BRSR - Ease of doing business

 Decisions taken by SEBI at its Board meeting held on 18th December, 2024

Ease of doing business with respect to Business Responsibility and Sustainability Report (BRSR)

With a view to facilitate ease of doing business for listed entities and their value chain partners with regard to requirements under BRSR on Environmental, Social and Governance (ESG) disclosures and its assurance, and introduction of voluntary disclosure on green credits, the Board approved the following:

1 Deferring ESG disclosures for value chain, as well as “assessment or assurance” thereof, by one year. Hence, ESG disclosures for value chain shall apply from FY 2025-26 (as against the current requirement of FY 2024-25) and “assessment or assurance” thereof shall be applicable from FY 2026-27 (as against the current requirement of FY 2025-26).

2 Providing ESG disclosures for value chain shall be “voluntary”, instead of the present requirement of ‘comply-and-explain’.

3 Reducing the scope of value chain to cover the top upstream and downstream partners of a listed entity, individually comprising 2% or more of the listed entity's purchases and sales (by value), respectively, while providing that the listed entity may limit disclosure of value chain to cover 75% of its purchases and sales (by value), respectively.

4 Reporting of previous year numbers will be voluntary in case of first year of reporting of ESG disclosures for value chain.

5 Introduction of a leadership indicator in Principle 6 of BRSR for disclosure of Green Credits generated or procured by the listed entity and its top-10 value chain partners.

6 Substitution of “assurance” with “assessment or assurance” in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, regarding BRSR. “Assessment” will be third-party assessment undertaken as per standards to be developed by the Industry Standards Forum (ISF) in consultation with SEBI. This would be applicable for BRSR Core disclosures for listed entities and value chain from FY 2024-25 and FY 2026-27 onwards, respectively.

SEBI would come out with a notification to bring all these into effect. 

SEBI Research Analysts Amendments 16th December 2024

 SEBI has vide notification dated 16^th December, 2024, amended the SEBI (Research Analysts) Regulations 2014. Salient features of the amendment are as follows

 

1)      In the definitions section, following new definitions have been added:

 

“(fa) “consideration” means any form of economic benefit including non-cash benefit, received or receivable, directly or indirectly, in any form whether from client or otherwise for providing research services;

 

(fb) “family of an individual research analyst” shall include individual research analyst, spouse, children and parents;

 

(fc) “family of client” shall include individual client, dependent spouse, dependent children and dependent parents;”

 

“(na) “non-individual” means a body corporate including a limited liability partnership and a partnership firm;

 

(nb) “other business activity or employment” means such business activity or employment which is not related to securities and:

a. it does not involve handling or managing of money or funds of client or person; or

b. it is not related to providing advice or recommendation to any client or person in respect of any products or assets for investment purposes;

 

(nc) “partner” means partner of the partnership firm or a limited liability partnership who renders research services on behalf of the firm or limited liability partnership;

 

(nd) “part-time research analyst” means an individual or a partnership firm who for consideration, is engaged in the business of providing research services and is also engaged in any other business activity or employment;

 

(ne) “persons associated with research services” shall mean any member, partner, officer, director or employee or any other staff of such research analyst or research entity including any person occupying a similar status or performing a similar function irrespective of the nature of association with the research analyst or research entity who is engaged in providing research services to the clients or other persons or group of persons or general public.

Explanation. - All client and public facing persons such as analysts, sales staff, service relationship managers, client relationship managers, etc., by whatever name called, shall be deemed to be persons associated with research services, but shall not include persons who discharge clerical or office administrative functions where there is no connection with research services and they have no client contact;”

 

“(oa) “principal officer” in case of non-individual research analyst engaged –

(i) solely in providing research services, shall mean the managing director or designated director or managing partner or executive chairman of the board or equivalent management body who is responsible for the overall function of the business and operations of non-individual research analyst;

(ii) in activities other than research services through separate departments/divisions, may be the person at the management level who is a business head or unit head, responsible for the overall function of the business and operations related to research services:

Provided that in case of non-individual research analyst being a partnership firm one of the partners shall be designated as its principal officer:

Provided further that where no partner of firm registered as a research analyst has minimum qualification and certification requirements provided in these regulations, it shall apply for registration as a research analyst in the form of a limited liability partnership or a body corporate within such time as may be specified by the Board.

