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SEBI strengthens surveillance capabilities using new technologies

H. P. Ranina/Dubai
Filed on August 9, 2020
SEBI is making efforts to analyse structured and unstructured market data by implementing the "Data Lake" project. - Reuters

Market regulators are monitoring the emergence of new risks and solutions being devised for KYC record keeping purposes.

Price of shares being manipulated by unscrupulous elements using social media platforms is well known. Is anything being done to protect the interest of small and retail investors who are influenced by manipulators using the social media network?

Market regulators in most countries, including the Securities & Exchange Board of India (SEBI), have strengthened their surveillance capabilities by use of new technologies such as big data analytics, artificial intelligence, block chain technology and natural language processing. The block chain technology is being used for clearing, settlement and record keeping. This technology permits maintenance of records in distributed ledgers.

Market regulators are monitoring the emergence of new risks and solutions being devised for KYC record keeping purposes. SEBI is making efforts to analyse structured and unstructured market data by implementing the "Data Lake" project. This project will help to augment analytical capabilities with advanced AI tools, pattern recognition and text mining. However, it is felt that regulators should strike a balance between risk management and market development. This is because a very high level of safety measures comes at the cost of liquidity in the market.

When multinational companies have a dispute on interpretation of provisions of double tax avoidance agreements, how is the dispute resolved without approaching a Court of law? E-commerce disputes are now gaining ground globally.

In all tax avoidance treaties which countries enter into, there is a clause for mutual agreement procedure (MAP) to be followed by two countries which have a dispute on interpretation of any provision of a treaty. This clause is based on guidelines issued by the Organisation for Economic Co-operation and Development. These guidelines provide a timeframe for various steps to be undertaken while resorting to this procedure.

Each country to the dispute will appoint a competent authority. It is now mandated that the procedure should be completed within 24 months of the dispute being identified by a corporation which is resident of one of the countries. The competent authorities will be entitled to obtain all documents necessary, even if they are confidential in nature, in respect of cross border transactions. This procedure will substantially benefit multinationals which are confronted with issues pertaining to transfer pricing adjustments or attribution of profits to a permanent establishment or for recharacterisation of an item of income or expenditure.

We have a ladies group in the Gulf. We are professionals working in different organisations having expertise in financial management and human resource development. Some of us believe that there are good opportunities for being appointed as independent directors of publicly listed companies in India. Is there scope in this field as we wish to hold this position while continuing to work in the Gulf?

Many companies listed on the stock exchanges in India are not able to fill up the quota applicable to independent directors who need to be ladies. Therefore, there is tremendous scope for this position. However, you will have to consider whether you will be able to act as an independent director in India based on your commitments in the Gulf. Generally, six to eight board meetings are held in a calendar year by most listed companies. The Ministry of Corporate Affairs in India has appointed the Indian Institute of Corporate Affairs to create and maintain a database of all persons eligible and willing to act as independent directors. Those who have less than ten years experience of being on the board of public companies have to undergo an online proficiency test which has to be passed by 28th February, 2021. Persons who wish to take the online proficiency test need to register on the website

Training programmes are being organised by the Institute of Directors and they also conduct mock tests which give an indication of the questions asked for the proficiency test. The syllabus is vast, comprising of the Companies Act, 2013, Securities Law, secretarial audit and standards, accounting standards and financial ratios, and issues pertaining to corporate frauds and enterprise risk management. Once you pass the proficiency test, you will get a certificate which can be downloaded. Thereafter, you will be eligible for appointment as an independent director of a company listed in India. As women, you will certainly have an edge over men as there is a shortage of lady independent directors in public limited companies.

H. P. Ranina is a practicing lawyer, specialising in tax and exchange management laws of India.

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