Securities and Exchange Broad of India

DEPUTY GENERAL MANAGER
Market Intermediaries Regulation &
Supervision Department

SEBI/MIRSD/DR-2/SRP/Cir – 2/ 2005
January 4, 2005

To

NSDL/CDSL

All Registered

i. Depository Participants

ii. Merchant Bankers

iii. Registrars to an Issue and Share Transfer Agents

iv. Debenture Trustees

v. Bankers to an Issue

vi. Underwriters

vii. Credit Rating Agencies

Dear Sir / Madam,

Sub: Renewal of Certificate of Registration

Section 12 of the SEBI Act, 1992 requires that any intermediary in the capital market shall function as such only under a Certificate of Registration issued by SEBI. The SEBI Regulations pertaining to certain intermediaries require that the Certificate shall be valid for a specified period and shall be required to be renewed thereafter. These Regulations requires an intermediary to make an application for renewal three months before the expiry of the validity of the certificate of registration.

However, it is noticed that at times application for renewal is not made in time. It is also possible that an application for renewal made by an intermediary is not disposed off by the expiry of the registration. As a result, the intermediary and its clients are not quite clear if the intermediary can continue to act as intermediary after expiry of registration. This circular intends to clarify these matters:

1. If the application for renewal is not received at SEBI by the expiry date of the certificate of registration, the intermediary shall:

a. cease to be an intermediary on the date of such expiry,

b. stop carrying on the activities of the intermediary from the date of such expiry, and

c. transfer, wherever relevant, the accounts / business of existing clients to another registered intermediary before the date of such expiry.

If the intermediary fails to comply with all of the above, it will be considered as a violation of section 12 and may attract action under the relevant provisions of SEBI Act, 1992, and/or the Regulations framed there under.

No application for renewal can be made after the date of expiry of registration. After the expiry of registration, the erstwhile intermediary can apply for registration, which will be considered as a fresh application for registration made under the relevant Regulations.

2. If the application for renewal is received at SEBI less than 3 months before the expiry of registration and SEBI has not advised otherwise by the date of expiry of registration, the intermediary shall stop undertaking any fresh business / clients from the date of expiry of the registration.

SEBI may initiate any action that may be deemed appropriate for late submission of application under the provisions of the SEBI Act, 1992 and the regulations framed there under.

It is clarified that in the above cases, the application for renewal shall mean the application complete in all respects. Incomplete application will be treated as no application.

3. If renewal is not granted by SEBI for whatever reason, the intermediary shall:

a. cease to be an intermediary on the date of expiry of registration or the date of receipt of communication of refusal to grant renewal,

b. stop carrying on the activities of the intermediary from the date as at (a) above, and

c. transfer, wherever required, the accounts / business of existing clients to another registered intermediary within such period as may be specified.

If the intermediary fails to comply with all of the above, it will be considered as violating section 12 and shall be liable for action under the relevant provisions of SEBI Act, 1992, and/or the provisions of Rules and Regulations framed there under.

4. If an intermediary wishes to surrender the registration voluntarily before the expiry of the registration, it shall transfer, wherever relevant, their existing business / client accounts to another SEBI registered intermediary, before they make request to SEBI for accepting the surrender the certificate of registration.

5. The intermediary may, if he so desires, make a representation for dispensing with the procedure, along with the application, for surrender in terms of the first proviso to regulation 16(1) of the SEBI ( Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty ) Regulations, 2002 in the prescribed format (enclosed with the Circular).

6. In all cases of transfer of business or client accounts to another registered intermediary as above, the clients shall not be subjected to any additional cost.

Yours faithfully,

  1. R. Prasad

Encl.: As above

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