RUW CIRCULAR NO.1 (2002-2003) - SEBI - RUW CIRCULAR NO.1 (2002-2003)

Circulars PRIMARY MARKET DEPARTMENT RUW CIRCULAR NO.1 (2002-2003) September 23, 2002 To all registered Underwriters As you may be aware, the Board, as per Regulation 6(c) of the SEBI (Underwriters) Rules Regulations, 1993, while considering applications for granting certificates of registration under the said Regulations, is required to consider interalia whether a person directly or indirectly connected with the applicant has not been granted registration by SEBI. It is clarified that while considering this aspect, the Board may consider grant of certificate to an applicant, notwithstanding that another entity in the same group has been previously granted registration by the Board, if the following conditions are fulfilled: The entities are incorporated as separate legal entities. The entities have independent Board of Directors. Independent Board of Directors for this purpose means that common directors should not be in majority in both the Boards. There is absolute arms length relationship with reference to their operations. The key personnel and infrastructure are independently available for each entity. Each entity has independent regulatory controls and supervisory mechanism. It is also clarified that when as per the above policy, two entities in the same group are granted registration, any action by way of suspension or cancellation of registration taken by SEBI against one entity, may entail action under Regulation 25 of the said Regulations against other entities of the same group registered in terms of the said Regulations. Explanation : For the purposes of this circular, two entities are considered to be in the same group if: the same person, by himself or in combination with relatives, directly or indirectly exercises control over both the entities or, they are under the same management within the meaning of section 370(1B) of the Companies Act,1956 or, where one entity directly or indirectly exercises control over the other entity. [ Control for this purpose means control as defined in regulation 2(1)(c) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997] Yours faithfully, NEELAM BHARDWAJ Division Chief