Securities and Exchange Board of India (Depositories and Participants) (Third Amendment) Regulations, 2003. - S.O. No.1156(E) - SEBI/LAD/DOP/18338/2003 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 1 st October, 2003 S.O.1156(E).-- In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations further to amend the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, namely:- 1. (i) These regulations may be called the Securities and Exchange Board of India (Depositories and Participants) (Third Amendment) Regulations, 2003. (ii) They shall come into force on the date of their publication in the Official Gazette. 2. In Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 - a. After Regulation 20, before Regulation 21, the following new Regulation shall be inserted, namely: - Participants to abide by Code of Conduct 20A The Participant holding a certificate shall, at all times, abide by the Code of Conduct as specified in Third Schedule . b. After SECOND SCHEDULE, the following THIRD SCHEDULE shall be inserted, namely : -- THIRD SCHEDULE Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 [Regulation 20A] CODE OF CONDUCT FOR PARTICIPANTS 1. A Participant shall make all efforts to protect the interests of investors. 2. A Participant shall always endeavor to a. render the best possible advice to the clients having regard to the clients needs and the environments and his own professional skills; b. ensure that all professional dealings are affected in a prompt, effective and efficient manner; c. inquiries from investors arc adequately dealt with; d. grievances of investors are redressed without any delay. 3. A Participant shall maintain high standards of integrity in all its dealings with its clients and other intermediaries, in the conduct of its business. 4. A Participant shall be prompt and diligent in opening of a beneficial owner account, dispatch of the Dematorialisation Request Form, Rematerialisation Request Form and execution of Debit Instruction Slip and in all the other activities undertaken by him on behalf of the beneficial owners. 5. A Participant shall endeavor to resolve all the complaints against it or in respect of the activities carried out by it as quickly as possible, and not later than one month of receipt. 6. A Participant shall not increase charges / fees for the services rendered without proper advance notice to the Beneficial Owners. 7. A Participant shall not indulge in any unfair competition, which is likely to harm the interests of other Participants or investors or is likely to place such other Participants in a disadvantageous position while competing for or executing any assignment. 8. A Participant shall not make any exaggerated statement whether oral or written to the clients either about its qualifications or capability to render certain services or about its achievements in regard to services rendered to other clients. 9. A Participant shall not divulge to other clients, press or any other person any information about its clients which has come to its knowledge except with the approval / authorisation of the clients or when it is required to disclose the information under the requirements of any Act, Rules or Regulations. 10. A Participant shall co-operate with the Board as and when required. 11. A Participant shall maintain the required level of knowledge and competency and abide by the provisions of the Act, Rules, Regulations and circulars and directions issued by the Board. The Participant shall also comply with the award of the Ombudsman passed under Securities and Exchange Board of India (Ombudsman) Regulations, 2003. 12. A Participant shall not make any untrue statement or suppress any material fact in any documents, reports, papers or information furnished to the Board. 13. A Participant shall not neglect or fail or refuse to submit to the Board or other agencies with which it is registered, such books, documents, correspondence, and papers or any part thereof as may be demanded / requested from time to time. 14. A Participant shall ensure that the Board is promptly informed about any action, legal proceedings etc., initiated against it in respect of material breach or non compliance by it, of any law, rules, regulations, directions of the Board or of any other regulatory body. 15. A Participant shall maintain proper inward system for all types of mail received in all forms. 16. A Participant shall follow the Maker - Checker concept in all of its activities to ensure the accuracy of the data and as a mechanism to check unauthorized transaction. 17. A Participant shall take adequate and necessary steps to ensure that continuity in data and record keeping is maintained and that the data or records are not lost or destroyed. It shall also ensure that for electronic records and data, up-to-date back up is always available with it. 18. A Participant shall provide adequate freedom and powers to its compliance officer for the effective discharge of his duties. 19. A Participant shall ensure that it has satisfactory internal control procedures in place as well as adequate financial and operational capabilities which can be reasonably expected to take care of any losses arising due to theft, fraud and other dishonest acts, professional misconduct or omissions. 20. A Participant shall be responsible for the acts or omissions of its employees and agents in respect of the conduct of its business. 21. A Participant shall ensure that the senior management, particularly decision makers have access to all relevant information about the business on a timely basis. 22. A Participant shall ensure that good corporate policies and corporate governance are in place. [F. No. SEBI/LAD/DOP/18338/2003] GYANENDRA NATH BAJPAI, Chairman Foot note : 1. SEBI (Depositories and Participants) Regulations, 1996, the principal regulation, was published in the Gazette of India on May 16, 1996 No. vide S.O. 345 (E). 2. SEBI (Depositories and Participants) Regulations, 1996 was subsequently amended - (a) on February 7, 1997 by SEBI (Depositories and Participants) (Amendment) Regulations, 1997 vide No. S.O. 91(E). (b) on September 5, 1997 by SEBI (Depositories and Participants) (Second Amendment) Regulations, 1997 vide No. S.O. 640 (E). (c) on January 5, 1998 by SEBI (Depositories and Participants) (Amendment) Regulations, 1998 vide No. S.O. 18 (E). (d) on January 21, 1998 by SEBI (Depositories and Participants) (Second Amendment) Regulations, 1998 vide No. S.O. 76 (E). (e) on May 20, 1999 by SEBI (Depositories and Participants) (Amendment) Regulations, 1999 vide No. S.O. 357 (E). (f) on July 7, 1999 by SEBI (Depositories and Participants) (Second Amendment) Regulations, 1999 vide No. S.O. 546 (E). (g) on September 21, 1999 by SEBI (Depositories and Participants) (Third Amendment) Regulations, 1999 vide No. S.O. 775 (E). (h) on December 26, 2000 by SEBI (Depositories and Participants) (Amendment) Regulations, 2000 vide No. S.O.1160 (E). (i) on May 29, 2001 by SEBI (Investment Advice by Intermediaries) (Amendment) Regulations, 2001 vide No. S.O. 476 (E). (j) on September 27, 2002 by Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 vide No. S.O. 1045 (E). (k) on June 16, 2003 by SEBI (Depositories and Participants) (Amendment) Regulations, 2003 vide No. S.O. 696 (E). (l) on September 2, 2003 by SEBI (Depositories and Participants) (Second Amendment) Regulations, 2003 vide No. S.O. 1014 (E).