9911796707
TMI BlogVAULT MANAGERS – PART IX X X X Extracts X X X X X X X X Extracts X X X X ..... VAULT MANAGERS – PART I - By: - Mr. M. GOVINDARAJAN - Corporate Laws / IBC / SEBI - Dated:- 8-1-2022 - - Gold Exchange Securities and Exchange Board of India ( SEBI for short) came with a proposal of setting up a gold Exchange in which gold, in the form of Electronic Gold Receipt, will be traded. For the purpose of handling gold by vault managers, SEBI made a regulation called as Securities and Exchange Board of India (Vault Manager) Regulations, 2021 ( Regulations for short) vide Notification No. SEBI/LAD-NRO/GN/2021/61, dated 31.12.2021 . These regulations came into effect from 31.12.2021. Vault Manager Regulation 2(1) (l) defines the expression vault manager as any person who carries on or intends to carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the business of providing vaulting services. Vaulting services Regulation 2(1)(m) defines the expression vaulting services in relation to gold as the storage and safekeeping of gold deposited with the Vault Manager, by the depositor, for the purpose of trading in Electronic Gold Receipt and providing services incidental thereto, and includes- utilizing the services of assayers empanelled with the Stock Exchanges for testing as per the gold standard, wherever required; coordination with depositories for creation, transfer and extinguishment of Electronic Gold Receipt; and providing deposit, storage and withdrawal services to the beneficial owners. Eligibility The applicant, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho wants to register as vault manager has to fulfill the following criteria- The applicant shall be a body corporate incorporated in India. The applicant shall have the minimum net worth of ₹ 50 crores. The applicant shall furnish refundable Financial Security Deposit as may be specified by the Board. The applicant shall have the infrastructure as specified by the Board for safe deposit, storage and withdrawal of gold. The applicant shall have adequate insurance to cover losses as may be specified by the Board. The applicant shall have a Standard Operating Procedure in respect of all the recognized vaults Registration procedure The following is the procedure enumerated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Regulations for registration of Vault Manager - A person who wants to register as Vault Manager shall make an application in Form A to the Board. Form A requires the following information- General information of the applicant; Organization structure; Business information; Financial information; Information concerning the vault(s); Security features; Other information; and Declaration Statement. The application shall accompany with ₹ 1 lakh towards non refundable deposit. The applicant or authorized representative may appear before the Board for the purpose of registration. The Board may call for any information/clarification from the applicant in regard to registration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Board will consider the application and consider whether the applicant has- net worth requirement; necessary infrastructure for carrying out the vaulting services effectively; requisite approvals, if any, under any law for the time being in force, in connection with providing its services; adequate and competent persons employed who have the required experience, knowledge and ability for managing the business of the Vault Manager a Standard Operating Procedure (SOP) has been prepared setting out the systems and procedures to be followed by it for the effective and efficient discharge of its functions; engaged in any other business apart from providing vaulting services; and the grant of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the certificate of registration is in the interest of the investors. On being satisfied that all records and documents sought have been furnished and that the applicant is eligible for the grant of a certificate of registration, the Board shall intimate the same to the applicant. On receipt of information from the Board for grant of registration the applicant shall pay to the Board a registration fee ₹ 10 lakhs. The Board shall grant the certificate of registration to the applicant in the format specified in Form B. Conditions for registration The Board shall issue certificate to the applicant subject to the following conditions- the Vault Manager shall maintain the net-worth at all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... times during the validity of its registration; the Vault Manager shall, during the process of seeking registration, immediately intimate the Board about any change in information submitted including information about change in control, if any; the Vault Manager shall abide by the provisions of the Act and these regulations in the discharge of its obligations and duties as a Vault Manager; the Vault Manager shall pay the fees the Vault Manager shall take adequate steps for redressal of the grievances of the investors in such manner and within such time as may be specified by the Board and inform the Board about the number, nature and other particulars of the complaints received, if any. Validity of regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stration Every certificate of registration granted shall be valid unless it is suspended or cancelled by the Board. A Vault Manager who has been granted a certificate of registration shall pay fee of ₹ 10 lakhs every 3 years, from the date of grant of certificate of registration within 3 months before the expiry of the block period for which fee has been paid in order to keep its registration in force. The said fee shall be paid by the Vault Manager within 15 days from the date of receipt of intimation from the Board by way of direct credit in the bank account through online payment using SEBI payment gateway. Rejection of application After considering an application made, if the Board is of the opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that a certificate should not be granted to the applicant, it may reject the application after giving the applicant a reasonable opportunity of making a written representation. The decision of the Board to reject the application shall be communicated to the applicant within thirty days of such decision. Surrender of certificate A Vault Manager shall make an application to the Board in terms of Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 