Bombay Stock Exchange Equities
Equities: Ordinary shares, preference shares, participating preference shares, cumulative preference shares, cumulative convertible preference shares, warrants, rights renunciations
Debt: Loans, debentures, convertible bonds, zero-coupon bonds, public sector undertaking bonds, State and Central Government bonds
Money Market: Governement Seurities, Treasury bills, commercial paper, bonds, bills of exchnage and promissory notes.
Derivatives: Index Futures and Options, Single Stock Futures and Options, Interest Rate Futures
Other: Mutual Fund units, Exchange Traded funds
Equities: In the dematerialised segment, a board lot is one share.
Physical shares: 5, 10, 50 and 100 shares, odd lots can be sold, typically at a discount to current price. (However trading in physical segment is not open to Institutional investors. Institutions are allowed to sell physical securities provided the security is not connected to both / one of the depositories)
Debt: Board lots vary according to type of debt security.
Derivatives: Lot sizes for derivatives are defined for each underlying security by the Exchanges.
Dividend Payment Frequency: Varies with issue, although normally annually.
Interest Payment Frequency: Varies with issue, although usually semi-annually.
Interest Accrual Rate
Government Debt – 30/360 day basis
Other Debt – Actual/365 day basis
Common Events: Cash dividend, Stock dividend, Rights
Initial Public Offers (book building and fixed price)
Open Offers, Buy-backs (through stock market or tender offer route), Mergers and De-mergers
Stock Splits, Income, Redemption, New issues
Rights Tradeable: Yes only on BSE and the settlement is by DVP mode between the contracting parties. The clearing house mechanism is not available for rights forms settlement.
New Shares from Exercised Rights: Allotment/credit of shares under rights is normally effected within 3-5 weeks from application / closure of the issue.
Foreign Investor Restrictions
Foreign investors are entitled to exercise voting rights, with restrictions (e.g. a maximum cap is specified for voting rights for an Investor in a Private Sector bank).
Meeting Notices/ Agendas
Provided in English. General meetings are announced three weeks in advance.
On request, subject to availability
On request, subject to availability
Power of Attorney: Required
Postal votes against management are not allowed. Voting is executed by a show of hands unless a poll is demanded. A proxy may demand a poll if they hold 10% of the voting rights or INR 50,000 paid up capital. Proxies can only vote if there is a poll.
Market Entrance Requirements: Alternatively, foreign investors may apply for individual FII status directly with the Indian authorities. Such approval takes longer than the time taken for sub account approval as documentation requirements are more stringent. The FII registration process takes approximately seven working days, whereas sub-account approval takes approximately three to four days. The cost of opening an individual FII status is considerably more than opening a sub account.
FIIs require prior approval from SEBI (RBI has recently granted a generic approval to all FIIs registered with SEBI). Local regulations require appointment of tax consuItants to make tax payments prior to repatriation of sale proceeds. The tax consultant will compute profit and loss and file tax returns on behalf of the investor.
Filing of Tax returns and payment of taxes require quoting of Permanent Account Number (PAN). Recent guidelines by NSDL and CDSL mandate the verification of PAN by the depositary participant for all depository accounts. Further, for opening a fresh depository account, verified copies of PAN card is mandated by SEBI.
From July 2, 2007 the Permanent Account Number (PAN), is the sole identification number for all participants transacting in the Indian securities market. In accordance with this SEBI has instructed all stock exchanges, depositories and SEBI-registered market intermediaries, to take the necessary steps to update their individual databases and infrastructure so that all clients and client transactions are linked to the PAN details. All intermediaries have been directed to collect Income Tax PAN cards of their existing and new clients, after verifying the original.
Effective July 2, 2007, investments held in physical securities will also require a PAN, and existing investments held in physical securities require a PAN by this date.
No single FII or a sub-account of an FII can hold more than 10% of the paid-up capital of a company. In respect of foreign corporates and individuals investing as sub-accounts of FIIs, this limit is restricted to 5% of the paid-up capital.
Aggregate FII holdings in securities of an Indian company is limited to 20% in the case of Public Sector Banks and 24% in case of other companies. The foreign share holding limit can be increased by a company subject to shareholder approval and industry wide maximum foreign shareholdings limits.
SEBI has announced the limit for foreign investment in Stock Exchanges, Depositories and Clearing Corporation is 49%. This overall limit of 49% is further segregated into the following:
- FII limit of 23%, which is allowed only through purchases in the secondary market.
- FIIs are not permitted to have representation on the Boards of such companies.
