Mrunal’s Economy Win21 Updates For UPSC & Other Competitive Exams

14 PILLAR#1C: SEBI-SHARE MARKET

Contents
14 Pillar#1C: SEBI-Share Market................................................................................................................ 34
14.1 🔪🔪🔪🔪 Financial Instruments: Debt ............................................................................................. 35
14.1.1 🔪🔪🔪🔪⏰Debt → Interest Rate Benchmarks: LIBOR, MIBOR, MIFOR, SOFR ......... 35
14.1.2 🔪🔪🔪🔪⏰: 🐯🐯🐯🐯 🧔🧔🧔 Short term debt instruments → by Govt → WMA......... 36
14.1.3 🐯🐯🐯🐯🐯 Consolidated Sinking Fund (CSF) for State Govts’ repayment ................... 36
14.1.4 🔪🔪🔪🔪🔪🔪 Long Term Debt Instruments: Other Special purpose Bonds ...................... 36
14.2 ⚖🗃🗃 Financial Instruments: Equities / Share Market............................................................ 37
14.2.1 ⚖🗃🗃 🤵🤵 IPO → Special Purpose Acquisition Company (SPAC) ............................ 37
14.2.2 ⚖🗃🗃 🌐🌐 ADR/GDR: Shares in Videshi locker............................................................... 37
14.2.3 👻👻⚖🗃🗃 🌐🌐 ATMANIRBHAR reforms in ADR/GDR/BharatDR............................. 38
14.3 📈📈 SENSEX & Corona(उ�ेखनीय सं केतक/ सूचकांक)............................................................................... 38
14.3.1 🐮🐮🐮🐮🐮🐮 SENSEX: Impact of Corona............................................................................... 39
14.3.2 🐮🐮🐮🐮🐮🐮 Share Market: Impact of Bond Yield................................................................ 39
14.3.3 🐮🐮🐮🐮🐮🐮 Bond Vigilantism ................................................................................................ 39
14.4 🗃🗃🗃🗃Securities and Exchange Board of India (SEBI) ............................................................. 40
14.4.1 🗃🗃⚖📜📜Securities Market Code & Investor charter ..................................................... 40
14.4.2 🛒🛒 (💻💻⏱:�) Algo Trading & Co-Location .................................................................. 40
14.5 🛒🛒 (🔪🔪🔪🔪) Bond Market Reforms ............................................................................................. 41
14.5.1 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Unified Bond Market (एक�कृ त बॉ� बाजार)............................................ 41
14.5.2 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Deepening of G-Sec market- Direct Retail participation @RBI 41
14.5.3 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Bond Buying Institution in 💼💼Budget-2021 ............................... 41
14.5.4 💍💍💍💍💍💍💍💍Commodity Market: Gold exchanges & 💼💼Budget-2021......................... 42

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 14.5.5 📦📦 � � Mutual fund → 🎛🎛 Mutual fund risk-o-meter .......................................... 42
14.5.6 🗃🗃🗃🗃: 🚛🚛🚛🚛🚛🚛 Bilateral Netting of Qualified Financial Contracts Act 2020 ........ 42
14.6 🏙🏙🏙🏙 Corporate Governance: Budget-2021 .............................................................................. 42
14.6.1 🏙🏙🏙🏙: Corporate Governance → LLP settlement Scheme 2020 ................................... 42
14.6.2 🏙🏙🏙🏙 Corporate Governance → OPC easier to setup & upgrade ................................. 43
14.6.3 🏙🏙🏙🏙 Corporate Governance → Small Companies given compliance relief .............. 43

