The Security and Exchange Board of India (SEBI) had notified the Relaxation in timelines for compliance with regulatory requirements owing to the COVID-19 pandemic. SEBI through a notification made on 1st December 2020 had relaxed the compliance requirements for depository participants, trading members, clearing corporations, as well as KYC registration agency regarding the submission of reports.
Considering the current situation due to the Covid-19 pandemic and representation received from the Stock Exchanges, SEBI decided towards extending the timelines for compliance with the many regulatory requirements through the trading members/clearing members. Due to the pandemic, the timelines were extended are as follows:
For internal audit and System Audit for the half-year ended on 30th September 2020, the timeline has been extended till 31st December 2020.
For the half-yearly net worth certificate as of 30th September 2020, the timeline has been extended till 31st December 2020.
For Cyber Security and Cyber Resilience Audit for the half-year ended on 30th September 2020, the timeline has been extended till 31st January 2021.
Taking into consideration the request received from the Depositories, it decided to extend the timelines for compliance with the many regulatory requirements by depository participants (DPs).
Firstly, for the Submission of the half-yearly Internal Audit Report by depository participants for the half-year ended on 30th September 2020, the timeline has been extended till 31st December 2020.
Also, for KYC (know your customer) application form and supporting documents of the customers, the SEBI had stated that the periods of exclusion shall be from 23rd March 2020 till December 31, 2020. A 15-day period after 31st December 2020 is allowable to Depository/ DPs, in order to clear the backlog.
Furthermore, for systems audit on a yearly basis for the financial year ended 31st March 2020, the timeline has been extended till 31st December 2020.
The Stock Exchanges or Clearing Corporations and Depositories are directed towards bringing the provisions of this circular to the notice of their associates and members respectively and also distribute the same on their websites
The Security and Exchange Board of India (SEBI) had stated that this circular has been issued for exercising the powers that were conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 as well as Section 19 of the Depositories Act, towards protecting the interests of investors in securities and towards promoting the development of, and to adjust the securities markets.
Conclusion
The Security and Exchange Board of India (SEBI) took this move in order to relax the deadlines which are likely to give additional time to corporations already struggling with operations part amidst the prevailing Covid-19 pandemic. In accordance with the efforts to give relief to the sagging companies, Nirmala Sitharaman, the Finance Minister of India had earlier held to decriminalize a number of offenses under the Companies Act.
Furthermore, the Security and Exchange Board of India (SEBI) had also presented new standards to provide more fund-raising flexibility to stressed companies. The amendments could also assist promoters to receive financial investors on board without losing control of the business.
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