA
SIMSR MFM Ist SEM
18
HISTORY OF STOCK MARKET & SEBI First Stock Exchange made in 1602 and East India Company was the first company to purchase shares. Bombay Stock Exchange was established in 1875 Earlier stock exchanges were dealing in commodities market
SIMSR MFM Ist SEM
19
PRIOR TO SEBI……
Securities Contracts (Regulation) Act 1956 was formed to control stock markets and securities in India IT was an Act which empowers Central Govt to recognize stock exchanges and has total control over it. Exchanges have to submit periodical returns or govt may call for direct enquiries
SIMSR MFM Ist SEM
20
HOW SEBI CAME IN TO PICTURE
The World Bank and the International Monetary Fund (IMF) have introduced a benchmark i.e., Financial Services Assessment Programme (FSAP) The mission of SEBI is to make India as one of the best securities market of the world and SEBI as one of the most respected regulator in the world.
SIMSR MFM Ist SEM
21
Objectives and Functions of SEBI
Objectives of SEBI: It tries to develop the securities market. Promotes Investors Interest. Makes rules and regulations for the securities market. Functions Of SEBI: Regulates Capital Market Checks Trading of securities. Checks the malpractices in securities market. It enhances investor's knowledge on market by providing education. It regulates the stockbrokers and sub-brokers. To promote Research and Investigation SIMSR MFM Ist SEM
22
CASE STUDIES
SEBI has directed Dipak Patel (U.S.A Passport No.209189753 ), Portfolio Manager of M/s Passport India Investment (Mauritius) Ltd, Kanaiyalal Baldev Patel (PAN AEWPP1442H ), Anandkumar Baldevbhai Patel (PAN AACFB8866B ) and Bhoomi Industries (PAN AACFB8866B) not to buy, sell or deal in any securities, directly or indirectly till further directions in this regard. SIMSR MFM Ist SEM
23
CASE STUDIES
SEBI has directed Dipak Patel (U.S.A Passport No.209189753 ), Portfolio Manager of M/s Passport India Investment (Mauritius) Ltd, Kanaiyalal Baldev Patel (PAN AEWPP1442H ), Anandkumar Baldevbhai Patel (PAN AACFB8866B ) and Bhoomi Industries (PAN AACFB8866B) not to buy, sell or deal in any securities, directly or indirectly till further directions in this regard. SIMSR MFM Ist SEM
24
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