(1) It shall be the duty of the 106[custodian] whose affairs are being inspected, and of every director, officer and employee thereof to produce to the inspecting officer such books, securities, accounts, records and other documents in its custody or control and furnish him with such statements and information relating to his activities of the 107[custodian], as the inspecting officer may require, within such reasonable period as the inspecting officer may specify.
(2) The 108[custodian] shall allow the inspecting officer to have reasonable access to the premises occupied by such custodian or by any other person on his behalf and also extend reasonable facility for examining any books, records, documents and computer data in the possession of the 109[custodian] or such other person and also provide copies of documents or other materials which in the opinion of the inspecting officer are relevant for the purposes of the inspection.
(3) The inspecting officer, in the course of inspection, shall be entitled to examine or to record the statements of any director, officer or employee of the 110[custodian].
(4) It shall be the duty of every director, officer or employee of the 111[custodian] to give to the inspecting officer all assistance in connection with the inspection, which the inspecting officer may reasonably require.
103 Substituted ibid for the words “custodian of securities”.
104 Substituted for the words “custodian of securities” by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
105 Substituted for the words “custodian of securities” by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
106 Substituted ibid for the words “custodian of securities”.
107 Substituted for the words “custodian of securities” by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
108 Substituted ibid for the words “custodian of securities”.
109 Substituted for the words “custodian of securities” by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
110 Substituted ibid for the words “custodian of securities”.
111 Substituted for the words “custodian of securities” by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
Submission of report to the Board.
24. The inspecting officer shall, as soon as possible, on completion of the inspection submit an inspection report to the Board:
Provided that if directed to do so by the Board, he may submit an interim report.
112[Action on inspection or investigation report.
25. The Board or the Chairman shall after consideration of inspection or investigation report take such action as the Board or Chairman may deem fit and appropriate including action under 113[Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008].]
114[Appointment of auditor.
25A. The Board shall have the power to appoint an auditor to inspect or investigate, as the case may be, into the books of account, records, documents or affairs of the applicant or the custodian, as the case may be; Provided that the auditors so appointed shall have the same powers as vested in the inspecting officer under regulation 21 and the applicant or custodian and its directors, officers and employees shall be under the same obligations, towards the auditor so appointed, as are mentioned in regulation 23.
Board to recover the expenses.
25B. The Board shall be entitled to recover from the custodian or the applicant, as the case may be, such expenses including fees paid to the auditors as may be incurred by it for the purposes of inspecting the books of account, records and documents of the applicant or the custodian as the case may be.]
CHAPTER V PROCEDURE EOR ACTION IN CASE OF DEFAULT 115[Liability for action in case of default.
112 Substituted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, w.e.f. 27-9-2002. Prior to its substitution, regulation 25 read as under:
“25. (1) Communication of findings etc. to the custodian of securities of securities.─The Board shall, after consideration of the inspection report or the interim report referred to in regulation 24, communicate the findings of the inspection officer to the custodian of securities and give him an opportunity of being heard.
(2) On receipt of the reply if any, from the custodian of securities, the Board may call upon the custodian of securities to take such measures as the Board may deem fit in the interest of the securities market and for due compliance with the provisions of the Act, the rules framed thereunder and these regulations.
113 Substituted for the words "the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002" by the SEBI (Intermediaries) Regulations, 2008 w.e.f.
26-5-2008.
114 Inserted by the SEBI (Custodian of Securities) (Amendment) Regulations, 1997, w.e.f. 17-10-1997.
26. A 116[custodian] who—
(a) contravenes any of the provisions of the Act, the rules framed thereunder or these regulations;
(b) fails to furnish any information relating to his activity as 117[custodian] as required by the Board;
(c) furnishes to the Board information which is false and misleading in any material particular;
(d) does not submit periodic returns or reports as required by the Board;
(e) does not co-operate in any enquiry or inspection conducted by the Board;
(f) fails to update its systems and procedures as recommended by the Board;
(g) fails to resolve the complaints of clients or fails to give a satisfactory reply to the Board in this behalf;
(h) is guilty of misconduct or makes a breach of the Code of Conduct specified in the Third Schedule;
(i) fails to pay annual fees, shall be dealt with in the manner provided under 118[Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008].]
119[27 to 32] 115 Substituted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, w.e.f. 27-9-2002. Prior to its substitution, regulation 26 read as under:
“26. Suspension of certificate. The Board may suspend the certificate granted to a custodian of securities where the custodian of securities:
(a) contravenes any of the provisions of the Act, the rules framed thereunder or these regulations;
(b) fails to furnish any information relating to his activity as custodian of securities as required by the Board;
(c) furnishes to the Board information which is false and misleading in any material particular;
(d) does not submit periodic returns or reports as required by the Board;
(e) does not co-operate in any enquiry or inspection conducted by the Board;
(f) fails to update its systems and procedures as recommended by the Board;
(g) fails to resolve the complaints of clients or fails to give a satisfactory reply to the Board in this behalf;
(h) is guilty of misconduct or makes a breach of the Code of Conduct specified in the Third Schedule;
(i) fails to pay annual fees, shall be dealt with in the manner provided under the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002."