Explanation. — The provisions of sub clause (i) shall also be applicable to the principal officer of a non-individual entity registered both as a research analyst and an investment adviser but engaged in no other business activity.”

 

2)     The concept of “part time research analyst is being introduced in Reg 2(1)(t).

 

3)     Clause u which is definition of “research analyst” is being substituted as under:

“(u) “research analyst” means a person who, for consideration, is engaged in the business of providing research services and includes a part-time research analyst;”

 

4)     Some more definitions added:

“(wa) “research services” means the following services provided by research analyst:

i. preparation or publication of the research report or content of the research report; or

ii. providing or issuing research report or research analysis; or

iii. making 'buy/sell/hold' recommendation; or

iv. giving price target or stop loss target; or

v. offering an opinion concerning public offer, or

vi. recommending model portfolio; or

vii. providing trading calls; or

viii. any other service of similar nature or character,

with respect to securities that are listed or proposed to be listed in a stock exchange, whether

or not any such person has the job title of 'research analyst' to the clients or other persons or

group of persons or general public;”

 

Research services were never defined in the regulations before.

 

 

5.            “(zc) “trading calls” means intraday, ultra-short duration, non-delivery based (other than hedging) recommendation or any recommendation related to securities that are not personalized or investor specific.”

 

6.         A new proviso has been added in Reg 3(1) which pertains to Application for grant of certificate.

 

            “Provided further that any principal officer, person associated with research services and partner of a research analyst which is registered under these regulations shall not be required to seek registration under regulation 3, subject to compliance with regulation 7 of these regulations.”

 

7)         Reg 6 which pertains to Consideration of application and eligibility criteria allows a partnership firm as an applicant besides an individual or body corporate or LLP. Clause (i) has been amended accordingly.

 

8)         Clause (ii) has been modified as under:

 

            “(ii) whether in case the applicant is an individual, he and all persons associated with research services are appropriately qualified and certified as specified in regulation 7;”

 

            Earlier it was required that only he is appropriately qualified and certified, now all persons associated with research services are required to be appropriately qualified and certified.

 

            Similar amendments are made in the case of body corporate or LLP or partnership firm

 

9)         Capital adequacy requirements are replaced with “deposit”

 

10)       Reg 7 which pertains to qualification and certification requirement has been amended as follows

 

            7. (1) An individual research analyst or a principal officer of a non-individual research analyst registered under these regulations, individuals employed as research analyst and partners of a research analyst, if any, engaged in research services shall have the following minimum qualifications, at all times:

(i) A professional qualification or graduate degree or post-graduate degree or post graduate diploma in finance, accountancy, business management, commerce, economics, capital market, banking, insurance, actuarial science or other financial services from a university or institution recognized by the Central Government or any State Government or a recognised foreign university or institution or association; or

 

(ii) a professional qualification by completing a Post Graduate Program in the Securities Market (Research Analysis) from NISM of a duration not less than one year or a professional qualification by obtaining a CFA Charter from the CFA Institute;

(2) Persons associated with research services shall, at all times, have minimum qualification of a graduate degree in any discipline from a university or institution recognized by the Central Government or any State Government or a recognized foreign university or institution.

(3) An individual registered as research analyst under these regulations, a principal officer of a non individual research analyst, individuals employed as research analyst, person associated with research services and in case of the research analyst being a partnership firm, the partners thereof if any, who are

engaged in providing research services, shall have, at all times, a NISM certification as specified by the Board from time to time:

Provided that a fresh relevant NISM certification as specified by the Board from time to time shall be obtained before expiry of the validity of the existing certification to ensure continuity in compliance with certification requirements.”

 

So all references to UGC, AICTE, National Board of Accreditation has been deleted. NISM seems to be single point of reference for obtaining qualification under these regulations.

 

11)       Reg 8 which pertains to capital adequacy has been completely revamped and in its place, deposit has been brought in.

 

            “Deposit.

8. (1) A research analyst shall maintain a deposit of such sum as specified by the Board from time to time.

