cs executive: l- 18 regulatory framework relating to securities market intermediaries

Compiled by: CA Vidhi Dedhia L- 18 Regulatory framework relating to securities market intermediaries

L- 18 REGULATORY FRAMEWORK RELATING TO SECURITIES MARKET INTERMEDIARIES

Minimum underwriting obligation

Lead merchant banker holding certificate of category 1

Managing a public issue

1. Has to accept a minimum under writingobligation of 5% of Total underwriting commitment

OR

25 Lacs in respect of such Issue

2. If the Lead merchant banker is unable to accept the minimum underwriting obligation

He should make an arrangement for such amount & inform SEBI of such arrangement

Discuss the norms for registration of portfolios manager with SEBI

1. Applicant shall be Applicant shall be fit and proper person.

2. Applicant has a) Infrastructure and

b) Capital adequacy 2 crores

3. Principal Officer of Applicant

Has Professional qualification recognized by government

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4. Applicant has minimum 2 employees

Have atleast 5 years of experience as portfolio manager/stock broker/fund manager

5. Applicant + Director + Principal officer/ Employees

Are not involved in litigation connected with Securities Are not convicted for any offence

6. Grant of certificate is in interest of investors

“Self – Regulatory Organization”

Means an organization of intermediaries

Representing a particular segment of Sec. Market

Duly recognized by the board

Excluding Stock .Exchange

Functions & obligations of self regulatory organization (Regulation 14) It shall always abide by the directions of the board It shall be responsible for investor protection and education of investors

or its members and shall ensure observance of securities law by its members

It is required to specify standard of conduct of its members also shall be responsible for implementation of the same by its members

It shall conduct inspection & audit of its members on regular basis through independent auditors


Segment of security market



It shall treat all its members and applications for membership in a fair and transparent manner

It shall promptly inform the violations of the provision of the act, the rules, the regulations, etc.

Prevention of Money Laundering Act, 2002 + Rules

Require every intermediary to Furnish details of cash transaction1) Value of Rs. 10,00,000 or more

OR Its equivalent foreign currency

2) If value of such transactions is less than < Rs. 10,00,000 or its equivalent foreign currency

All series of Cash transaction connected to each other

Prevention of Money Laundering Act 2002,+

RulesRequire every intermediary to furnish every details

Of Suspicious Transaction

Whether Cash Non – cash Transactions

1) Transaction that gives rise to a reasonable ground of suspicion


Cash Transaction

SUSPICIOUS TRANSACTION REPORT



That involves Proceeds of crime

2) Transactions made in circumstances of Unusual situations 3) Transactions that have no economic Rationale 4) Terrorism

1) Maintain various records2) Intimate SEBI - Where such documents are kept

- Preserve for 3 years3) Inform SEBI number of issues for which he was engaged as banker

Additional Information

Monies Received Refunds made Dividend / Interest Warrant paid

4) Enter into agreement with Body Corporate for whom he is the banker to an issue.5) Abide by code of conduct Schedule III of SEBI (Banker to an issue) Reg 1994

DEBENTURE TRUSTEE & RESPONSIBILTIES AND DUTIES

These are the persons or agencies appointed as trustee on behalf of debenture holders to protect debenture holders interest and keep the assets by the company charged against debenture under trust.

SEBI (Debenture Trustee) Regulations, 1993 issued by SEBI

To regulate debenture trustees Regulation 3 lays down that the applicant seeking the certificate of trustee shall apply

to SEBI in form A., following matters shall be taken into consideration for applicant: Has necessary infrastructure Experience as debenture trustee or has in employment minimum 2 persons who

had experience in matters which are relevant Any person directly or indirectly connected with the applicant has not been

granted registeration by SEBI under the act. Any director or principal officer is or has been found guilty of economic

offence.

RESPONSIBILTIES AND DUTIES


OBLIGATIONS AND RESPONSIBILITIESN OF BANKERS TO ISSUE



Regulation 13 to 18 deals with the following:

1. It should not act as a debenture trustee without entering into a written agreement with the body corporate.

2. NO debenture trustee shall act as such for any issue of debenture in case : I t is an associate of the body corporate or It has lent and the loan is not yet fully repaid or is proposing to lend

money to the body corporate 3. It should accept such trust deed only which contains the matter specified in

schedule IV of the regulations.4. It shall fulfill its duties as specified in regulation 15 i.e calling for periodical

reports from the body corporate & o ther duties.5. It shall abide by its code of conduct6. Maintenance of books of accounts, records & documents relating to trusteeship

functions provided for a period of minimum 5 preceding financial years.



cs executive: l- 18 regulatory framework relating to securities market intermediaries

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