SPECIAL INSTRUCTIONS FOR CLIENTS BUYING SHARES OF EXCHANGES, CLEARING CORPORATIONS AND DEPOSITARIES

“Regulation 19(1) & 20 of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 (SECC Regulations) which states that no person shall, directly or indirectly, acquire or hold equity shares of a recognised Stock Exchange, recognised Clearing Corporation and recognised Depositaries unless he is a fit and proper person in terms of Regulation 19 and 20 of the SECC Regulations."

ELIGIBILITY FOR ACQUIRING OR HOLDING SHARES. REGULATION 19 OF SECC

No person shall, directly or indirectly, acquire or hold equity shares of a recognised Stock Exchange, recognised Clearing Corporation and recognised Depositaries unless he is a fit and proper person.

Any person who, directly or indirectly, either individually or together with persons acting in concert, acquire equity shares such that his shareholding exceeds two per cent of the paid up equity share capital of a a recognised Stock Exchange, recognised Clearing Corporation and recognised Depositaries shall seek approval of SEBI within fifteen days of the acquisition.

A person eligible to acquire or hold more than five per cent of the paid up equity share capital under sub-regulation (2) of regulation 17 and sub-regulation (2) of regulation 18 may acquire or hold more than five per cent of the paid up equity share capital of a a recognised Stock Exchange, recognised Clearing Corporation and recognised Depositaries only if he has obtained prior approval of SEBI.

Any person holding more than two per cent of the paid up equity share capital of the a recognised Stock Exchange, recognised Clearing Corporation and recognised Depositaries on the date of commencement of these regulations, shall ensure compliance with this regulation within a period of ninety days from the date of such commencement.

If approval under sub-regulation (2) or (4) is not granted by SEBI to any person, such person shall forthwith divest his excess shareholding.

Any person holding more than two per cent. of the paid up equity share capital in a a recognised Stock Exchange, recognised Clearing Corporation and recognised Depositaries, as the case may be, shall file a declaration within fifteen days from the end of every financial year to the a recognised Stock Exchange, recognised Clearing Corporation and recognised Depositaries, as the case may be, that he complies with the fit and proper criteria provided in these regulations.

FIT AND PROPER CRITERIA. REGULATION 20 OF SECC

For the purposes of these regulations, a person shall be deemed to be a fit and proper person if Such person has a general reputation and record of fairness and integrity, including but not limited to —

• Financial integrity

• Good reputation and character

• Honesty

Such person has not incurred any of the following disqualifications

The person, or any of its whole time directors or managing partners, has been convicted by a court for any offence involving moral turpitude or any economic offence or any offence against the securities laws.

An order for winding up has been passed against the person.

The person, or any of its whole time directors or managing partners, has been declared insolvent and has not been discharged.

An order, restraining, prohibiting or debarring the person, or any of its whole time directors or managing partners, from dealing in securities or from accessing the securities market, has been passed by the Board or any other regulatory authority, and a period of three years from the date of the expiry of the period specified in the order has not elapsed.

Any other order against the person, or any of its whole time directors or managing partners, which has a bearing on the securities market, has been passed by SEBI or any other regulatory authority, and a period of three years from the date of the order has not elapsed.

The person has been found to be of unsound mind by a court of competent jurisdiction and the finding is in force

The person is financially not sound.

If any question arises as to whether a person is a fit and proper person, SEBI's decision on such question shall be final. For more details please click here

Do's

• Risk factors pertaining to the issue.

• Outstanding litigations and defaults, if any

• Financials of the issuer.

• Object of the issue.

• Company history.

• Background of promoters.

• Instructions before making application.

Read the Prospectus/ Abridged Prospectus and carefully note

Don'ts

• Do not fall prey to market rumors.

• Do not go by any implicit/explicit promise made by the issuer or any one else

• Do not invest based on Bull Run of the market index/scrips of other companies in same industry/issuer company.

• Do not bank upon the price of the shares of the issuer company to go up in the short run.

Do's

• Go through all rules, regulations, bye-laws and disclosures made by the exchanges.

• Trade only through - Trading Member (TM) registered with SEBI or authorized person of TM registered with the exchange.

• While dealing with an authorised person, ensure that the contract note has been issued by the TM of the authorized person only.

• While dealing with an authorized person, pay the brokerage/payments/margins etc. to the TM only.

• Ensure that for every executed trade you receive duly signed contract note from your TM highlighting the details of the trade along with your unique client-id.

• Obtain receipt for collateral deposited with Trading Member (TM) towards margin.

• Go through details of Client-Trading Member Agreement.

• Know your rights and duties vis-à-vis those of TM/ Clearing Member.

• Be aware of the risk associated with your positions in the market and margin calls on them.

• Collect / pay mark to market margins on your futures position on a daily basis from / to your Trading member.

Don'ts

• Do not start trading before reading and understanding the Risk Disclosure Documents

• Do not trade on any product without knowing the risk and rewards associated with it

Do's

• Before investing ensure that the entity is registered with SEBI.

• Read the offer document of the scheme especially the risk factors carefully.

• Check the viability of the project.

• Check and verify the background/expertise of the promoters

• Ensure clear and marketable title of the property/assets of the entity

• Ensure that the Collective Investment Management Company has the necessary infrastructure to carry out the scheme

• Check the credit rating of the scheme and tenure of the rating

• Check for the appraisal of the scheme and read the brief appraisal report.

• Read carefully the objects of the scheme.

• Check for the promise vis-a-vis performance of the earlier schemes in the offer document.

Don'ts

• Do not invest in any CIS entity not having SEBI registration.

• Do not get carried away by indicative returns.

• Do not invest based on market rumors.

Don'ts