cs executive: l- 18 regulatory framework relating to securities market intermediaries
TRANSCRIPT
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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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BC
Whichever
Is less
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Compiled by: CA Vidhi Dedhia L- 18 Regulatory framework relating to securities market intermediaries
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
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Segment of security market
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Compiled by: CA Vidhi Dedhia L- 18 Regulatory framework relating to securities market intermediaries
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
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Cash Transaction
SUSPICIOUS TRANSACTION REPORT
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Compiled by: CA Vidhi Dedhia L- 18 Regulatory framework relating to securities market intermediaries
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
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OBLIGATIONS AND RESPONSIBILITIESN OF BANKERS TO ISSUE
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Compiled by: CA Vidhi Dedhia L- 18 Regulatory framework relating to securities market intermediaries
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.
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