- Restricting level of equity investment to 5% by a foreign investor, either individually or persons acting in concert.
RBI monitors aggregate foreign investment levels in Public Sector Banks, companies where permitted FII investment limits is 24%, and companies which have received shareholder approval to raise the Foreign Shareholding up to the maximum level.
For effective monitoring, RBI has set a cautionary limit at 0.5% below the permitted investment ceiling limit for companies with equity capital of INR 10 billion or more, and at 2% for companies with equity capital less than INR 10 billion.
Custodians (and FIIs) are notified when the cautionary limit is reached. Once notified, FIIs can only purchase additional shares in these companies after prior approval by RBI (custodians facilitate the application to RBI in such cases). Trades between FIIs can, however, be conducted without prior RBI approval, subject to the trade being executed in a specified trading segment (also known as the Inter-FII Segment).
FIIs are required to restrict investment in debt securities to a maximum of 30%. Equity investments must comprise a minimum of 70% of the total investments. FIIs’ are allowed to set up dedicated debt funds where all investments are made in debt. Specific SEBI approval is required for such funds. Investment limits for such funds are approved by SEBI and are allocated out of the overall limits for Foreign Investment in Debt Securities (Government Securities and Corporate Debt). Total FII investment in debt securities is capped at USD 4.1 billion, this comprises a USD 1.5 billion cap on investment in corporate debt and a USD 2.6 billion cap on investments in government securities. This 2.6 billion cap is in turn sub-divided into cap on investment by 100% debt FIIs at USD 2.0 billion and investment under the 70:30 route at USD 0.6 billion. For corporate debt, the USD1.5 billion cap is sub-divided into a USD1 billion cap on investment by 100% debt FIIs and a USD0.5 billion cap on investment by 70:30 debt FIIs. The limits are as below:
|Instrument||Type of FII||Current debt limit (USD bill)||Current headroom (USD bill)||Current investible debt limits (USD bill)|
|G-Sec / Treasury Biils||100% debt FII
|Corporate Bond||100% debt FII
100% debt FII/sub accounts:
* Individual 100% debt FIIs would be allotted separate limits for investments in G-sec/T-bills aggregating to USD 1345 million and in corporate bond aggregating USD 920 million.
* Investments beyond USD 1,345 million and USD 920 million in G-sec / T-bills and Corporate Debt respectively would require prior SEBI approval.
* 70:30 FIIs can invest till the overall limit reaches USD 540 million in G-sec and USD 450 million in corporate debt.
* Investments in G-sec/T-bills beyond USD 540 mio and in corporate debt beyond USD 450 million would require prior SEBI approval
FIIs are also permitted to invest in Debt Capital Instruments raised in INR by Banks in India. The aggregate limit of investments is fixed at USD 500 million. This limit is over and above the limits in debt securities (G-sec and Corporate debt) specified above.
|Type of FII / sub-account||Limits allocated (USD million)|
|100% debt FII||390|
- 70:30 FIIs can invest till the overall aggregate limit reaches USD 90 million
- Thereafter prior approval of SEBI is required for limit allocation
- Each of the 100% debt FIIs granted individual separate limits for investment in DCI
FIIs are free to repatriate the capital, capital gains, dividends, interest and other income after payment of applicable taxes.
The Securities Lending Scheme (restricted to equity shares) was first introduced by SEBI in 1997 to increase liquidity in the market and to facilitate timely delivery of securities. FIIs were only allowed to lend securities (not borrow). Consequently the FII participation in securities lending and borrowing was negligible.
NSE’s Automated Lending and Borrowing Mechanism (ALBM) and BSE’s Borrowing and Lending of Securities Scheme (BLESS) were discontinued by SEBI on July 2, 2001. Consequently, there were no Stock Exchange administered securities lending and borrowing schemes available in the market. Following representations by market participants, SEBI decided to re-introduce this scheme through the Stock Exchanges in a revamped manner with effect from April 1, 2004.
Under the new scheme, Stock Exchanges have now been permitted to borrow shares to meet a shortfall in securities at the time of settlement, which is expected to do away with the practice of auction (buy-in) for meeting shortfall in securities.
In January 2006, SEBI had invited views from market participants on the discussion paper that it released on Securities borrowing and lending and allowing short sales by Institutional Investors. SEBI has set short selling by institutional investors, and securities lending and borrowing on its priority list for this year. It is expected SEBI will notify the modalities in this financial year.
Dividend Tax Rate
Dividends paid by companies, on or after April 1, 2003, are not taxed in the hands of the investors. In lieu of this, a dividend distribution tax of 14.025% is levied on the company distributing the dividend. Accordingly, all dividends are received by FIIs on a gross basis.