(2) The deposit shall be maintained with a scheduled bank, marked as lien in favour of a body or body corporate recognised by the Board for the purpose of administration and supervision of research analysts in accordance with regulation 14 of these regulations:

Provided that such deposit shall be available for utilization in case the research analyst fails to pay dues emanating out of arbitration and conciliation proceedings, if any, under the Online Dispute Resolution Mechanism or such other mechanism as may be specified by the Board.”

 

12)       Reg 13 introduces a new proviso as under:

 

“Provided that part-time research analyst registered under these regulations shall use the term ‘part-time research analyst’ in all correspondences with its clients.”

 

13)       No. of clients of a part time research analyst shall not exceed 75 in total at any point in time.

 

14)       A new clause has been added in Reg 14 as follows:

 

“(1A) Notwithstanding anything contained in regulation 14, the administration and supervision of the proxy advisers shall entirely vest with the Board.”

15)       Reg 19 which pertains to disclosures in research reports sees a new clause added:

“(vii) A research analyst or research entity shall disclose to the client the extent of use of Artificial Intelligence tools in providing research services.”

           

16)       A new Reg 19A has been added for website as follows:

 

            “Website.

19A. A Research analyst or research entity shall maintain a functional website containing such details as may be specified by the Board.”

17)       In Reg 20 which pertains to contents of research report, a new clause has been added as follows:

“(4) Research analyst or research entity shall ensure that the recommendations in the research report are corroborated by relevant data and analysis forming the basis for such research service.”

 

18)       In Reg 24, which is the General Responsibility section, following new clauses have been added:

 

“(6) A research analyst or research entity shall disclose to the client the terms and conditions as may be specified by the Board and take consent of the client on such terms and conditions in such manner as may be specified by the Board.

(7) A research analyst or research entity who uses Artificial Intelligence tools, irrespective of the scale and scenario of adoption of such tools, for servicing its clients shall be solely responsible for the security, confidentiality and integrity of the client data, use of any other information or data for

research services, research services based on output of Artificial Intelligence tools and compliance with any law for the time being in force.

(8) Research analyst or research entity engaged in providing model portfolio shall abide by the guidelines issued by the Board from time to time.”

 

19)       In Reg 25 which pertains to maintenance of records, new clauses have been added as follows:

 

            “(v) Know Your Client records of the fee paying client;

(vi) a register or record containing list of the clients along with client’s PAN, the date and nature of the research service, details of the products/securities for which research service was provided and fee/consideration, if any charged/received for such research service;

            (vii) records of communication including emails, call recordings etc. with all clients including prospective clients in such manner as may be specified;

(viii) the terms and conditions of research services disclosed to the clients and the consent of the client thereon.”

 

20)       Reg 25(3) which pertains to conducting of an annual audit – now the ICMA institute has been empowered apart from ICAI & ICSI.

 

21)       Reg 26 which pertains to appointment of compliance officer has been revamped as follows:

 

            “Appointment of compliance officer.

26. (1) A non-individual research analyst or research entity shall appoint either:

(i) a compliance officer; or

(ii) an independent professional who is a member of Institute of Chartered Accountants of India or Institute of Company Secretaries of India or Institute of Cost Accountants of India or member of any other professional body as may be specified by the Board, provided that such a professional holds a relevant certification from NISM, as specified by the Board who shall be responsible for monitoring the compliance of the provisions of the Act, these

regulations and circulars issued by the Board.

(2) Where independent professional referred in sub-regulation (1) of this regulation is appointed for monitoring compliance, the principal officer shall submit an undertaking to the Board or the body or body corporate recognised under regulation 14 of these regulations to the effect that principal officer shall be responsible for monitoring the compliance in respect of the

requirements of the Act, regulations, notifications, guidelines, instructions issued by the Board.”

 

22)       A new regulation 26C has been introduced for client level segregation of research services and distribution activities.

 

            Individual shall not provide distribution services

            Family of individual shall not provide distribution services

A non individual shall have client level segregation at group level for research services and distribution services

 

Rights Issues

SEBI has issued a circular dated 22nd January, 2020 streamlining the process of issue and allotment of rights shares by listed companies.

https://www.sebi.gov.in/legal/circulars/jan-2020/streamlining-the-process-of-rights-issue_45753.html

Salient features of the amendments are as follows:

1.1 The period for advance notice to stock exchange(s) under Regulation 42(2) of LODR Regulations has been reduced from at least 7 working days to at least 3 working days (excluding the date of intimation and the record date), for the purpose of rights issue.