14.1 🔪🔪🔪🔪 FINANCIAL INSTRUMENTS: DEBT

14.1.1 🔪🔪🔪🔪⏰Debt → Interest Rate Benchmarks: LIBOR, MIBOR, MIFOR, SOFR
London Inter-bank Offered Rate (LIBOR) is the average interest rate at which
banks in London give short term loans to each other.
🤩🤩Objectives/usage/application of LIBOR?
- (some) global banks decide their call money /notice money rates based on it.
- (some) external commercial borrowing (Indian Bizman taking loans from
abroad),
- (some) FCNR deposit interest rates (Non resident Indians depositing foreign
currency savings in Indian banks to earn interest)
- (some) Interest Rate Swaps/Derivatives (IRS: one party exchanging its
LIBOR bond/loan-paper to another party's bond/loan-paper. what/why/how-
NOTIMP.)
😰😰Controversy? LIBOR methodology had become unreliable & fraud-ridden in
recent years. So, UK regulator ordered stopping LIBOR by the end of 2021.
⇒ So accordingly, Financial intermediaries across the world are changing their
LIBOR based contracts/agreements to other benchmarks. e.g. TONAR
(Tokyo/Japan), SARON (Switzerland), SOFR (USA), SONIA (UK-Sterling-
Pound), ESTR (Euro) etc. What are their full forms? how they work is not
important.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
In LIBOR definition, replace the word “London” → “Mumbai” and “Global” →
MIBOR
“Indian”, and you’ll know what MIBOR is!
⇒ Mumbai Interbank Forward Outright Rate (MIFOR) is a benchmark that
derives values from LIBOR and a few other indicators etc.
⇒ 🤩🤩objectives/usage/application? Similar to LIBOR.
MIFOR
⇒ 😰😰Since LIBOR is expiring by the end of 2021 → MIFOR will also stop
working, Because it derives value from LIBOR value. 2020-Nov: RBI
announced working on a new Indian benchmark to address this issue.

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 ✋Some Inexperienced Pvt Quizmasters setting technical MCQs from “SOFR” & how it’ll affect
Indian Economy in 500 ways, & their Babu-Sona-bhakts are going crazy abt it but sensible
candidates need not loose sleep. Just look at previous Years MCQs#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
14.1.2 🔪🔪🔪🔪⏰: 🐯🐯🐯🐯 🧔🧔🧔 Short term debt instruments → by Govt → WMA
⇒ When Govt faces short term mismatch in receipt (income) and payment (Expenditure)
⇒ RBI Lends money on short term (3 months). Not counted in fiscal deficit figure. (More abt Fiscal
Deficit in 📑📑Pillar2D: FRBM)
⇒ Corona-crisis: ⬆mismatch in cashflow because
o ⬇Govt Income: Sales ⬇ GST, Govt gave extension in tax payment deadlines
o ⏫Expenses: free LPG, food, mask etc.
⇒ So, ATMANIRBHAR Bharat → RBI ⏫WMA limits by 60% than before to help the Union
(1.20lcr) and State Governments (₹51,560cr collectively).
⇒ If upto above amount of ₹₹ borrowed = its WMA: loan interest = repo%
⇒ If beyond above amount borrowed then called ‘Overdraft’: loan interest repo+2%
🎓🎓✋^ above % or quantity or figures not imp for scope of exam

14.1.3 🐯🐯🐯🐯🐯 Consolidated Sinking Fund (CSF) for State Govts’ repayment
⇒ Started in 1999. It has >₹1.25 lakh crore by 2019. (समेिकत घाटा �नपटान �न�ध)
⇒ Annually, State Govt has to contribute money equal to 1-3% of its outstanding market loans to
this fund. This fund is kept with RBI. (रा� ने �जतना कजार् उठाया है उसके सामने इसम� थोड़ा पैसा जमा करना है)
⇒ CSF is a fund outside consolidated fund of the State and public account of the State. (More in
📑📑Pillar2: budget.)
⇒ CSF meant to be used for only 1 purpose= repayment/redemption of loans taken by the State
Government. (बकाया ऋण चुकाने के �लए ही इस �न�ध का उपयोग होगा)
⇒ 2020-May: RBI relaxed technical norms related to withdrawal of ₹₹ from CSF till 31/3/2021 to
help the State Governments. (तकनीक� �नयमो मे कु छ छू ट दी गयी)
14.1.4 🔪🔪🔪🔪🔪🔪 Long Term Debt Instruments: Other Special purpose Bonds
⇒ US Govt (1870s) and British Govt (1917) had issued Consol bond.
⇒ Consol is short form for ‘consolidated annuities’.
🤧🤧🔪🔪🔪🔪♾ ⇒ Consol bonds have no maturity date. They are perpetual bonds that paid 4-5%
(proposed) interest rate, for an infinite time period. In theory they don’t repay the
Consol Bonds principal amount back to investor. Thus, they’re Irredeemable Bonds (अमो�).
for Corona- ⇒ However, in reality, the Government may redeem(/buyback) the bonds after
revival certain years, by paying principal to the investor.
⇒ Some economists suggesting Indian govt should issue Consol Bonds for Post-
corona economic revival. (अथर्�व�ा को पुनर्जी�वत करने के �लए)