116 Substituted for the words “custodian of securities” by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
117 Substituted ibid for the words “custodian of securities”.
118 Substituted for "the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002" by the SEBI (Intermediaries) Regulations, 2008, w.e.f. 26-5-2008.
119 Regulations 27 to 32 omitted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, w.e.f. 27-9-2002.
FIRST SCHEDULE FORMS [See regulation 2(h)] FORM A 120[SECURITIES AND EXCHANGE BOARD OF INDIA (CUSTODIAN) REGULATIONS, 1996] (See Regulation 3(3)) Application for grant of certificate of registration as 121[Custodian] Securities and Exchange Board of India Mittal Court, 'B' wing, 1st Floor Nariman Point, Mumbai 400021 - India ________________________________________________________________ INSTRUCTIONS:
i. This form is meant for use by the applicant for application for grant of certificate of registration as 122[custodian].
ii. The applicant should complete this form, and submit it, along with all supporting documents to the Board at its head office at Mumbai.
iii. This application form should be filled in accordance with the 123[SEBI (Custodian) Regulations, 1996].
iv. The application will be considered by the Board provided it is complete in all respects.
v. All answers must be typed.
vi. Information which needs to be supplied in more detail may be given on separate sheets which should be attached to the application form.
vii. The application must be signed and all signatures must be original.
viii. The application must be accompanied by an application fee as specified in the Second Schedule to the 124[SEBI (Custodian) Regulations, 1996].
ix. Every page of the form and every additional sheet must be initialled by the authorised signatory of the applicant.
x. All copies of documents should be attested as true by an authorised notary.
120 Substituted by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
121 Substituted ibid for the words “custodian of securities”.
122 Substituted for the words “custodian of securities” by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
123 Substituted by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
124 Substituted by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
1. Name, address of the registered office, address for correspondence, telephone number(s), fax number(s), telex number(s) of the applicant and the name of the contact person.
2. Please indicate to which of the following categories the applicant belongs:
(i) Foreign bank
(ii) Domestic bank
(iii) Financial Institution
(iv) Other
3. (a) Date and place of incorporation or establishment and date of commencement of business (enclose certificate of incorporation, memorandum and articles of association or statutory provisions, if any, under which incorporated or established).
(b) Details of the activities carried on by the applicant, in India or overseas.
(c) Details of affiliates and subsidiaries of the applicant operating in India, and activities carried on by them.
(d) Details of registration with the Securities and Exchange Board of India or with the Reserve Bank of India or with any regulatory authority overseas of the applicant, and of its affiliates and subsidiaries operating in India.
(e) In case the applicant is buying, selling or otherwise dealing with the securities market as a 125[custodian] immediately before the 24th March, 1995.
(i) Date of commencement of business as "126[custodian]" in case of banks, please enclose copies of the Reserve Bank of India's permission, and if applicable, copies of approval from the Central Government, to carry on activities as 127[custodian].
(ii) Type and number of existing clients (Financial Institutions, Mutual Funds, Foreign Institutional Investors, Depository Receipts, Portfolio Managers, Non Banking Finance Companies, Stock Brokers, Corporates, Individuals.)
(iii) Volume of assets under custody.
4. Please state whether the applicant, director or principal officer is involved in any litigation connected with the securities market which has an adverse bearing on the business of the applicant; or has at any time been convicted for any moral turpitude or at anytime has been found guilty of any economic offence.
5. Please also state whether there has been any instance of violation or non adherence to the securities laws, code of ethics/conduct, code of business rules, for which the applicant, or its parent or holding company or affiliate may have been 125 Substituted ibid for the words “custodian of securities”.
126 Substituted for the words “custodian of securities” by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
127 Substituted for the words “custodian of securities” by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
subject to economic, or criminal, liability, or suspended from carrying out its operations, or the registration revoked temporarily.
6. Please indicate the net worth and paid-up capital in Rupees as per the latest audited financial statements of the applicant (enclose copy).
7. Please indicate services that are provided to clients or are proposed to be provided to clients as 128[custodian].
8. Please provide the following details regarding infrastructure:
(i) space owned in square feet (please indicate location and enclose copy of title);
(ii) space on lease in square feet (please indicate location and enclose copy of lease agreement);
(iii) space on rent in square feet (please indicate location and enclose copy of rental agreement);
129[(iv) details of vault or warehouse, for each vault or warehouse (in case the vault or warehouse is built to any specific standard, give details and documentary evidence thereof).]
