INSUBCONTINENT EXCLUSIVE:
Under the SEBI's new framework, the criteria will be principle-based and/or rule-based.New Delhi: Market regulator SEBI has altered the
criteria to determine "fit and proper person", a notification issued on Wednesday showed
Under the Securities and Exchange Board of India's new framework, the criteria will be principle-based and/or rule-based.The
principle-based criteria include integrity, honesty, ethical behaviour, reputation, fairness, and character, according to the notification
Further, the rule-based norms will determine the 'fit and proper' status of the person based on the disqualifications stated by the market
regulator.Some of such disqualifications included an order of conviction passed against such person by a court for any offence, involving
moral turpitude or such person has been declared insolvent and not discharged
A person categorised as wilful defaulter or declared a fugitive economic offender or against whom an order has been passed by SEBI or any
other financial sector regulator will also be disqualified.For 'fit and proper person' criteria, the applicant or intermediary needs to have
competence and capability in terms of infrastructure, manpower requirements and financial soundness, including meeting the net worth
requirement.The criteria shall apply to various persons -- the applicant or the intermediary; the principal officer, the directors or
managing partners, the compliance officer and the key management persons by whatever name called; and the promoters or persons holding
controlling interest or persons exercising control over the applicant or intermediary, directly or indirectly.In the case of an unlisted
applicant or intermediary, any person holding 20 per cent or more voting rights, irrespective of whether they hold controlling interest or
exercise control, will be required to fulfil the 'fit and proper person' criteria.Where any person has been declared as not 'fit and proper
person' by SEBI, the regulator said such a person will not be eligible to apply for any registration during the period provided in the said
order or for five years, if no such period is specified in the order.At the time of filing of an application for registration as an
intermediary, if any notice to show cause has been issued for proceedings then such an application will not be considered for grant of
registration for one year from the date of issuance of such notice or until the conclusion of the proceedings, whichever is earlier, SEBI
noted.Any disqualification of an associate or group entity of the applicant or intermediary will not have any bearing on the 'fit and proper
person' criteria of the applicant or intermediary.If any person fails to satisfy the 'fit and proper person' criteria, the intermediary will
replace such person within 30 days from the date of such disqualification
Also, the intermediary will ensure that such person does not exercise any voting rights and that such person divests their holding within
six months from the date of such disqualification.In case the intermediary failed in complying with these directions, the fit and proper
person criteria may be invoked against the intermediary.
