Lok Sabha Question No. 3356 (UNSTARRED), answered on 2016-08-05
Subject: Dividend paid by Companies
Ministry: FINANCE
Asked by: K.R.P. PRABAKARAN

j

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF ECOf\IOMIC  AFFAIRS

## LOK SABHA UNSTARRED  QUESTTON  NO. s356 TO BE ANSWERAI} ON FRIDAY,  AUGUST  5,20I6ISHRAVANA 14, 1938 (SAKA)

I

## DIVIDEND PAID Bf COMPANIES

## OI]ESTION

## 3356. SHRI K.R.P. PRABAKARAN:

will the Minister of I;II'{ANCE  be pleased  to state: ,'

- . (a) whether the Government has received complaints so, the details  thereof; about many companies refusing to pay dividend  and if
- (b) the action taken or proposed  to be taken by the Government  against them; and
- (c) the details  of action taken by the Govemment against the use of the controversial participatory  notes investment  system?

I

## MTMSTER'F *'ATE  ffi^rsrRyoF FTNAN.E (SHRI ARIUN RAM MEGHWAL)

(g)&  O)l  A company  is empowered  to take decision  on payment  of dividend,  or otherwise, as per Section 123 of the Companies Act, 2013. Government of India has no role to play in the matter.

Securities  and Exchange  Board of India (SEBI),  the securities markets regulator,  has informed  that it has not'received any specific,complaints  about listed cornpanies  iefusing to paydividend.  Howevern  SEBI has ampnded  the SEBI (Listing Obligations  and Disolosure Requirements) Regulations, 2015, with eflect from 8tr' July,-2016, whereby the top 500 listed companies  (by way of market capitalization) are required to formulate and disclose their dividend  distribution policies  in their annual  reports and on their websites.  The listed entities other than top 500 listed entities, based on market capitalization, may disclose  theif dividend  disfibution policiesonavoluntarybasisintheirannualreportiandontheirwobsites.-

(c): In order to ensure transparency,  SEBI has been constantly tightening  nonns  for taking exposure in Indian Capital  Markets  through Offshore Derivative Inskuments  (ODl)/Partioipatory  Notes  (PNjroute, Some of the recsnt steps taken by SEBI are as follows:

- (i) Under the SEBI (Foreign  Portfolio Investors (FPl))'Regulations,  ZOt+, which became operational from 1" June,2014, only category-I FPIs (which are Governrnent  and Goyernment  relatedinvestors)  and category-Il  FPIs (which are appropriately regulated)  can issue  and subsc4ibq  to ODIs. ,
- (ii) Regulatory  arbi*age was eliminated by aligning  the eligibility  and investment  norms between subscription through ODI route and FPI regime,  vide SEBI's Circular  dated 24fl'Novernber, 2014.
- (iii) Recently, vide Circular dated 10th June, 2016, SEBI has further tightened the provisions  for Know Your ' Client (KYC) norms for ODI subscribers,  transferability of ODI{  ryportrqg  of suspicious  transactions, periodic  review of systems and ODI reporting  format.  ODIs can now be transferred only to persons in acgordanue  with Regulation  22(l) of SEBI (FPI) Regulations,  2A14,  and prior consent of the FPI needs to be obtained  for such transfer. Required changes  in the SEB1 (FPIjRedlations,2014 were carried  out Ss July, 2016.' , :
- whichever is earlier, (iv) Fu4her, vide SEBIIs  Circular dated  29d'June,2016,  it.was specified  that existing  unregulbted  fimds with appropriately  regulated  Investment  Managers  will not be allowed  to take fresh positions  iniODIs.  The existing positions  may continue till 31't December,2020  or till the expiry  of the:ODI instrument, , : .' .  .,',  ,,t'

' Consequent  to the steps taken by SEBI, the Notional Derivatives  as a percentage  of Assets Under Custody of all 8.Bolo in June 2016. Value of outstanding FPIs has reduced from PNs on Equrty, Debt and 10.5% in January  2A16 to

*tlr*{c{r

:..