1.2 Issuance of newspaper advertisement disclosing date of completion of dispatch and intimation of same to the stock exchanges for dissemination on their websites, as per Regulation 84 (1) of ICDR Regulations, shall be completed by the issuer at least 2 days before the date of opening of the issue.

1.3 Introduction of dematerialized Rights Entitlements (REs) –
1.3.1. In the letter of offer and the abridged letter of offer, the issuer shall disclose the process of credit of REs in the demat account and renunciation thereof.
1.3.2. REs shall be credited to the demat account of eligible shareholders in dematerialized form. 1.3.3. In REs process, the REs with a separate ISIN shall be credited to the demat account of the shareholders before the date of opening of the issue, against the shares held by them as on the record date.
1.3.4. Physical shareholders shall be required to provide their demat account details to Issuer / Registrar to the Issue for credit of REs not later than two working days prior to the issue closing date, such that credit of REs in their demat account takes place at least one day before the issue closing date.

1.4 Trading of dematerialized REs on stock exchange platform -
1.4.1. REs shall be traded on secondary market platform of Stock exchanges, with T+2 rolling settlement, similar to the equity shares. Trading in REs on the secondary market platform of stock exchanges shall commence along with the opening of the issue and shall be closed at least four days prior to the closure of the rights issue.
1.4.2. Investors holding REs in dematerialized mode shall be able to renounce their entitlements by trading on stock exchange platform or off-market transfer. Such trades will be settled by transferring dematerialized REs through depository mechanism, in the same manner as done for all other types of securities.

1.5. Payment mode - Application for a rights issue shall be made only through ASBA facility.

1.6. No withdrawal of application shall be permitted by any shareholder after the issue closing date.

Indian Stamp Act

PIB press release dated 21st February, 2019

The President of India, today, gave his assent to the Amendments to the Indian Stamp Act, 1899 which were introduced as part of the Finance Act 2019. The was in fulfillment of the commitment made in the last Union Budget 2018-19 to take reform measures with respect to Stamp Duty regime on financial securities transactions in consultation with the States and make necessary amendments to the Indian Stamp Act, 1899. The Finance Bill 2019 was passed by both the Houses of Parliament, Lok Sabha and Rajya Sabha, on 12^thand 13^th February 2019 respectively.

Objective

The amendments propose to create the legal and institutional mechanism to enable states to collect stamp duty on securities market instruments at one place by one agency (through the Stock Exchanges or Clearing Corporations authorised by the stock exchange or by the Depositories) on one Instrument. A mechanism for appropriately sharing the stamp duty with relevant State Governments based on state of domicile of the buying client is also proposed.

Background

The present system of collection of stamp duty on securities market transactions has led to multiple rates for the same instrument, resulting in jurisdictional disputes and multiple incidences of duty, thereby raising the transaction costs in the securities market and hurting capital formation. This has also given scope for rate shopping and evasion of duty.

In order to facilitate ease of doing business and to bring in uniformity and affordability of the stamp duty on securities across States and thereby build a pan-India securities market, the Central Government, after due deliberations, in exercise of powers under Entry 91 of the List I and Entry 44 of List III of the 7th Schedule of Indian Constitution, has decided to amend the Indian Stamp Act, 1899 to create the legal and institutional mechanism to enable states to collect stamp duty on securities market instruments at one place by one agency (through Stock Exchanges or Clearing Corporations authorized by it or by the Depositories) on one Instrument and develop a mechanism for appropriately sharing the stamp duty with relevant State Governments.

