(1) It shall be the duty of every research analyst or research entity in respect of whom an inspection has been ordered under the regulation 27 and any other associate person who is in possession of relevant information pertaining to conduct and affairs of such research analyst or research entity including their representative, if any, to produce to the inspecting authority such books, accounts and other documents in his custody or control and furnish him with such statements and information as the inspecting authority may require for the purposes of inspection.
(2) It shall be the duty of research analyst or research entity and any other associate person who is in possession of relevant information pertaining to conduct and affairs of the research analyst to give to the inspecting authority all such assistance and shall extend all such co-operation as may be required in connection with the inspection and shall furnish such information as sought by the inspecting authority in connection with the inspection.
(3) The inspecting authority shall, for the purposes of inspection, have power to examine on oath and record the statement of any employee, director, partner or person responsible for or connected with the activities of research analyst or research entity or any other associate person having relevant information pertaining to such research analyst or research entity.
(4) The inspecting authority shall, for the purposes of inspection, have power to obtain authenticated copies of documents, books, accounts of research analyst or research Page 24 of 35 entity, from any person having control or custody of such documents, books or accounts.
Submission of report to the Board.
30. The inspecting authority 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, the inspecting authority may submit an interim report.
Action on the inspection report.
31. The Board may after consideration of the inspection report and after giving reasonable opportunity of hearing to research analyst or research entity or its authorized representatives, without prejudice to any other action under the Act, issue such directions as it deems fit in the interest of securities market or the investors includingrequiring research analyst or research entity not to provide research recommendation for a particular period;
(i) requiring the research analyst or research entity to refund any money collected as fees, charges or commissions or otherwise to the concerned clients along with the requisite interest.
(ii) prohibiting the research analyst or research entity from operating in the capital market or accessing the capital market for a specified period.
CHAPTER V PROCEDURE FOR ACTION IN CASE OF DEFAULT Liability for action in case of default.
32. Research analyst or research entity who:
(i) contravenes any of the provisions of the Act or any regulations or circulars issued thereunder;
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(ii) fails to furnish any information relating to its activity as a research analyst as required by the Board;
(iii) furnishes to the Board information which is false or misleading in any material particular;
(iv) does not submit periodic returns or reports as required by the Board;
(v) does not co-operate in any enquiry, inspection or investigation conducted by the Board;
(vi) fails to resolve the complaints or fails to give a satisfactory reply to the Board in this behalf, shall be dealt with in the manner provided under the Act or the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.
CHAPTER VI MISCELLANEOUS Power of the Board to issue clarifications etc.
33. In order to remove any difficulties in the application or interpretation of these regulations, the Board may issue clarifications and guidelines in the form of circulars.
Power of the Board over body or body corporate recognized under regulation
14.34. The Board reserves the right to alter, modify and overrule any decision, action taken or penalties imposed by the body or body corporate recognized under regulation
14.
FIRST SCHEDULE FORM A Securities and Exchange Board of India (Research Analysts) Regulations, 2014 Page 26 of 35 3[SeeRegulation 3] 4[Application for grant of certificate of registration] SEBI Bhavan, C4-A, G Block, BandraKurla Complex, Bandra (East), Mumbai-400051 India INSTRUCTIONS
1. This form is meant for use by the applicant for grant of certificate of registration as a research analyst.
2. The applicant should complete this form, and submit it, along with all supporting documents to the Board at its head office at Mumbai.
3. This application form should be filled in accordance with these regulations.
4. The application shall be considered by the Board provided it is complete in all respects.
5. All answers must be legible and all the pages must be numbered with signature/ stamp on each page of the form.
6. Information which needs to be supplied in more detail may be given on separate sheets which should be attached to the application form and appropriately numbered.
7. The application must be signed.
8. The application must be accompanied by an application fee as specified in the Second Schedule to these regulations.
1. GENERAL INFORMATION 3Substituted for the words “SeeRegulations 3(2) and 11” vide the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016.
4 Substituted for the words “Application for Grant of Certificate of Registration/Renewal as Research Analyst Securities and Exchange Board of India ” vide the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016.
Page 27 of 35
(a) Name, address of the registered office, address for correspondence and principal place of business, telephone number(s), fax number(s), e-mail address of the applicant.
(b) PAN of the applicant.
(c) 5[***]
(d) Name, direct line number, mobile number and e-mail of the contact person(s).
(e) Date and place of incorporation/ establishment, if any. If the applicant is incorporated outside India, details of such incorporation.
(f) Whether the applicant is engaged in preparation of research reports or research analyses prior to making application under these regulations.