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 ⇒ Party#1 Road contractor pays fees/premium to party#2 insurance company.
🚦🚦🚦🚦 Insurance company gives him a surety bond.
(Proposed) ⇒ Road contractor gives this surety bond to party#3 Highway Ministry.
Surety Bond for ⇒ if the road contractor is not finishing project within prescribed time-
road limit/quality-limit → Insurance company will pay ₹₹ to Highway Ministry.
construction ⇒ Presently, Insurance companies are not allowed to issue surety bonds in India.
So, 2020-Jul: IRDAI (insurance regulator) has set up a committee, whose
chairman's name is not greatly imp for exam.
14.2 ⚖🗃🗃 FINANCIAL INSTRUMENTS: EQUITIES / SHARE MARKET
⇒ 📔📔📔📔ES20 & 📔📔📔📔ES21 : No of IPO-issuing Companies have ⏬: 134 (2017) → 103 (2018) →
49 (2019) → 33 (2020). Which indicates problems like protectionism (trade war/nations
imposing heavy tax on imported items to protect local industries (📑📑Ref: Pillar3), NPA (bad
loans 📑📑Ref Pillar1B2), slowdown in consumer demand by Corona= preventing some of the
companies from expanding further.
⇒ Amount of ₹₹ mobilized through IPO⏫ [₹31,000 cr in 2020 while ₹11,000 in 2019]
14.2.1 ⚖🗃🗃 🤵🤵 IPO → Special Purpose Acquisition Company (SPAC)
⇒ SPAC is a type of company which does not do production of goods and services by itself so it's
also labelled as shell company/blank cheque company.
⇒ It is created only to acquire share (equity) capital from the public through initial public offering
(IPO) & use that money to buy / acquire another company.
⇒ If the acquisition is not made within two years of the IPO, the SPAC is delisted and the money is
returned to the investors.
⇒ Why in the news? USA's RMG-II is a Nasdaq stock exchange-listed Special Purpose Acquisition
Company (SPAC). RMG-II acquired an Indian company "ReNew Power" through this process.
14.2.2 ⚖🗃🗃 🌐🌐 ADR/GDR: Shares in Videshi locker

Figure 1: �बना अमरीक� SEBI मे पं जीकरण िकए, उनके शेयरबाजार से पैसा उठाऊँ , तो कै से?
- A non-American company wants to mobilize money from American share market but does not
want to go through the lengthy & complex process of registration with the American
sharemarket regulator.
- Then such non-American company gives its shares to an American bank.
- Based on those (non-American) shares, the American bank will issue American Depositary
Receipts (ADR: अमरीक� �नपे�ागार रसीद) & sell them to American investors. Denomination: USD.