9. Please provide the following details regarding staff involved in activities as 130[custodian]:
(i) organisation structure;
(ii) experience and background of key personnel.
10. Please provide the following details regarding safekeeping and security systems and procedures:
(i) 131[warehouse,] vault security and access control systems;
(ii) systems for tracking securities 132[and goods];
(iii) risk control and operations manuals (enclose copies);
(iv) give details of independent internal control mechanisms for monitoring, evaluation and review of accounting safekeeping and reporting systems and procedures.
11. Please provide the following details regarding automatic data processing systems and record keeping:
(i) details of hardware, software and communications systems, their capability, function and location;
128 Substituted ibid for the words “custodian of securities”.
129 Substituted by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019. Prior to such substitution, sub-clause (iv) read as – “(iv) details of vault, for each vault (in case the vault is built to any specific standard, give details and documentary evidence thereof).” 130 Substituted for the words “custodian of securities” by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
131 Inserted ibid.
132 Inserted by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
(ii) details of data storage and back up procedures and sites, their capability, function and location;
(iii) details of disaster recovery systems and procedures.
12. Declaration statement (to be given as below) We hereby agree and declare that the information supplied in the application, including the attachment sheets, is complete and true.
We further agree that, we shall notify the Securities and Exchange Board of India immediately any change in the information provided in the application.
We further agree that we shall comply with, and be bound by the Securities and Exchange Board of India Act, 1992, and the 133[Securities and Exchange Board of India (Custodian) Regulations, 1996], and such other guidelines/instructions as may be announced by the Securities and Exchange Board of India from time to time.
We further agree that as a condition of registration, we shall abide by such operational instructions/directives as may be issued by the Securities and Exchange Board of India from time to time.
For and on behalf of……………… (Name of the applicant) Authorised signatory ............................... ..........................................
(Name) (Signature) Date:
Place :
FORM B (See regulation 8) 134[SECURITIES AND EXCHANGE BOARD OF INDIA (CUSTODIAN) REGULATIONS, 1996] CERTIFICATE OF REGISTRATION AS 135[CUSTODIAN] I. In exercise of the powers conferred by sub-section (1) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), read with the 133 Substituted by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
134 Substituted by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
135 Substituted ibid for the words “custodian of securities”.
regulations made thereunder, the Board hereby grants a certificate of registration to _________________ as a 136[custodian] subject to the conditions specified in the Act and in the regulations made thereunder.
II. The Registration Number of the 137[custodian] is IN................
/....../..... /....
Date:
Place: MUMBAI By order Sd/- For and on behalf of Securities and Exchange Board of India SECOND SCHEDULE [See regulation 138[3(3) and 8]] 139[SECURITIES AND EXCHANGE BOARD OF INDIA (CUSTODIAN) REGULATIONS, 1996] FEES PAYABLE UNDER THE REGULATIONS 140[PART A AMOUNT TO BE PAID AS FEES (I) Application fee Rs.141[5,00,000]
(ii) Registration fee Rs.142[50,00,000]
(iii) Annual fee Rs.10,00,000 or 143[144[0.0005] per cent] of the "assets under custody" of the 145[custodian], whichever is higher.
136 Substituted for the words “custodian of securities” by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
137 Substituted by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019 138 Substituted for the words and expressions “3(3), 8 and 9(C)” by the Securities and Exchange Board of India (Custodian) (Amendment) Regulations, 2019, w.e.f. 22-3-2019.
139 Substituted ibid.
140 Substituted by the SEBI (Custodian of Securities) (Second Amendment) Regulations, 2006, w.e.f. 31-10-2006.
141 Substituted for the figure "1,00,000" by SEBI (Payment of Fees) (Amendment) Regulations 2014, w.e.f.
23.05.2014.
142 Substituted for the figure "15,00,000", ibid.
143 Substituted for "0.0005 percent" by the SEBI (Payment of Fees) (Amendment) Regulations, 2009, w.e.f. 01-07-
2009.
144 Substituted for the figure "0.00025" by SEBI (Payment of Fees) (Amendment) Regulations 2014, w.e.f.
23.05.2014.
Explanation I.—For the purpose of this part, the expression "assets under custody" shall mean the value of the assets held by the 146[custodian] as disclosed by him under sub-paragraph (4) of paragraph II.
147[***]]
PART B I. The fees specified above shall be payable 148[by way of direct credit in the bank account through NEFT/RTGS/IMPS or any other mode allowed by RBI or] by demand draft or bankers cheque in favour of "The Securities and Exchange Board of India" at Mumbai.
