Regulation 16A - Restriction in having association with certain persons - Securities and Exchange Board of India (Intermediaries) Regulations, 2008

1 [CHAPTER IIIA RESTRICTION IN DEALING WITH OTHER ENTITIES Restriction in having association with certain persons 16A. (1) No person regulated by the Board or the agent of such a person shall have any direct or indirect association, with another person who- (i) provides advice or any recommendation, directly or indirectly, in respect of or related to a security or securities, unless the person is registered with or otherwise permitted by the Board to provide such advice or recommendation; or (ii) makes any claim, of returns or performance expressly or impliedly, in respect of or related to a security or securities, unless the person has been permitted by the Board to make such a claim: Provided that the provisions of this sub-regulation shall not apply in respect of an association through a specified digital platform. (2) The person regulated by the Board shall ensure that any person associated with it or its agent does not engage in the activities mentioned in clauses (i) or (ii) of sub-regulation (1) without the necessary permission. Explanation 1 . For the purposes of this regulation, the expression person regulated by the Board shall mean (a) a person registered with the Board under section 12 of the Act; (b) an asset management company of a mutual fund registered with the Board; (c) investment manager of an alternative investment fund or infrastructure investment trust registered with the Board; (d) manager of a real estate investment trust registered with the Board. Explanation 2. For the purposes of this regulation, the expression association shall mean- (a) a transaction involving money or money s worth; (b) referral of a client; (c) interaction of information technology systems; (d) any other association of a similar nature or character. Explanation 3. For the purposes of this regulation, the expression specified digital platform shall mean a digital platform as specified by the Board, which has a mechanism in place to take preventive as well as curative action, to the satisfaction of the Board, to ensure that such a platform is not used for indulging in any activity as referred to in clause (i) or (ii) of sub-regulation (1). Explanation 4 . For the removal of doubts, it is clarified that the term another person in this regulation shall not include a person who is engaged in investor education, provided that such a person does not, directly or indirectly, indulge in any activity as referred to in clause (i) or (ii) of sub-regulation (1) without the necessary permission. ] ************** NOTES:- 1. Inserted vide Notification No. SEBI/LAD-NRO/GN/2024/201 dated 26-08-2024