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- Global Depositary Receipt (GDR): Same as above, but when single bank issues receipts for
investors in multiple countries. Denomination: usually USD or Euro.
Share issuing company → Deposits his company’s That bank issues -- in local
shares in a bank of → market in – currency
Non-American company → American Bank → Issues ADR (in $) in American
Sharemarket
Non-Indian company → Indian Bank → Issues Bharat / Indian depositary
receipt (IDR) (in ₹) in Indian
Sharemarket
14.2.3 👻👻⚖🗃🗃 🌐🌐 ATMANIRBHAR reforms in ADR/GDR/BharatDR
Company Wants to BEFORE AFTER 👻👻ATMANI
👴👴Indian company wants to acquire ✅Allowed ✅Allowed
capital from abroad,
via ADR/GDR
👴👴Indian company wants to acquire ✋Not allowed by ✅now it’s allowed
capital from abroad by Indian authorities
directly listing its
shares in a foreign
stock exchange
🎅🎅Foreign wants to acquire ✅Allowed ✅Allowed
company capital from India, via
BharatDR/iDR
🎅🎅Foreign wants to acquire ✋Not allowed by ✋Not allowed by
company capital from India by Indian authorities Indian authorities
directly listing its
shares in Indian stock
exchange
⇒ Before: Direct listing by the Indian companies on foreign/overseas stock exchanges was not
permitted. (due to danger of money laundering, China/ISI mischief etc.)
⇒ So Indian companies had to use ADR/GDR type mechanisms, But, relatively difficult to attract
investors in through ADR/GDR routes, nowadays. (compared to directly listing shares.)
⇒ After 👻👻ATMANIRBHAR: Indian companies allowed to directly list their shares in foreign
nations stock exchanges. → Foreign capital/dollars can be attracted towards India → factory
expansion, jobs⏫ → economic revival. (अथर्तंत्र को पूनर्जी�वत करना)

14.3 📈📈 SENSEX & CORONA(उ�ेखनीय सं केतक/ सूचकांक)

⇒ SENSEX?: Sensitive Index/ सं वेदी सूचकांक. It’s the weighted average of Free Float Market
Capitalization (FFMC) of 30 companies, selected by BSE’s “Index Cell”.

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⇒ NIFTY? NSE index of 50 companies. Nikkei? Tokyo Stock Exchange index of 225 companies.
14.3.1 🐮🐮📈📈🐻🐻 SENSEX: Impact of Corona
📔📔📔📔ES21 Vol2Ch4: observed When comparing Year 2020 (Jan to Dec) to 2019:
⇒ Nifty50 [Highest ~15k points] & BSE SENSEX [Highest ~50k points] ⏫
⇒ Stock Exchange Volatility declined ⏬, esp after March-202, as measured by "India VIX index"
of NSE. (अ��रता कम �ई है)
⇒ Share Prices of Pharma, IT companies ⏫, But Airline/Luxury goods/fashion ⏬
⇒ Biz of Mutual Funds ⏫ (धं धे म� बरकत)
⇒ Incoming Foreign Portfolio Investment (FPI) has ⏫ [270 billion$] (More in 📑📑Pillar#3A)
2020- Initial months of lockdown, ⏬⏬ due panic among investors, Force Majure but then
⏫⏫ because (शु�-शु� के महीनों म� �गरावट िकंतु बाद म� ब�त तेजी आई �ोंिक…)
1. Cheap Loans / Expansionary Monetary Policy → Some of that money may have entered the
share market through to large investors. (�व�ार वादी मौिद्रक नी�त)
2. 'work from home' + RBI loan Moratorium- may have encouraged many service sector employees
to invest ₹ in the sharemarket. (तालाबं दी के दौरान लोन क� िक� नहीं चुकानी थी तो कु छ ने वह रकम शेयर बाजार म�
�नवेश क� होगी)
3. Unprecedented demand and profit for IT and Pharma sector- Encouraged the investors to park
their money in such shares at very high price. (तालाबं दी के दौरान सूचना प्रौद्यो�गक� और औषधीय कं प�नयों म�
अप्र�ा�शत तेजी)
4. Youtubers/Reddit/Social media influencers giving online share trading Tips. Many Apps
available.
5. American video game store company GAMESTOP's shares ⏫1625% in 1 year. Such gimmickry
will attract more small investors to invest although in future they will lose when 'overpriced'
shares see 'correction' in the share market. Associated keyword "short squeeze trading" [✋What
it means? how it works? Ans. not important]
14.3.2 🐮🐮🐮🐮🐮🐮 Share Market: Impact of Bond Yield
⇒ Bond yield is the profit you make on Bond investment.
⇒ If Mr.Bhide buys ₹100 principal bond with 10% interest = his yield = (₹110-100) / ₹100
investment= 10% but if he sells it to Mr.Jetha at ₹90 then Jetha's yield = ₹(110-90) interest / ₹90
investment= 22% Profit. Thus bond yield (profit) ⏫, If you manage to buy bond at a cheaper
than the original (face value) price.
⇒ 2021-Feb-March: When bond yield ⏫, some investors sold their shares of the low performing
companies → to invest into bonds → sharemarket⏬ fell for some days/weeks.
14.3.3 🐮🐮🐮🐮🐮🐮 Bond Vigilantism
- Bond Vigilantes: large bond market investors who aggressively sell G-Sec in open market to
protest against Policies of Govt/Central Bank.