149[II. Payment of annual fee.—(1) On and from the commencement of the Securities and Exchange Board of India (Custodian of Securities) (Second Amendment) Regulations, 2006, the annual fee shall be payable with reference to each financial year, within one month of completion of the financial year.
(2) A 150[custodian] who is granted registration on and after the commencement of the Securities and Exchange Board of India (Custodian of Securities) (Second Amendment) Regulations, 2006, shall pay proportionate annual fee in respect of the financial year in which he was granted registration and full annual fee for every subsequent financial year during which the registration subsists.
(3) A 151[custodian] who is granted registration before the commencement of the Securities and Exchange Board of India (Custodian of Securities) (Second Amendment) Regulations, 2006, shall pay proportionate annual fee in respect of the financial year of such commencement and full annual fee for every subsequent financial year during which the registration subsists.
Provided that any annual fee paid by a 152[custodian] before the commencement of the Securities and Exchange Board of India (Custodian of Securities) (Second Amendment) Regulations, 2006, in respect of a period, the whole or part of which 145 Substituted by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
146 Substituted ibid.
147 Omitted by the Securities and Exchange Board of India (Custodian) (Amendment) Regulations, 2019, w.e.f. 22-3-
2019. Prior to omission the explanation read as below:
“Explanation II.—It is clarified that no Registration fee shall be payable under clause (ii), in case of renewal of the certificate of registration.” 148 Inserted by the SEBI (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017, w.e.f. 6-3-2017.
149 Substituted by the SEBI (Custodian of Securities) (Second Amendment) Regulations, 2006, w.e.f. 31-10-2006.
150 Substituted by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
151 Substituted ibid.
152 Substituted by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
falls after such commencement, shall be proportionately adjusted against the amount payable under this subparagraph.
(4) The payment of annual fee shall be accompanied by a statement of assets under custody which shall be in such format as may be specified by the Board and shall be certified to be true and complete by the functional head of the custody services of the 153[custodian].]
THIRD SCHEDULE (See regulation 12) 154[SECURITIES AND EXCHANGE BOARD OF INDIA (CUSTODIAN) REGULATIONS, 1996] CODE OF CONDUCT
1. The 155[custodian] shall maintain the highest standard of integrity, fairness and professionalism in the discharge of his duties.
2. The 156[custodian] shall be prompt in distributing dividends, interest or any such accruals of income received or collected by him on behalf of his clients on the securities held in custody.
3. The 157[custodian] shall be continuously accountable for the movement of securities 158[or goods] in and out of 159[the] custody account, deposit, and withdrawal of cash from the client's account and shall provide complete audit trail, whenever called for by the client or 160[Board].
4. The 161[custodian] shall establish and maintain adequate infrastructural facility to be able to discharge custodial services to the satisfaction of clients, and the operating procedures and systems of the 155[custodian] shall be well documented and backed by operations manuals.
5. The 155[custodian] shall maintain client confidentiality in respect of the client's affairs.
153 Substituted ibid.
154 Substituted by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
155 Substituted ibid.
156 Substituted by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
157 Substituted ibid.
158 Inserted ibid.
159 Inserted by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
160 Substituted for “Securities and Exchange Board of India” by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, w.e.f. 1-1-2019.
161 Substituted ibid.
6. Where custodian records are kept electronically, the 155[custodian] shall take precautions necessary to ensure that continuity in record keeping is not lost or destroyed and that sufficient back up of records is available.
7. The 155[custodian] shall create and maintain the records of securities held in custody in such manner that the tracing of securities or obtaining duplicate title documents is facilitated, in the event of loss of original records for any reason.
8. The 155[custodian] shall extend to other custodial entities, depositories and clearing organizations all such co-operation that is necessary for the conduct of business in the areas of inter custodial settlements, transfer of securities and transfer of funds.
9. The 155[custodian] shall ensure that an arms length relationship is maintained, both in terms of staff and systems, from his other businesses.
10. Every 155[custodian] shall exercise due diligence in safe-keeping and administration of the assets of his clients in his custody for which he is acting as 155[custodian].
162[11. (a) A 155[custodian] or any of his employees shall not render, directly or indirectly any investment advice about any security in the publicly accessible media, whether real-time or non-real-time, unless a disclosure of his interest including long or short position in the said security has been made, while rendering such advice.
(b) In case an employee of the 155[custodian] is rendering such advice, he shall also disclose the interest of his dependent family members and employer including their long or short position in the said security, while rendering such advice.]
********* 162 Inserted by the SEBI (Investment Advice by Intermediaries) (Amendment) Regulations, 2001, w.e.f. 29-5-2001.