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THE GAZETTE OF EXTRAORDINARY PART III – SECTION 4 PUBLISHED BY AUTHORITY SECURITIES AND EXCHANGE BOARD OF NOTIFICATION Mumbai, SECURITIES AND EXCHANGE BOARD OF (CERTIFICATION OF ASSOCIATED PERSONS IN THE
SECURITIES MARKETS) REGULATIONS, 2007 F. No. 11/LC/GN/2007/4567. In exercise of the powers conferred by section 30 read with sections 11, 12 and 19 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations, namely:- CHAPTER I PRELIMINARY Short Title and Commencement. 1. (1) These regulations may be called the Securities and Exchange Board of India (Certification of Associated Persons in the Securities Markets) Regulations, 2007. (2)
They shall come into force on the date of their publication in the
Official Gazette. Definitions. 2.
(1) In these
regulations, unless the context otherwise requires: - (a) “Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992); (b) “agent” means any person who is engaged in the activity of sale or distribution of securities on behalf of an issuer or a distributor for a commission or any other consideration; (c) “associated person” means a principal or employee of an
intermediary or an agent or distributor or other natural person engaged in the
securities business and includes an employee of a foreign institutional
investor or a foreign venture capital
investor working in (d) “Board”
means the Securities and Exchange Board of India established under section 3 of
the Act; (e) “certificate” means the certificate granted by NISM in
accordance with these regulations; (f)
“Continuing Professional Education” (CPE) means any course, programme, training
programme, activity, conference, seminar that has been accredited or approved
by NISM to enhance the knowledge, skills and professional competency of
associated persons in the areas of securities, governance and ethics; (g) “distributor” means any person engaged by an intermediary or
an issuer for the purpose of sale or
distribution of securities; (h) “intermediary” means an entity registered under sections 11
or 12 of the Act and includes any person required to obtain any membership or
approval from a stock exchange or a self-regulatory organization; (i) “issuer” means a company or a mutual
fund or a collective investment scheme
which has issued or proposes to issue securities to the public in accordance
with the relevant regulations or guidelines made by the Board and also includes
a venture capital fund registered under the relevant regulations or guidelines
made by the Board; (j) “NISM”
means the National Institute of Securities Markets established by the Board; (k) “principal”
means persons who are actively engaged in the management of the intermediary’s
securities business including supervision, solicitation, conduct of business,
and includes: (1)
Sole Proprietors (2) Managing Partners and (3) Whole
Time Directors (l) “securities” means securities
as defined in clause (h) of section 2 of the Securities Contracts (Regulation)
Act, 1956 (42 of 1956). (2) Words and expressions used and not defined in these regulations shall have the meanings, if any, respectively assigned to them by or under the Act or the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the Companies Act, 1956 (1 of 1956) or the Depositories Act, 1996 (22 of 1996) or rules and regulations made thereunder or any amendment thereto or re-enactment thereof. CHAPTER
II CERTIFICATION OF ASSOCIATED PERSONS Obligation to obtain certificate 3. (1) The Board may by
notification in the Official Gazette require such categories of associated
persons to obtain requisite certificate for engagement or employment with such
classes of intermediaries and from such date as may be specified in the
notification: Provided that
an associated person employed or engaged by an intermediary prior to the date
specified by the Board may continue to be employed or engaged by the
intermediary if he obtains the certificate within two years from the said date.