to surrender the certificate of registration along with information that would satisfy the Board that- the vaults have no pending obligations for physical delivery of gold; and all disputes with respect to the gold depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited with it for the purpose of providing vaulting services as specified in these regulations have been satisfactorily resolved. The financial security deposit furnished by the Vault Manager shall be refunded on surrender of certificate. Code of Conduct The Vault Manager shall- be prompt in providing vaulting services to the beneficial owners; take reasonable care to organize and control its affairs responsibly and effectively, with adequate risk management systems; maintain adequate financial resources; observe proper standards of market conduct in all their businesses relating to vaulting services; maintain the highest standards of integrity, fairness and professionalism in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he discharge of its duties; exercise due diligence in safe-keeping of the assets of the beneficial owners in its custody for which it is acting as a Vault Manager; be continuously accountable for the movement of gold between its own authorized vaults and shall provide complete audit trail, whenever called for by the Board; establish and maintain adequate infrastructural facility to be able to discharge vaulting services; ensure that all operating procedures of the Vault Manager shall be well documented and backed by operation manuals; maintain confidentiality in respect of the information of the beneficial owner; take necessary precautions to ensure that continuity in record keeping, where the recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds are kept electronically, is not lost or destroyed and that back up of entire records is available; extend to other Vault Managers, depositories and clearing organizations all such co-operation that is necessary for the conduct of business in the areas of inter-vault settlements, transfer and withdrawal of gold; ensure that an arm s length relationship is maintained, both in terms of staff and systems, from its other businesses; be liable for loss of or any damage to the gold caused by its failure to exercise such care and diligence in regard to the gold as a careful and vigilant owner of the gold would exercise while in custody of the gold. Inspection The Board is having power to undertake inspecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the books of accounts, records, documents and deposits of gold of the Vault Manager for any purpose, including the following- to ensure that the books of account, records and documents are being maintained by the Vault Manager, in the manner specified in these regulations; to examine the complaints, if any, received from investors or any other person on a matter having a bearing on the activities of the Vault Manager; to ascertain whether the provisions of the Act, these regulations and circulars and guidelines issued thereunder are being complied with by the Vault Manager; to inspect into the affairs of the Vault Manager in the interest of the securities market or in the interest of investors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before ordering an inspection, the Board shall give not less than 10 days notice to the Vault Manager. If the Board is satisfied that in the interest of the investors no such notice should be given, it may by an order in writing direct that the inspection of the affairs of the Vault Manager be taken up without such notice. It shall be the duty of the Vault Manager- to produce to the inspecting officer, such books of accounts, records and other documents in its custody or control and furnish him with such statements and information relating to his activities as Vault Manager and within such reasonable period as the inspecting officer may require; to allow the inspecting officer to have reasonable access to the prem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises occupied by it or by any other person on its behalf and also extend reasonable facility for examining the books, records, documents and computer data in the possession of the Vault Manager or such other person and also provide copies of documents or other materials which in the opinion of the inspecting officer are relevant for the purposes of the inspection. The inspecting officer shall be entitled to examine or to record the statements of any director, officer or employee of the Vault Manager during inspection. On completion of inspection, the inspecting officer shall submit an inspection report to the Board. The Board shall, after consideration of the inspection report, take such action as the Board may deem fit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd appropriate including action under Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 . Audit The Board is having the power to appoint an auditor to inspect, into the books of account, records, documents or affairs of the Vault Manager. The auditors so appointed shall have the same powers as are vested upon the inspecting officer and the Vault Manager or its directors, officers or employees shall be bound by the same obligations towards the auditor so appointed. The Board shall be entitled to seek from the Vault Manager, the expenses as may be incurred by it as fees paid to the auditor for inspecting the books of account, records and documents of the Vault Manager. De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fault of Vault Manager A Vault Manager who- contravenes any of the provisions of the Act, the rules framed there under or these regulations; fails to furnish any information relating to its activity as Vault Manager as required by the Board; furnishes false and misleading information to the Board; does not submit reports as required by the Board; does not co-operate in any enquiry or inspection conducted by the Board; fails to update its systems and procedures as recommended by the Board; fails to resolve the complaints of complainants or fails to give a satisfactory reply to the Board in this behalf; makes a breach of the Code of Conduct; or fails to pay the fees in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with these regulations, shall be dealt with in the manner provided under the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 . - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