Salient Features

To achieve the rationalisation of stamp duty structures, the amendments, inter-alia, provide for the following structural reforms; —

1. Each security is charged with a duty as specified in Schedule I of the Act. Securities are defined to include all those instruments specified in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956; a “derivative” as defined in clause (a) of Section 45U of the Reserve Bank of India Act, 1934; a Certificate of Deposit, Commercial Usance Bill, commercial paper and such other debt instrument of original or initial maturity up to one year as the Reserve Bank of India may specify from time to time; repo on Corporate Bonds; and any other instrument declared by the Central Government, by notification in the Official Gazette, to be securities for the purposes of this Act.
2. All rates are applicable only on one side (either by the buyer or by the seller but not by both), while presently States charge stamp duty on both sides.
3. While fixing the rates, the rates charged by Maharashtra is taken as the benchmark as Maharashtra accounts for around 70% of the total stamp duty collection in the country. However, the rates are chosen in such a manner that it provides a revenue neutral position to the state governments while reducing overall tax burden for investors.
4. While duty is applicable normally on the transaction value, in case of swaps the first leg of the cash flow; in case of options its premium; and in case of repo on corporate bonds the interest paid by the borrower are considered for levy of duty.
5. For all exchange based secondary market transactions in securities, stock exchanges (SEs) shall collect the duty; and for off-market transactions (which are made for a consideration as disclosed by trading parties) and initial issue of securities happening in demat form, depositories shall collect the duty. In the future event of inter-operability of clearing corporations (CCPs), which provides for linking of multiple CCPs while allowing participants to consolidate their clearing and settlement functions at a single CCP, irrespective of the stock exchange on which the trade is executed, stock exchanges can authorize CCPs to collect stamp duty on behalf of state governments. This is because when inter-operability of CCPs is enabled, investors will be able to buy and sell securities at any stock exchange and clear through any CCP of their choice. If so, the categorization of a transaction as delivery vs. non-delivery based trades so as to fix appropriate levies, can only be done by CCPs. The CCPs are substantially owned by stock exchanges (at least 51% shareholding rests with SEs).
6. State of domicile of the buying client or that of the broking house /depository Participant of the buying client (in case the buyer is outside India, as in the case of Foreign Portfolio Investors (FPIs)) would be taken as the basis for remitting duty to the respective States.
7. Issue of securities is also proposed to be brought into the same tax framework as that of trading of securities, that is, authorising depositories to collect duty from companies and redistributing to States based on the domicile State of subscribers /buyers of security.
8. The depositories /repositories and trading platforms under the jurisdiction of the Reserve Bank of India are also brought into this framework. However, Government Securities (G-secs) and instruments based on G-secs (such as repos/reverse repos on G-Secs) have been excluded from the purview of stamp duty. Platforms, which facilitate liquidity adjustments like call money market have also been excluded.
9. In order to prevent multiple incidence of taxation, it is proposed that no stamp duty shall be collected by the State on any secondary record of transaction associated with a transaction on which the depository / stock exchange has been authorised by the State Government to collect the stamp duty.
10. Tax arbitrage is avoided by providing the same rate of stamp duty for issue or re-issue or sale or transfer of securities happening outside stock exchanges and depositories.
11. Further, rule-making powers are granted to the Central Government for implementing the new collection mechanism. Penalty provisions have also been incorporated.
12. For facilitating the collection, stock exchanges/clearing corporations/depositories shall be eligible for some commission which will be decided in consultation with State Governments

Implementation Strategy / Inter-state Council mechanism

Subsequent to the enactment of the Act, it is proposed to create a Coordination Council under Article 263 of the Indian Constitution by a separate order/notification of the President of India. This Council comprising of representatives from Union and States may be tasked with the responsibility of making recommendations regarding review / revision of stamp duty rates. The Government will also notify the required rules.

Impact

The proposed rationalised and harmonised system is expected to lead to zero tax evasion. Further, cost of collection would be minimised while revenue productivity is enhanced. Adoption of the centralised collection mechanism is expected to bring in not only more revenue but greater stability to the revenue collection by the states. Further, this system will help develop equity markets and equity culture across the length and breadth of the country, ushering in balanced regional development.

Public Interest Directors

SEBI has issued a circular dated 5th February, 2019 regarding the performance review of Public Interest Directors on the Boards of stock exchanges, clearing corporations and depositories. Salient features of this circular are as follows:

1. In respect of Public Interest Directors (PIDs) appointed in the governing board of Stock Exchanges, Clearing Corporations and Depositories (herein after referred as Market Infrastructure Institutions or MIIs), SEBI Board, in its meeting dated June 21, 2018, inter alia, decided that the tenure of PIDs may be extended by another 3 years, subject to performance review in the manner specified by the Board.

