Intermediary ensure persons Comply with Fit and Proper person criteria: SEBI [Read Circular]

Intermediary ensure persons - SEBI - Taxscan

The Securities and Exchange Board of India (SEBI) notified the Securities and Exchange Board of India (Intermediaries) (Third Amendment) Regulations, 2021 which seeks to amend the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 wherein the Intermediary ensure persons  comply with fit and proper person criteria.

The applicant or intermediary shall meet the criteria, as provided in the respective regulations applicable to such an applicant or intermediary including the competence and capability in terms of infrastructure and manpower requirements; and (b) the financial soundness, which includes meeting the net worth requirements.

The fit and proper person criteria shall apply to the various  persons namely the applicant or the intermediary; the principal officer, the directors or managing partners, the compliance officer and the key management persons by whatever name called; and the promoters or persons holding controlling interest or persons exercising control over the applicant or intermediary, directly or indirectly. Provided that in case of an unlisted applicant or intermediary, any person holding twenty percent or more voting rights, irrespective of whether they hold controlling interest or exercise control, shall be required to fulfill the ̳fit and proper person‘ criteria.

For the purpose of determining as to whether any person is a ̳fit and proper person‘, the Board may take into account any criteria as it deems fit, including but not limited to the integrity, honesty, ethical behaviour, reputation, fairness and character of the person; (b) the person not incurring any of the disqualifications namely criminal complaint or information under section 154 of the Code of Criminal Procedure, 1973 (2 of 1974) has been filed against such person by the Board and which is pending; charge sheet has been filed against such person by any enforcement agency in matters concerning economic offences and is pending; an order of restraint, prohibition or debarment has been passed against such person by the Board or any other regulatory authority or enforcement agency in any matter concerning securities laws or financial markets and such order is in force; recovery proceedings have been initiated by the Board against such person and are pending;  an order of conviction has been passed against such person by a court for any offence involving moral turpitude; any winding up proceedings have been initiated or an order for winding up has been passed against such person; such person has been declared insolvent and not discharged; such person has been found to be of unsound mind by a court of competent jurisdiction and the finding is in force;  such person has been categorized as a wilful defaulter; such person has been declared a fugitive economic offender; or  any other disqualification as may be specified by the Board from time to time.

As per the notification where any person has been declared as not ̳fit and proper person‘ by an order of the Board, such a person shall not be eligible to apply for any registration during the period provided in the said order or for a period of five years from the date of effect of the order, if no such period is specified in the order.

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