Interest Tax Rate
Interest earned by FIIs on securities normally attracts income tax at the rate of 20% (20% + applicable surcharge + education cess). While, normally, the issuer deducts such taxes at source, interest payments on Government Debt and Discount instruments (such as treasury bills) are made gross, without deduction of tax at source.
Capital Gains Tax Rate
Profits made on sale of investments attract Capital Gains tax.
In respect of securities transactions executed on Stock Exchanges (where Securities Transaction Tax is levied), profits on sale of securities held for twelve months or less are termed short-term gains and are taxed at 10%. Profits on sale of securities held for more than twelve months are termed long-term gains and are currently exempt from tax, provided STT is paid at the time of sale of such shares.
Tax laws require capital gains to be computed by allocating securities on a First-in, First-out (FIFO) basis. Dematerialised securities are deemed to have been sold on a FIFO basis according to date of credit by the depository, irrespective of the sequence of actual purchase.
|Austria||Korea (South)||South Africa|
|Czech Republic||Nepal||Trinidad and Tobago|
|Greece||Philippines||United Arab Emirates|
|Hungary||Poland||United Arab Republic|
|Israel||Qatar||United States of America|
Stamp Duty is payable on registration of physical securities. Stamp duty, at 0.25% of the consideration price or the market rate (whichever is higher) is payable by the buyer when physical shares are sent for registration. Stamp duty on debt instruments varies from state to state.
All taxes applicable to FII transactions must be paid prior to repatriation of funds. Repatriations can be effected after the No Objection Certificate (NOC) is obtained from a tax consultant. Advance tax must be paid five times a year by the dates mentioned below, which is a percentage of the clients’ estimated tax liability by the due dates. These percentages are prescribed by the tax authorities. The tax consultant, while computing the tax liability, considers all transactions contracted till the due dates. Delays in payment attract penal interest and penalty
Due dates for payment of advance tax are June 15, September 15, December 15, March 15 and 31 March (end of financial year).
SENSEX is calculated using the "Free-float Market Capitalization" methodology. As per this methodology, the level of index at any point of time reflects the Free-float market value of 30 component stocks relative to a base period. The market capitalization of a company is determined by multiplying the price of its stock by the number of shares issued by the company. This market capitalization is further multiplied by the free-float factor to determine the free-float market capitalization.
The base period of SENSEX is 1978-79 and the base value is 100 index points. This is often indicated by the notation 1978-79=100. The calculation of SENSEX involves dividing the Free-float market capitalization of 30 companies in the Index by a number called the Index Divisor. The Divisor is the only link to the original base period value of the SENSEX. It keeps the Index comparable over time and is the adjustment point for all Index adjustments arising out of corporate actions, replacement of scrips etc. During market hours, prices of the index scrips, at which latest trades are executed, are used by the trading system to calculate SENSEX every 15 seconds and disseminated in real time.
|500410||ACC Ltd.||Housing Related|
|500490||Bajaj Auto Ltd.||Transport Equipments|
|500103||Bharat Heavy Electricals Ltd.||Capital Goods|
|532454||Bharti Airtel Ltd.||Telecom|
|500124||Dr. Reddy’s Laboratories Ltd.||Healthcare|
|500300||Grasim Industries Ltd.||Diversified|
|500425||Ambuja Cements Ltd.||Housing Related|
|500180||HDFC Bank Ltd.||Finance|
|500440||Hindalco Industries Ltd.||Metal|
|500696||Hindustan Unilever Ltd.||FMCG|
|532174||ICICI Bank Ltd.||Finance|
|500209||Infosys Technologies Ltd.||Information Technology|
|500510||Larsen & Toubro Limited||Capital Goods|
|500520||Mahindra & Mahindra Ltd.||Transport Equipments|
|532500||Maruti Udyog Ltd.||Transport Equipments|
|500312||ONGC Ltd.||Oil & Gas|
|500359||Ranbaxy Laboratories Ltd.||Healthcare|
|532712||Reliance Communications Limited||Telecom|
|500390||Reliance Energy Ltd.||Power|
|500325||Reliance Industries Ltd.||Oil & Gas|
|500376||Satyam Computer Services Ltd.||Information Technology|
|500112||State Bank of India||Finance|
|532540||Tata Consultnacy Service Limited||Information Technology|
|500570||Tata Motors Ltd||Transport Equipments|
|500470||Tata Steel Ltd.||Metal|
|507685||Wipro Ltd.||Information Technology|