2. Based on decisions taken by SEBI Board, the clauses relating to tenure of PID were amended and have been provided in the Regulation 24(3) of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 [SECC Regulations, 2018] and Regulation 25(3) of SEBI(Depositories and Participants) Regulations, 2018 [SEBI(D&P) Regulations, 2018] as under: Public interest directors shall be nominated for a term of three years, extendable by another term of three years, subject to performance review in the manner as may be specified by the Board:

Provided that post the expiry of term(s) at the recognized stock exchange or the recognized clearing corporation / depository, a public interest director may be nominated for a further term of three years in other recognized clearing corporation or recognized stock exchange, or a depository, only after a cooling-off period of one year:

Provided further that a person may be nominated as a public interest director for a maximum of three terms across recognized stock exchanges / recognized clearing corporations / depositories, subject to a maximum age limit of seventy five years.

3. For complying with the aforementioned regulation, while developing a framework for performance review of PIDs, MIIs need to consider the following: a. Policy for Performance review of PIDs:

i. The Nomination and Remuneration committee (NRC) of the MIIs will be responsible for framing the performance review policy for PIDs.

ii. Such performance review policy shall include criteria for performance evaluation, methodology adopted for such evaluation and analyzing the results, amongst others.

iii. Performance review policy of PID shall include scope for both internal evaluation as well as external evaluation.

iv. Further, as performance review is not a static process and requires periodical review, NRC shall also be responsible for reviewing such performance review policy, at least once in 3 years.

v. Such performance review policy and changes made therein, shall be approved by the governing board of MII.

b. Guiding criteria of Performance Review: As a part of framing performance review policy, NRC shall be primarily responsible for formulation of performance evaluation criteria. The criteria for performance review of PIDs, which shall be considered for both internal evaluation and external evaluation, may be framed by NRC taking into consideration guiding principles provided at Annexure A. These principles would serve as a guidance for MIIs and the same may be adopted by respective MIIs, as considered appropriate, with additional principles, if any.

c. Evaluation mechanism:
i. PIDs shall be subjected to internal evaluation as well as external evaluation, carrying equal weightage.
ii. Internal evaluation: All the governing board members shall evaluate the performance of each PID, on an annual basis at the end of every financial year.
iii. External evaluation: PIDs shall also be subject to external evaluation during their last year of the term in a MII, by a management or a human resources consulting firm. The consultant shall take into consideration the performance of the PID for the entire tenure served in a given MII, at least up to 4 months before expiry of his/ her term. In order to avoid any bias or conflict of interest, external consultant should not be a related party or associated with the MII, the concerned PID or any other governing board members.
iv. Such performance review should be carried out in fair & objective manner and the review should be recorded with clarity and verifiable facts in a standardized format covering all the relevant criteria / aspects.
v. While evaluating conflict of interest of a PID, the governing board of MII shall also take into consideration provisions of Clause 2(d) of Schedule II Part H of SECC Regulations, 2018 and Clause 2(d) of Schedule II Part C of SEBI (D&P) Regulations, 2018 under the head ‘Public Interest Director’; and conflict of interest, if any, of any PIDs should be disclosed to SEBI by the governing board with their comments/ views.

d. Disclosure: Performance evaluation criteria for PIDs shall be disclosed in their annual report as well as on the website of the concerned MII. 

e. Recommendation to SEBI: After taking into account the performance of a PID in the concerned MII, on the basis of internal evaluation and external evaluation both carrying equal weightage, NRC shall consider and recommend extension of his / her tenure to the Governing Board of the MII. The Governing Board of the MII shall in-turn consider and recommend to SEBI if the tenure of the PID is desired to be extended by another term of three years.

f. In addition to the other requirements prescribed in performance review policy of the MIIs along-with norms specified in SECC Regulations, 2018 and SEBI (D&P) Regulations, 2018, the following may be considered by NRCs of MIIs:

i. It shall be ensured that the concerned PID hasn’t remained absent for three consecutive meetings of the governing board and has attended seventy five per cent of the total meetings of the governing board in each calendar year; failing which PID shall be liable to vacate office.

ii. It shall be ensured that PIDs in the governing boards of MIIs are selected from diverse fields of work, in terms of their qualification and experience.

