Lok Sabha Question No. 4871 (UNSTARRED), answered on 2016-12-16
Subject: Payment of Dividends
Ministry: FINANCE
Asked by: VASANTHI M.

## GOVERNMENT OF INDIA MINISTRY  OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UNSTARRED  QUESTION  NO. 4871

## To BE ANSWERED  oN FRIDAY, l6'h DEcEMBER,20I6IAGRAHAvANA 25, 1938  (saka)

## PAYMENT OF DIYIDENDS

## QUESTION

## 4871. SHRIMATI VASANTHI M.:

Will the MinistEr of FINANCE  be pleased  to state:

- (a) whether the Securities and Exchange Board of India is aware  of cornplaints  received from shareholders about many companies  refusing to pay dividends despite having extra cash and  if so, the details ther.eof;
- (b) wlrether  the Governtnent has taken note of tlie ooncerns  from different quarters  regarding misuse  of .  participatory  notes; and
- (c) if so, the details thereof and the steps taken by the Government  to check the rnisuse?

## ANSWER

## MINISTER OF' STATE IN THE MINISTRY OF FINANCE (SHRI  ARJUN  RAM MEGHWAL)

(a): The securities and Exchange  Board of India (SEBD has informed tlrat it lras hardly received any cornplaint regarding  non-payment  of dividends  by cornpanies.  However,  while  declaration  of clividend is not mandatory,  a new Regulation 43A has been introduced in the SEBI (Listing obligation.  *a  Disclosure Requireme'ts) Regulations,  2015 requiring  the top 500 listed companies  iuy  *uy of riarket capitalization)  to fo.nulate  and disclose their  dividellddistribution policies  in their  annual r*portr  and on tlreir websites  in order to help investors in taking well-informed investment  cleoisions.

(b) and (c): Yes Madam. In order to ensure tmnsparency and to neutralize any possibility  of misuse of the inveetmont roufe llrucrgh  offtftor-e Derivative  lnstruments  (oDfs)/  participatory"llit",  (pNs),  SEBI has been o.onstantly  tightening lotgT\_ryt taking exposure  in the Indian  oapiial markei through  these instruments.  Some of the recent steps  taken by SEBI are as follows;

- ii' Vide SEBI's Circular dated 24tt'November,  2014, regulatory  arbitrage has been eliminated  by aligni'g the eligibility and investment  norms  between subscription  intougn oDI route and FpI  regime. e
- i. u*'der  the sEBI (Foreig'  portforio lrrvestors)  Regurations,  2014, only (FPIs),  which are Government  and covernnient-related  investo.s appropriately regulated)  can issue  and sr.rbscribe  to ODIs. category-t  Foreign Portfolio Irrvestors ancl category-Il  FPIs (which are
- iii' The llol'Ills for issuance  of ODI were  further tightened  vide SEBI's  Circular dated 10th  June,  2016.
- iv' Regulation  22 (2) of the SEBI (FPI) Regulations  ,  2a14  was amended to ensure that transfer of oDIs is done onty to  se(sot\s  wt'ro at-e compliant  vrit\rthe prorrisicms  of Regu'lation  22 (l) and prior  consent of the Fpl is obtained for such tmnsfer.
- v' Vide SEBI's Circular  dated 29tr' .Iune, 2016,  it has been rnandated  that  ODI subscribers  which  have  subscribed to oDIs under the Foreign  Institutional Investors (FII) Regulations can continue to subscribe  to oDIs under tlre FPI regime,  subject  to the condition  tlrat they cornply  riith RegulationZZof SEBI FpI Regulations,  2014 and meet the eligibility criteria  prescribed in S-EBI's'Clrcular  afi"a z+"1l.rou.n1u".,  2014 al"ong with other lorml wlrich may be notified  by SEBI from time to time. Further,  those ODI subscrjbers  which  do not meet the aforenrentioned l9r|s, including unregulated  funds whose investment  n;il;r is appropriately regulated, can continue  to hold the position  till the date  of expiry of such positions  ir  till  g'f'a'D;.;A"i-ZaZa, whichever is earlier. Such subscribers canrrot  take fresh poritionr  o, ,.n"* the old positiols.

SEBI lras further stated that consequent to the steps taken by it, there has been a constant  decline in the outstanding  value  of Offshore ODls.

**:t**<