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- ⏫Supply of G-Sec in secondary market → prices⏬ → G-sec Yield⏫ → share investors sell
underperforming companies' shares to invest in G-Sec → sharemarket⏬ → Difficult for
companies to raise equity(share) capital through IPO. [similarly, difficult to govt to borrow for
next round because existing G-sec’s yields get high, so investors will demand higher interest on
future G-secs as well.]
- RBI report warns about Bond vigilantism in USA / World.
14.4 🗃🗃🗃🗃SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)
⇒ SEBI has “SCORES” online portal for complaint. (�नवेशक इधर ऑनलाइन फ़�रयाद करे)
⇒ SEBI has Securities Market Trainers (SMARTs) Program for investor education
14.4.1 🗃🗃⚖📜📜Securities Market Code & Investor charter
⇒ 💼💼Budget-2021: we’ll create a single new law named "Securities Markets Code" by merging
older acts 1) SEBI Act, 1992, 2) Depositories Act, 1996, 3) Securities Contracts (Regulation) Act,
1956 4) Government Securities Act, 2007. (पुराने �व�भ� कानूनों का एक�करण �वलीनीकरण करके "प्र�तभू�त बाजार
सं िहता" नामक नया कानून बनेगा)
⇒ 💼💼Budget-2021: we’ll create an "investor charter" (�नवेशक अ�धकार पत्र) for financial investors
across all financial products (Share, Bond, derivatives, Commodities market etc). Note: A
citizens’ charter (नाग�रक अ�धकारपत्र) is a document of commitments made by a government agency
to the citizens in respect of the services being provided to them. e.g. if "X" problem is not solved
in "Y" days then complain to "Z" officer on ABC Phone number / email address etc.
🤩🤩Benefits of Securities Market Code & Investor charter?
 Ease of doing business & Ease of doing investment
 More clarity over rights and responsibilities financial market participants [Individual Investor,
Share Broker, Stock Exchange, Depository, Underwriter, Companies etc]
 Deepening of the financial market, Mobilisation of savings to the productive channels of
economy
14.4.2 🛒🛒 (💻💻⏱:�) Algo Trading & Co-Location
⇒ Algo-Trading = Some large brokers / companies use algorithmic trading computer programmes
to automatically buy / sell securities at a speed and frequency that is impossible for a human
trader. This can be misused for manipulating the share prices. While SEBI has not banned it, but
issued technical measures e.g. a single broker / investor can’t place more than 100 online orders
per second.
⇒ Co-location = stock exchange allowing the share broker to install their office/computer systems
very close to Stock Exchange. Then broker's computers can monitor/buy/sell shares quicker than
a computer sitting 500 kilometres away: So, co-location gives added advantage, esp. for the Algo-
Traders.
⇒ 2021: SEBI fines National Stock Exchange (NSE) For violation of some norms related to co-
location.

