Securities and Exchange Board of India (Underwriters) (Amendment) Regulations, 2003. - S.O. No.1158(E) - SEBI/LAD/DOP/18342/2003 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 1 st October, 2003 S.O. 1158(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 (Underwriters) Regulations, 1993, namely;- 1. (i) These regulations may be called the Securities and Exchange Board of India (Underwriters) (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 (Underwriters) Regulations, 1993 - a. For the existing Schedule III, the following schedule III shall be substituted, namely: - SCHEDULE III Securities and Exchange Board of India (Underwriters) Regulations, 1993 [Regulation 13] CODE OF CONDUCT FOR UNDERWRITERS 1. An underwriter shall make all efforts to protect the interests of its clients. 2. An Underwriter shall maintain high standards of integrity, dignity and fairness in the conduct of its business. 3. An underwriter shall ensure that it and its personnel will act in an ethical manner in all its dealings with a body corporate making an issue of securities (hereinafter referred to in the schedule as the issuer ). 4. An Underwriter shall endeavor to ensure all professional dealings are effected in a prompt, efficient and effective manner. 5. An Underwriter shall, at all times, render high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgement. 6. An underwriter shall not make any statement, either oral or written, which would misrepresent - (a) the services that the underwriter is capable of performing for its client, or has rendered to any other Issuer Company; (b) his underwriting commitment. 7. An Underwriter shall avoid conflict of interest and make adequate disclosure of his interest. 8. An Underwriter shall put in place a mechanism to resolve any conflict of interest situation that may arise in the conduct of its business or where any conflict of interest arises, shall take reasonable steps to resolve the same in an equitable manner. 9. An Underwriter shall make appropriate disclosure to the client of its possible source or potential areas of conflict of duties and interest while acting as Underwriter which would impair its ability to render fair, objective and unbiased services. 10. An underwriter shall not divulge to other Issuer, Press or any party any confidential information about its Issuer Company, which has come to its knowledge and deal in securities of any Issuer Company without making disclosure to the Board as required under the regulations and also to the Board of Directors of the Issuer Company. 11. An Underwriter shall not discriminate amongst its clients, save and except on ethical and commercial considerations. 12. An Underwriter shall ensure that any change in registration status / any penal action taken by board or any material change in financials which may adversely affect the interests of clients / investors is promptly informed to the clients and any business remaining outstanding is transferred to another registered person in accordance with any instructions of the affected clients/investors. 13. An Underwriter shall maintain an appropriate level of knowledge and competency and abide by the provisions of the Act, regulations and circulars and Guidelines issued by the Board. The underwriter shall also comply with the award of the Ombudsman passed under Securities and Exchange Board of India (Ombudsman) Regulations, 2003. 14. An Underwriter shall ensure that the board is promptly informed about any action, legal proceedings etc. initiated against it in respect of any material breach or non compliance by it, of any law, rules, regulations, directions of the board or of any other regulatory body. 15. An underwriter shall not make any untrue statement or suppress any material fact in any documents, reports, papers or information furnished to the Board. 16. (a) An underwriter or any of his employees shall not render, directly or indirectly any investment advice about any security in the publicly accessible media, whether real-time or non-real-time, unless a disclosure of his interest including its long or short position in the said security has been made, while rendering such advice. (b) In case, an employee of an underwriter is rendering such advice, the underwriter shall ensure that he shall disclose his interest, the interest of his dependent family members and that of the employer including their long or short position in the said security, while rendering such advice. 17. An Underwriter or any of its directors, partners or manager having the management of the whole or substantially the whole of affairs of the business, shall not either through its account or their respective accounts or through their associates or family members, relatives or friends indulge in any insider trading. 18. An Underwriter shall not indulge in any unfair competition, which is likely to be harmful to the interest of other underwriters carrying on the business of underwriting or likely to place such other underwriters in a disadvantageous position in relation to the underwriter while competing for, or carrying out any assignment. 19. An Underwriter shall have internal control procedures and financial and operational capabilities which can be reasonably expected to protect its operations, its clients and other registered entities from financial loss arising from theft, fraud, and other dishonest acts, professional misconduct or omissions. 20. An Underwriter shall provide adequate freedom and powers to its compliance officer for the effective discharge of his duties. 21. An Underwriter shall develop its own internal code of conduct for governing its internal operations and laying down its standards of appropriate conduct for its employees and officers in the carrying out of their duties. Such a code may extend to the maintenance of professional excellence and standards, integrity, confidentiality, objectivity, avoidance of conflict of interests, disclosure of shareholdings and interests etc. 22. An Underwriter shall ensure that good corporate policies and corporate governance is in place. 23. An Underwriter shall ensure that any person it employs or appoints to conduct business is fit and proper and otherwise qualified to act in the capacity so employed or appointed (including having relevant professional training or experience) 24. An Underwriter shall ensure that it has adequate resources to supervise diligently and does supervise diligently persons employed or appointed by it to conduct business on its behalf. 25. An Underwriter shall be responsible for the acts or omissions of its employees and agents in respect to the conduct of its business. 26. An Underwriter shall ensure that the senior management, particularly decision makers have access to all relevant information about the business on a timely basis. 27. An Underwriter shall not be party to or instrumental for a. Creation of false market; b. Price rigging or manipulation, or; c. Passing of unpublished price sensitive information in respect of securities which are listed and proposed to be listed in any stock exchange to any person or intermediary. [F.No. SEBI/LAD/DOP/18342/2003] GYANENDRA NATH BAJPAI, Chairman Foot Note : 1. SEBI (Underwriters) Regulation, 1993 the principal regulation was published in the Gazette of India on October 8, 1993, vide No. LE/10/93. 2. The Securities and Exchange Board of India (Underwriters) Regulations, 1993 was subsequently amended ; a. on November 28, 1995 by the SEBI (Payment of Fees) Amendment Regulations, 1995 vide No, S.O. 939 (E). b. on January 17, 1997 by the SEBI (Underwriters) Amendment Regulations, 1997 vide No. S.O. 46 (E). c. on January 01, 1998 by the SEBI (Underwriters) Amendment Regulations, 1998 vide No. S.O. 21 (E). d. on September 30, 1999 by the SEBI (Underwriters) Amendment Regulations, 1999 vide No. S.O. 797 (E). e. on March 28, 2000 by Securities and Exchange Board of India (Appeal to Securities Appellate Tribunal) (Amendment) Regulations, 2000 vide No. S.O. 278 (E). f. on May 29, 2001 by the SEBI (Investment Advice by Intermediaries) (Amendment) Regulations, 2001 vide No. S.O. 476 (E). g. 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). h. on December 10, 2002 by the SEBI (Underwriters) Amendment Regulations, 2002 vide No. S.O. 1291 (E).