(g) Whether the applicant is registered with SEBI, RBI, IRDA or PFRDA in any capacity. If so, details of such registration.
(h) Name and activities ofassociate companies/concerns of the applicant.
(i) Write-up on the activities of the applicant.
2. DETAILS OF APPLICANT:
(a) Legal structure of applicant - Whether the applicant is an individual, body corporate (including company), partnership firm or limited liability partnership.
(b) Shareholding pattern/beneficial ownership pattern of the applicant, if applicant is other than individual (Enclose identity proof and address proof of the applicant/directors/partners/beneficial owners).
(c) Whether the applicant or research analysts employed by the applicant or partners of the applicant has/have necessary qualification as specified in regulation 7.
5 Omitted vide the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to omission, sub-para (c) read as under:
“(c) Whether application is for registration/ renewal. Provide registration number if the application is for renewal of certificate.” Page 28 of 35
(d) Number of research analysts employed by the applicant who shall engage in research analysis and/or research report preparation under these regulations on behalf of the applicant. (Provide details thereof, including self certified copies of supporting documents in respect of qualification for such research analysts employed).
(e) Declaration by the applicant that the research analysts employed, partners of the applicant, if any, currently comply with the qualification requirements under regulation 7. (Provide self certified copies of supporting documents) (If the applicant is an existing research analyst applying for fresh registration, then he shall provide a declaration stating that the applicant shall comply with the certification requirements for research analysts employed under these regulations and partners of the applicant, if any, within two years from the date of commencement of these regulations and shall submit a copy of the certification to the Board within fifteen days of receipt of such certification.)
(f) Declaration by the applicant that it shall ensure that the research analyst employed and partners of the applicant, if any, comply with the certification and qualification requirements under the regulation 7 at all times including obtaining fresh certification before expiry of existing certification.
(g) Copy of Income Tax Return/ Copy of Form 16 for the last 3 years in case of individual applicant.
(h) Networth certificate or certified copy of assets and liabilities statement or certification of net tangible assets of the applicant certified by a chartered accountant, not more than six months old at the time of filing of application.
Please note that membership number of the Chartered accountant must be included in the certificate.
3. DETAILS OF RESEARCH SERVICES
(a) Details of the proposed research services Page 29 of 35
(b) Details about internal policies and procedures to effectively address conflict of interest
(c) Details about the standard disclosures to be provided
(d) Any other relevant information pertaining to research services provided
4. DETAILS OF INFRASTRUCTURE
(a) Details of office space, office equipment, furniture and fixtures, communication facilities, research capacity, research software for undertaking research analysis.
(b) Declaration that the applicant has the necessary infrastructure to effectively discharge the activities of research analyst.
5. OTHER INFORMATION/DECLARATIONS/ REGULATORY ACTIONS
(a) Details of all settled and pending disputes in the last 5 years.
(b) Whether any previous application for grant of certificate made by any person directly or indirectly connected with the applicant has been rejected by the Board; If yes, provide details of the same.
(c) Whether any disciplinary action has been taken by the Board or any other regulatory authority against any person directly or indirectly connected with the applicant under the Act or the regulations made there under in the last 5 years.
If yes, provide details of the action.
(d) Whether the applicant/directors/promoters/ partners have been indicted/involved in any economic offence in the last 5 years. If yes, provide details of the same.
(e) Declaration that the applicant, research analyst’ employed by it, its representatives and partners, if any, are fit and proper persons based on the criteria as specified in Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.
(f) Declaration that the applicant shall comply with Chapter of III of the Regulations.
(g) Any other information considered relevant to the nature of services to be rendered by the applicant.
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6. DECLARATION STATEMENT I/We hereby agree and declare that the information supplied in the application, including the attachment sheets, is complete and true.
AND I/ we further agree that, I/we shall notify the Securities and Exchange Board of India immediately any change in the information provided in the application.
I/ We further agree that I/ we shall comply with, and be bound by the Securities and Exchange Board of India Act, 1992, and the Securities and Exchange Board of India (Research Analysts) Regulations, 2014, guidelines/instructions as may be issued by the Securities and Exchange Board of India from time to time.
I/ We further agree that as a condition of registration, I/ 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) Authorized signatory/ Applicant (Signature) (Date and Place) Form B Securities and Exchange Board of India (Research Analysts) Regulations, 2014 [See Regulation 9] Certificate of registration as Research Analyst 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 regulations made Page 31 of 35 there under, the Board hereby grants a certificate of registration to ___________________________________________________ as a research analyst subject to the conditions specified in the Act and in the regulations made thereunder.