Mrunal’s Economy Win21 Series Pillar#1C: SEBI Sharemarket→ Page 40

14.5 🛒🛒 (🔪🔪🔪🔪) BOND MARKET REFORMS

Figure 2: पूंजी बाजार क� जड़ो को गहरा करना है तो �सफर् अमीरों का नही, गरीबो क� बचत का पैसा भी जाना चािहए!
14.5.1 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Unified Bond Market (एक�कृ त बॉ� बाजार)
⇒ At present (1) Government bonds’ (G-Sec) market (2) private sector / Corporate Bonds market
are functioning separately. Because
o (A) RBI depository for G-Sec/ T-Bill is separate. Where govts, banks, NBFCs and
primary dealers can participate, and minimum investment guidelines are high (e.g.
investor’s g-sec buying order must be minimum “X” lakh rupees, else RBI rejects
application)
o (B) SEBI regulated depositories (For non-Government = private sectors’ share/bonds) is
separate- where retail investors/common men register & participate.
⇒ 💼💼Budget-2019 promised reform to connecting these two platforms, to facilitate retail investors’
participation in G-sec. (आम जनता भी सरकारी प्र�तभू�तयां सीधे ही खरीद सक� )
⇒ 2020: SEBI proposed “unified bond market” where both G-sec & Corporate Bonds will be
available for buying/selling. This will (1) help govt mobilize public’s savings more easily for its
welfare schemes (2) Give small/retail investors easier opportunity to invest directly in G-sec.
लेिकन ये असल म� अभी बनना बाक� है।
14.5.2 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Deepening of G-Sec market- Direct Retail participation @RBI
⇒ Before: Retail investors invested in G-Sec indirectly via Mutual Fund Companies /Stock
exchange through NDS-OM (Negotiated Dealing system-order matching).
⇒ AFTER: RBI allows retail investors to open "Gilt account" in RBI Direct facility in E-Kuber Core
banking solution (CBS) platform= they can directly purchase fresh G-Sec from RBI (=Primary
market) & resell it to other investors (=secondary market) later on.
14.5.3 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Bond Buying Institution in 💼💼Budget-2021
⇒ Secondary market-Provides liquidity to the investor -Since he can sell existing shares/bonds and
hand to others → motivation to buy new shares/bonds in primary market → capital to healthy
new company.
⇒ But in India, the secondary market for bonds is not fully developed. Inadequate number of large
players → Difficult to resell the bonds at the right prices → 😰😰discourages the investors from
bonds → Difficult for companies to mobilize ₹₹
⇒ So, 💼💼Budget-2021: Proposed to setup a body/organization to purchase investment grade debt
securities. This body will buy bonds both in stressed and normal times. Benefit?
development/Deepening of the Bond market. ✋Exact name of the organisation? headquarter?
Ans. details yet to be announced.