(2) An
associated person on being employed or engaged by an intermediary on or after
the date specified by the Board shall obtain the certificate within one year
from the date of being employed or engaged by the intermediary. (3) An
associated person who, as on the date specified by the Board, holds a
certificate for a category as recognized by the Board shall not be required to
obtain a fresh certificate for the same category during the validity of such
certificate. (4) The
Board for the purpose of issuing notification under sub regulations (1) and (2)
shall take into consideration: (a) whether the
associated person as part of his work or operation deals or interacts with the
investors, issuers or clients of intermediaries; (b) whether the
associated person deals with assets or funds of investor or (c) whether the associated person handles redressal
of investor grievances; (d) whether the
associated person is responsible for internal control or risk (e) whether the
associated person is responsible for compliance of any rules or (f) whether the associated person is engaged in activities that
have a bearing on Manner of obtaining certificate 4. (1)
Subject to the provisions of this regulation, an associated person may obtain
the certificate in any of the following manners, namely:- (a) by
passing a certification examination conducted by any organization or self
regulatory organization approved or engaged as may be specified by NISM from
time to time; or (b) by
obtaining such number of classroom credits accumulated through attending
classes on such subjects as may be specified by NISM from time to time; or (c) by delivering such number of formal classroom sessions in
all or specific programmes of continuing professional education as may be
specified by NISM from time to time. (2) An
associated person being principal shall obtain the certificate in any of the
manners specified in clause (a) or clause (b) or clause (c) of sub regulation
(1). (3) An
associated person, other than a principal, who has attained the age of fifty
years or who has atleast ten years experience in the
securities markets in the activities mentioned in sub regulation (4) of
regulation 3 on the date specified in the notification issued under sub
regulation (1) of regulation 3, shall obtain the certificate in the relevant
category in the manner specified in clause (a) or clause (b) of sub regulation
(1). (4) An associated person other than those mentioned in sub regulation (2) or sub regulation (3) shall obtain the certificate in the manner specified in clause (a) of sub regulation (1). Validity period of certificate 5. (1) The
certificate granted under regulation 3 shall be valid for a period of three
years from the date of the grant of the certificate or revalidation thereof as
the case may be. (2) Upon expiry of the validity of certificate
possessed by an associated person, the certificate shall be revalidated for a
period of three years at a time, provided the associated person successfully
completes a programme of continuing professional education specified by NISM in
accordance with Chapter IV of these regulations. Associated person not to undertake certain
activities without a valid certificate 6. No associated person engaged in any of the
activities mentioned in clauses (a) to (f) of sub regulation (4) of regulation
3 shall continue to be so engaged after the date specified in sub regulation
(1) or sub regulation (2) of regulation 3, as the case may be, unless such
associated person holds a valid certificate. CHAPTER III POWERS AND FUNCTIONS
OF NISM Powers and functions of NISM 7. (1) NISM would perform the functions delegated to it under
these regulations or as may be delegated by the Board. (2) Without prejudice to the generality of the foregoing provisions and the activities of NISM under its articles, the functions of NISM in respect of certification for associated persons in the securities market shall include putting in place and implementing the certification process, procedure and policies. (3) NISM in consultation with the Board may lay
down standards which may – (a) specify that all or
any portion of such standards shall be applicable to all or any category of
associated persons working or associated with all or any class of
intermediaries in securities market; (b) specify
that no associated person in any such class may be qualified to be employed or
engaged or continued to be employed or engaged by an intermediary unless he is
in compliance with such standards of examination, continuing professional
education requirements and such other qualifications as NISM in consultation
with the Board may specify.
Conduct of certification examination and
programmes of continuing professional education 8. For
conducting certification examination and programme of continuing professional
education, NISM may: (1) accredit, approve or
engage any organization or self regulatory organization to administer certification
examinations. (2) accredit, approve or engage any organization or self
regulatory organization to conduct all or any programme of continuing
professional education as may be specified from time to time. (3) require
all associated persons appearing for certification examinations or undergoing
programme of continuing professional education to pay reasonable fees or
charges to defray the costs incurred in conducting such certification
examinations and programmes of continuing professional education. CHAPTER IV CONTINUING
PROFESSIONAL EDUCATION REQUIREMENTS Continuing Professional Education requirements for associated persons 9. (1) NISM may specify the requirements for
continuing professional education (CPE) for associated persons holding certificate
and approve the programmes of CPE that may be conducted by entities accredited
and engaged in accordance with regulation 8. (2) No intermediary shall permit any associated
person to continue and no associated person shall continue to perform duties as
an associated person unless such person has complied with the requirements
specified by NISM under sub regulation (1) within 3 years from the date of
obtaining the certificate or revalidation thereof. (3) The requirements of sub regulations (1) and (2) shall apply to associated persons who are engaged in any of the activities mentioned in clauses (a) to (f) of sub regulation (4) of regulation 3. Intermediary to ensure participation in continuing professional
education 10. (1) Each
intermediary shall be responsible to ensure that its associated persons
participate in a programme of continuing professional education approved by
NISM under sub regulation (1) of regulation 9. (2) Associated persons shall take all appropriate
and reasonable steps to participate in a programme of continuing professional
education as required by the intermediary. CHAPTER V MISCELLANEOUS Certification of associated persons to be
pre-condition for registration of intermediaries. 11. Compliance with the provisions of these regulations
shall be one of the factors to be taken into consideration by the Board for the
purpose of determining eligibility criteria for grant or renewal of certificate
of registration to an intermediary under the relevant regulations. M. DAMODARAN CHAIRMAN SECURITIES AND EXCHANGE BOARD OF [ADVT- III/IV/69
ZB/2007/Exty.] *************** | |