4. The application for extension of term of a PID shall be accompanied with the attendance details of PID in the meetings of various mandatory committees and of the governing board of the MII along-with specific reasons for seeking extension of his / her term as a PID. Such specific reasons shall include facts such as whether the concerned PID, during the term served, had identified any important issues concerning any matter which may involve conflict of interest, or have significant impact on functioning of MII, or may not be in the interest of securities market as a whole, and whether the PID had reported the same to SEBI.

5. In terms of SECC Regulations, 2018 and SEBI (D&P) Regulations, 2018, it is clarified that a minimum of two names shall be submitted by MIIs at the time of making request for appointment of PID and extension of the term of existing PID, including appointment of PID for the purpose of broad basing the governing board, against each such vacancy.

6. It is clarified that the aforementioned norms specify the minimum requirements that have to be complied with by MIIs, however the NRCs of MIIs may adopt additional and more stringent norms while framing a policy for performance review of PIDs. With regard to the detailed criteria for performance evaluation, as provided in Annexure A to the circular, the same shall serve as an illustrative guide for MIIs to frame performance evaluation criteria – both for internal as well as external evaluation, and the same may be adopted by MIIs as considered appropriate, with additional criteria, if any.

7. Additionally, with regard to tenure of PID, following is clarified:
a. The term of existing PIDs serving in a MII for more than three years, can be extended, subject to his / her performance review and a maximum tenure of 6 years as PID in that particular MII. .

b. The term of existing PIDs, that have already served for six years or more in a single MII, shall not be eligible for further extension in that MII.

8. MIIs are directed to:
c. take necessary steps to put in place systems for implementation of the circular, including necessary amendments to the relevant bye-laws, rules and regulations;

d. disseminate the provisions of this circular on their websites; and

e. communicate to SEBI, the status of implementation of the provisions of this circular in the Monthly Report.

Guide for MIIs to frame criteria for performance review of PIDs:

a. Qualifications: The PID’s qualification in area of law, finance, accounting, economics, management, administration or an other area relevant to the financial markets, including any recent updates in this regard.

b. Experience: The PID’s prior experience in area of law, finance, accounting, economics, management, administration or any other area relevant to the financial markets, including any recent updates in this regard.

c. Knowledge and Competency: 
Whether the PID has sufficient understanding and knowledge of the entity in which it operates and the applicable regulatory norms. 

Whether the PID has sufficient understanding of the role, responsibilities and obligations of PID under the relevant regulatory norms. 

How the PID fares across different competencies as identified for effective functioning of Board of the concerned MII (The MII may list various competencies and mark all PIDs against every such competency e.g. Constructive and analytical decision making abilities). 

Whether the PID has sufficient understanding of the risk attached with the business structure.

d. Fulfilment of functions: 
Whether the PID understands and fulfils the functions as assigned to him/her by the Board and the regulatory norms. 

Whether the PID gives views and opinion on various regulatory matters when comments are invited by SEBI through various means.

e. Ability to function as a team: 
Whether the PID is able to function as an effective team- member. 
Whether the PID listens attentively to the contributions of others and gives adequate weightage to the views and perception of other Board members. 
Whether the PID shares good interpersonal relationship with other directors.

f. Initiative: 
Whether the PID actively takes initiative with respect to various areas. 

Whether the PID insists on receiving information necessary for decision making.

Whether the concerned PID keeps himself well informed about the functioning of MII and the external environment in which it operates. 

Whether the PID remains updated in terms of developments taking place in regulatory areas. 

Whether the PID has identified any important issues concerning any matter which may involve conflict of interest for the concerned MII, or may have significant impact on their functioning, or may not be in the interest of securities market, and whether the PID reported same to SEBI. 

Whether the PID appropriately deals with critical matters. g. Availability and attendance: 

Whether the PID is available for meetings of the Board and attends the meeting of Governing board and Committees regularly and timely, without delay. It must be ensured that the concerned PID hasn’t remained absent for three consecutive meetings of the governing board and has attended seventy five per cent of the total meetings of the governing board in each calendar year; failing which the PID shall be liable to vacate office.

h. Commitment:
Whether the PID is adequately committed to the Board and the MII.

i. Contribution: 
Whether the PID has contributed effectively to the entity and in the Board meetings. 

