12 January 2022
SEBI, vide its notification dated 17 November 2021, has amended the SEBI (Intermediaries) Regulations, 2008 (‘Intermediaries Regulations’), substituting Schedule II thereof, which lays down the criteria for ‘fit and proper’ persons to hold a registration as an intermediary. The amendment has come into effect from 17 November 2021.
Pursuant to the amendment while determining whether an applicant meets the ‘fit & proper person’ criteria under the Intermediaries Regulations, in addition to the principal officer, directors or managing partners, compliance officer and key management persons of the intermediary SEBI may now even consider whether the promoters or persons holding controlling interest or exercising control over the applicant or intermediary fulfil the ‘fit and proper’ person criteria, or not.
Further, for determining the ‘fit and proper person’ criteria, the person or intermediary should not be subject to any of the following disqualifications – i) criminal complaint/filed pending under section 154 of the Code of Criminal Procedure; ii) charge sheet filed for economic offences by any enforcement agency and pending proceedings thereto; iii) an order of restraint, prohibition or debarment on matters of securities laws or financial market passed the board/regulatory authority/enforcement agency; iv) any recovery proceedings initiated by board pending against such person; v) conviction of any offence involving moral turpitude; vi) winding proceedings passed or initiated; vii) declared insolvent and not discharged; viii) unsoundness of mind; ix) a wilful defaulter; x) declared fugitive economic offender; or xi) any other disqualification as specified by the board.
In the event any person is declared as not a ‘fit and proper person’ to be an intermediary, such person shall not be eligible to apply for a registration as an intermediary for a period of 5 (five) years, from the date of such an order. Additionally, in the event any person associated with a registered intermediary feels to meet the revised criteria, the intermediary shall be required to ensure that such person is replaced within a time period of 30 (thirty) days from such disqualification.
The amendment also clarifies that an intermediary shall have to fulfil the ‘fit and proper’ person criteria, not only at the time of obtaining the registration, but at all times during the continuation of the registration as well.
These amendments were approved at SEBI’s board meeting on 28 September 2021.
Please click here to read the amendment notification.
