Securities and Exchange Board of India (Foreign Institutional Investors) (Second Amendment) Regulations, 2003. - S.O. No.990(E) - SEBI/LAD/DOP/16098/2003 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 28 th August, 2003 S.O. No.990(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 to amend the Securities and Exchange Board of India (Foreign Institutional Investors ) Regulations, 1995, namely:- 1. (i) These regulations may be called the Securities and Exchange Board of India (Foreign Institutional Investors) (Second) (Amendment) Regulations, 2003. (ii) They shall come into force on the date of their publication in the Official Gazette. 2. (i) In the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, after regulation 20, the following shall be inserted, namely :- 20A. Foreign Institutional Investors shall fully disclose information concerning the terms of and parties to off-shore derivative instruments such as Participatory Notes, Equity Linked Notes or any other such instruments, by whatever names they are called, entered into by it or its sub-accounts or affiliates relating to any securities listed or proposed to be listed in any stock exchange in India, as and when and in such form as the Board may require. (ii) In regulation 7, after the third proviso, the following shall be inserted, namely :- 7A A foreign institutional investor holding a certificate shall, at all times, abide by the Code of Conduct as specified in Third Schedule . (iii) After the Second Schedule, the following shall be inserted, namely :- Securities and Exchange Board of India (Foreign Institutional Investors), Regulations, 1995. Code of Conduct (Regulation 7A) Third Schedule 1. A Foreign institutional Investor and its key personnel shall observe high standards of integrity, fairness and professionalism in all dealings in the Indian securities market with intermediaries, regulatory and other government authorities. 2. A Foreign Institutional Investor shall, at all times, render high standards of service, exercise due diligence and independent professional judgment. 3. A Foreign Institutional Investor shall ensure and maintain confidentiality in respect of trades done on its own behalf and/or on behalf of its sub-accounts/clients. 4. A Foreign Institutional Investor shall ensure the following : a. clear segregation of its own money / securities and sub-accounts money / securities b. arms length relationship between its business of fund management / investment and its other business. 5. A Foreign Institutional Investor shall maintain an appropriate level of knowledge and competency and abide by the provisions of the Act, regulations made thereunder and the circulars and guidelines, which may be applicable and relevant to the activities carried on by it. Every Foreign institutional Investor shall also comply with award of the Ombudsman and decision of the Board under Securities and Exchange Board of India (Ombudsman) Regulations, 2003 . 6. A Foreign Institutional Investor shall not make any untrue statement or suppress any material fact in any documents, reports or information furnished to the Board. 7. A Foreign Institutional Investor shall ensure that good corporate policies and corporate governance are observed by it. 8. A Foreign Institutional Investor shall ensure that it does not engage in fraudulent and manipulative transactions in the securities listed in any stock exchange in India. 9. A Foreign Institutional Investor or any of its directors or manager shall not, either through its / his own account or through any associate or family members, relatives or friends indulge in any insider trading. 10. A Foreign Institutional Investor shall not be a party to or instrumental for a. creation of false market in securities listed or proposed to be listed in any stock exchange in India; b. price rigging or manipulation of prices of securities listed or proposed to be listed in any stock exchange in India; c. passing of price sensitive information to any person or intermediary in the securities market. [F. No. SEBI/LAD/DOP/16098/2003] G.N. BAJPAI, Chairman Foot notes :-- 1. The SEBI (Foreign Institutional Investors) Regulations, 1995 were published in the Gazette of India, Part II, Section 3(ii) on November 14, 1995 vide No. S.O. 918(E). 2. The Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995 were subsequently amended - (a) on October 9, 1996 by the Securities and Exchange Board of India (Foreign Institutional Investors) (Amendment) Regulations, 1996 vide No. S.O. 702(E). (b) on November 19, 1996 by the Securities and Exchange Board of India (Foreign Institutional Investors) (Second Amendment) Regulations, 1996 vide No. S.O. 799(E). (c) on February 12, 1997 by the Securities and Exchange Board of India (Foreign Institutional Investors) (Amendment) Regulations, 1997 vide No. S.O. 105(E). (d) on July 10, 1997 by the Securities and Exchange Board of India (Foreign Institutional Investors) (Second Amendment) Regulations, 1997 vide No. S.O. 495(E). (e) on December 5, 1997 by the Securities and Exchange Board of India (Foreign Institutional Investors) (Third Amendment) Regulations, 1997 vide No. S.O. 823(E). (f) on April 20, 1998 by the Securities and Exchange Board of India (Foreign Institutional Investors) (Amendment) Regulations, 1998 vide No. S.O. 333(E). (g) on May 18, 1998 by the Securities and Exchange Board of India (Foreign Institutional Investors) (Second Amendment) Regulations, 1998 vide No. S.O. 417(E). (h) on June 30, 1998 by the Securities and Exchange Board of India (Foreign Institutional Investors) (Third Amendment) Regulations, 1998 vide No. S.O. 545(E). (i) on April 16, 1999 by the Securities and Exchange Board of India (Foreign institutional Investors) (Amendment) Regulations, 1999 vide No. S.O. 263(E). (j) on August 26, 1999 by the Securities and Exchange Board of India (Foreign Institutional Investors) (Second Amendment) Regulations. 1999 vide No. S.O.688(E). (k) on February 29, 2000 by the Securities and Exchange Board of India (Foreign Institutional Investors) (Amendment) Regulations, 2000 vide No. S.O.180(E). (l) on March 28, 2000 by the Securities and Exchange Board of India (Appeal to the Securities Appellate Tribunal) (Amendment) Regulations, 2000 vide No. S.O. 278(E). (m) on October 20, 2000 by the Securities and Exchange Board of India (Foreign Institutional Investors) (Second Amendment) Regulations, 2000 vide No. S.O. 946(E). (n) on February 13, 2001 by the Securities and Exchange Board of India (Foreign Institutional Investors) (Amendment) Regulations, 2001 vide No. S.O. 128(E). (o) on May 29, 2001 by the Securities and Exchange Board of India (Investment Advice by Intermediaries) (Amendment) Regulations, 2001 vide No. S.O. 476(E). (p) on September 27, 2002 by the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 vide No. S.O. 1045(E). (q) on December 10, 2002 by the Securities and Exchange Board of India (Foreign Institutional Investors) (Amendment) Regulations, 2002 vide No. S.O. 1292 (E). (r) on May 14, 2003 by the Securities and Exchange Board of India (Foreign Institutional investors) (Amendment) Regulations, 2003 vide No. S.O. 548 (E).