II. The Registration Number is IN/RA/_____________.
III. 6[This certificate of registration shall be valid till it is suspended or cancelled by the Board.]
Date :
Place : MUMBAI By Order Sd/- For and on behalf of Securities and Exchange Board of India SECOND SCHEDULE Securities and Exchange Board of India (Research Analysts) Regulations, 2014 [See Regulation 3(2) and Regulation 9] FEES
1. 7[1. Every applicant shall pay non-refundable application fees along with the application for grant of certificate of registration as under:
6 Substituted vide the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to substitution, Paragraph III read as under:
“III..Unless renewed, the certificate of registration is valid from ________ to _________.” 7Substituted vide the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to substitution, Paragraph 1. read as under:
“Every individual applicant including partnership firms shall pay non-refundable application fees of five thousand rupees and others shall pay non-refundable application fees of fifty thousand rupees along with the application for grantorrenewalofcertificate ofregistration.” Page 32 of 35 i. For individuals or partnership firms: Rupees 5000;
ii. For proxy advisory firms: Rupees 5000;
iii. For Body Corporate including Limited Liability Partnerships:
Rupees 50000.]
2. 8[Every applicant shall pay registration fee at the time of grant of certificate of registration by the Board as under:
i. For individuals or partnership firms: Rupees 10000;
ii. For proxy advisory firms: Rupees 10000;
iii. For Body Corporate including Limited Liability Partnerships:
Rupees 500000.]
3. 9[A Research Analyst who has been granted a certificate of registration, to keep its registration in force, shall pay fee prescribed at paragraph 2 above every five years , from the date of grant of certificate of registration or from the date of grant of certificate of registration granted prior to the commencement of the Securities and Exchange Board of India (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2016, as the case may be, within three months before expiry of the period for which fee has been paid.]
4. 10[The fee referred to in paragraph 2 shall be paid by the applicant within 8Substituted vide the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to substitution, Paragraph 2. read as under:
“2. Applicants who are individuals or partnership firms shall pay a sum of ten thousand rupees as registration/ renewal fee at the time of grant or renewal of certificate by the Board.” 9Substituted vide the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to substitution, Paragraph 3. read as under:
“A body corporate including limited liability partnership firm shall pay a sum of five lakh rupees as registration/ renewal fee at the time of grant or renewal of certificate by the Board.” 10Substituted vide the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to substitution, Paragraph 4. read as under:
Page 33 of 35 fifteen days from the date of receipt of intimation from the Board by way of demand draft in favour of 'Securities and Exchange Board of India' payable at Mumbai or at respective regional or local office or by way of by way of direct credit in the bank account through NEFT/RTGS/IMPS or any other mode allowed by RBI”.]
5. 11[***]
6. 12[***] “Every applicant who is engaged in providing proxy advisory services shall pay non-refundable application fees of five thousand rupees with the application for grantorrenewalofcertificate ofregistration.” 11 Omitted vide the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to omission, Paragraph 5. read as under:
“Applicants who are engaged in providing proxy advisory services shall pay a sum of ten thousand rupees as registration/ renewal fee at the time of grant or renewal of certificate by the Board.” 12Omitted vide the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to omission, Paragraph 6. read as under:
“The fee referred to in paragraph 1, 2, 3, 4 and 5 shall be paid by the applicant within fifteen days from the date of receipt of intimation from the Board by a demand draft in favor of 'Securities and Exchange Board of India' payable at Mumbai.” Page 34 of 35 THIRD SCHEDULE [See sub-regulation (2) of regulation 24] CODE OF CONDUCT FOR RESEARCH ANALYST
1. Honesty and Good Faith Research analyst or research entity shall act honestly and in good faith.
2. Diligence Research analyst or research entity shall act with due skill, care and diligence and shall ensure that the research report is prepared after thorough analysis.
3. Conflict of Interest Research analyst or research entity shall effectively address conflict of interest which may affect the impartiality of its research analysis and research report and shall make appropriate disclosures to address the same.
4. Insider Trading or front running Research analyst or research entity or its employees shall not engage in insider trading or front running or front running of its own research report.
5. Confidentiality Research analyst or research entity or its employees shall maintain confidentiality of report till the report is made public.
6. Professional Standard Research analyst or research entity or its employees engaged in research analysis shall observe high professional standard while preparing research report.
7. Compliance Research analyst or research entity shall comply with all regulatory requirements applicable to the conduct of its business activities.
8. Responsibility of senior management Page 35 of 35 The senior management ofresearch analyst or research entity shall bear primary responsibility for ensuring the maintenance of appropriate standards of conduct and adherence to proper procedures.
U.K. SINHA CHAIRMAN SECURITIES AND EXCHANGE BOARD OF INDIA