SEBI has changed some rules.
New Delhi:
Capital market regulator SEBI has revised rules on ‘fit and proper’ criteria for stock exchanges and other institutions providing infrastructure. Any direction passed against such institutions by this amendment shall not affect their functioning. The new rules aim to separate the role of the individual from such institutions.
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To be ‘fit and proper’ certain criteria have to be met. There should be no punishment from the court for any offense other than financial integrity, good reputation. Also, there should be no order of SEBI against the concerned person.
In two separate notifications, the Securities and Exchange Board of India (SEBI) said the ‘fit and proper’ person criteria will apply to applicants, stock exchanges, clearing corporations, depositories, their shareholders, directors and key management personnel.
In addition, such market infrastructure institution (MII) has to ensure that all its shareholders, directors and key management personnel meet these standards.
According to the notification issued on 22nd of this month, if any director or key management employee of the organization is not considered ‘fit and proper’ then such organizations have to remove such person within 30 days from the date of disqualification. Failing to do so, the ‘fit and proper person’ criterion can be applied against him.
Any such disqualification shall not affect the position of directors or key management personnel. This will be applicable unless the directors or key employees involved in the management are also found guilty in the above case.
“Any order passed by the Board against a recognized stock exchange or clearing corporation shall not affect its functioning unless specifically stated in the order,” Sebi said.
The regulator has amended the Securities Contracts Rules as well as the Depository Participants Rules.