Mrunal’s Economy Win21 Series Pillar#1C: SEBI Sharemarket→ Page 41

14.5.4 💍💍💍💍💍💍💍💍Commodity Market: Gold exchanges & 💼💼Budget-2021
⇒ Gold exchange is a special type of commodity market devoted only to Gold trading.
⇒ 💼💼Budget-2021: We will undertake reforms in the regulation of gold exchange markets in India.
1) SEBI will be the regulator 2) Warehousing Development and Regulatory Authority (WDRA-
Statutory body under Dept of Food and Public Distribution) Will be responsible for
Warehousing/Vaulting, Assaying, Logistics of gold exchanges. (भं डारण, गुणव�ा परी�ण, रसद के मामलों
क� �ज�ेदारी)
14.5.5 📦📦 � � Mutual fund → 🎛🎛 Mutual fund risk-o-meter
SEBI requires the mutual fund company to disclose how much risk is present in their scheme, on a
monthly basis, thru a digital dashboard called 'risk-o-meter'.
It shows 6 categories of risk: low, low to moderate, moderate, moderately high, high, (#)very high
risk. (#) SEBI added this new category 'very high risk' in 2020-Oct.
14.5.6 🗃🗃🗃🗃: 🚛🚛🚛🚛🚛🚛 Bilateral Netting of Qualified Financial Contracts Act 2020
अहर्ताप्रा� �व�ीय सं �वदा/अनुबंध क� िद्वप�ीय नेिटंग के �लए कानून/अ�ध�नयम 2020
⇒ A derivative is a contract whose value is derived from the value of another underlying asset
which could be a share, bond, commodity or currency.
⇒ Suppose, some derivative trades / financial contracts have been made between two parties
wherein Mr. Jetha owes ₹10 lakh to Mr.Bhide, while Mr. Bhide owes ₹8 lakhs to Mr.Jetha.
⇒ "bilateral netting" is a process to offset claims against each other to determine a single net
payment obligation due from one party to another. Accordingly, in our example- Mr. Jetha
should pay ₹2 lakh "NET" to Mr.Bhide. (शुद्ध �प से एक प� ने अ� प� को िकतनी रकम देनी है उसका आ�खरी
िहसाब लगा िदया जाए)
⇒ Previously India did not have a clear legal framework for this process. So lot of capital was tied
up unnecessarily into the contracts (e.g. Bhide's ₹8 lakh, अनाव�क �प से ब�त सारी पूंजी ऐसे अनुबंधों म�
अटक� रहती थी)
⇒ 2020: Bilateral Netting of Qualified Financial Contracts Act/Bill 2020 Implemented from
1/10/2020.
⇒ 🤩🤩Benefits of new law? 1) Stability, clarity in financial contracts 2) Freeing up the capital tied up
in such contracts.
14.6 🏙🏙🏙🏙 CORPORATE GOVERNANCE: BUDGET-2021

Figure 3: तुम मेरे पापा के दो� हो? - Cyrus Mistry

14.6.1 🏙🏙🏙🏙: Corporate Governance → LLP settlement Scheme 2020
⇒ Limited Liability Partnership (LLP) companies are required to submit accounts and ownership
related documents to the Ministry of Corporate Affairs.

Mrunal’s Economy Win21 Series Pillar#1C: SEBI Sharemarket→ Page 42

⇒ But many of them did not submit the documents on the deadline → Govt ordered them to pay
late fees/penalties, threatened them with prosecuting cases under the LLP Act and cancelling
their registration.
⇒ LLP settlement Scheme, 2020: “If you submit the required documents between x to y date →
Then you will have to pay less penalty and we will give you immunity from prosecution.”, said
the Government.
14.6.2 🏙🏙🏙🏙 Corporate Governance → OPC easier to setup & upgrade
⇒ One Person Company: special type of private ltd company having only one member.
⇒ 💼💼Budget-2021: One Person Companies (OPCs)- Legal reforms in Companies Act to [1) allow
NRIs to easily register OPC in India [2) OPC can be converted to other types of companies any
time
14.6.3 🏙🏙🏙🏙 Corporate Governance → Small Companies given compliance relief
⇒ 💼💼Budget-2021: Companies with paid up capital not more than ₹2cr & annual turnover not
more than ₹20cr = treated as ‘Small Companies’. [Previously, definition of Small Company was
more stricter]
⇒ They’ll be given relief in Companies Act related compliance e.g. how frequently they’ve to
submit accounts and ownership related documents to the Ministry of Corporate Affairs etc.
Stay Tuned for the Remaining [Win21CSP] Pillar#1/2/3/4/5/6’s update packs at
Mrunal.Org/Download
📑📑Next Handout Pillar1D: Insurance, Pension, Financial Inclusion

14.7 📯📯MRUNAL’S FULL LENGTH ECONOMY COURSE FOR UPSC PRELIMS & MAINS
⇒ I’m also pleased to announce, my next ONLINE batch for Economy for UPSC Civil Service Exam
covering both Prelims and Mains topics of Economy.
⇒ Night batch, Rapid revision handout, easy to understand powerpoints, weekly quiz
⇒ 🔖🔖Coupon Code: Mrunal.org for 10% discount
⇒ 📡📡Registration Link: https://unacademy.com/@mrunal.org

Mrunal’s Economy Win21 Series Pillar#1C: SEBI Sharemarket→ Page 43