Whether the PID participates in the proceedings of Board meetings keeping in mind the interests of various stakeholders. 

Whether the PID actively deliberates and contributes on proposed business propositions and strategic decisions taking into consideration pros and cons of such propositions, long term outlook, business goals, cost-benefit analysis, etc.

j. Integrity: 
Whether the PID demonstrates highest level of integrity (including conflict of interest disclosures, maintenance of confidentiality, etc.). 

Whether the PID strictly adhere to the provisions of the SEBI SECC Regulations, 2018, SEBI (D &P) Regulations, 2018 and any other regulatory provision, as applicable, along-with the code of conduct and code of ethics prescribed under other applicable regulatory norms. 

Whether disclosures such as dealing in securities and other regulatory disclosures are provided by the PID on timely basis. 

Confirmation on the PID being a Fit & Proper person.

Investor Grievance Redressal System - SCORES

SEBI has issued a circular dated 26th March, 2018 on the new measures initiated under SCORES, the investor grievance redressal system under SEBI. The gist of the circular is given below:

1. This circular is being issued in continuation to SEBI circular no. CIR/OIAE/1/2014 dated 18th December, 2014 regarding redressal of investor grievances through SEBI Complaints Redress System (SCORES) platform.

2. SCORES is a web based centralized system to capture investor complaints against listed companies and registered intermediaries and is available 24x7. It was introduced on June 8, 2011 and has been facilitating redressal of investor grievances in a speedy manner.

3. SEBI encourages investors to lodge complaints through electronic mode in SCORES. However, complaints received from investors in physical form are also digitized by SEBI and uploaded in SCORES. Thereafter, follow-up actions of the complaint are done in electronic form only i.e. through SCORES. Investors can easily access, retrieve and preserve the complaints lodged by them in electronic mode. Further, it enhances the turnaround time and speed of redressal of a complaint.

4. Investors may contact the Investor Associations (IAs) recognized by SEBI for any assistance in filing complaints on SCORES. The lists of Investor Associations are available on SEBI website (www.sebi.gov.in). Investors may also seek assistance in filing complaints on SCORES from SEBIs toll free helpline number 1800 266 7575 or 1800 22 7575.

5. SEBI has received inputs from listed companies and intermediaries that investor grievances can be resolved faster if the grievance been taken up directly with the entity at the first instance. Accordingly, it appears to be prudent and time saving if the investors approach the concerned listed company or registered intermediary first with all the requisite details to redress the complaints. In case, the listed company or registered intermediary fails to redress the complaint to the investor’s satisfaction, the investor may file a complaint in SCORES.

6. At present following types of complaints are not dealt through SCORES:

i. Complaints against the companies which are unlisted/delisted, in dissemination board of Stock Exchanges,

ii. Complaints those are sub-judice i.e. relating to cases which are under consideration by court of law, quasi-judicial proceedings etc.

iii. Complaints falling under the purview of other regulatory bodies viz. RBI, IRDAI, PFRDA, CCI, etc., or under the purview of other ministries viz., MCA, etc.

iv. Complaints against a sick company or a company where a moratorium order is passed in winding up / insolvency proceedings.

v. Complaints against the companies where the name of company is struck off from RoC or a vanishing company as per list published by MCA.

vi. Suspended companies, companies under liquidation / BIFR / etc.

7. To enhance investor satisfaction on complaint redressal, SEBI has already put in place a ‘Complaint Review facility’ under SCORES wherein an investor if unsatisfied with the redressal may within 15 days from the date of closure of his complaint in SCORES opt for review of the complaint and the complaint shall be escalated

8. Effective from August 01, 2018, following procedure shall be followed for filing and redressal of investor grievances using SCORES:

a. Investors who wish to lodge a complaint on SCORES are requested to register themselves on www.scores.gov.in by clicking on “Register here”. While filing the registration form, details like Name of the investor, PAN, Contact details, Email id, Aadhaar card number(optional), CKYC ID(optional) etc. (Annexure A) may be provided for effective communication and speedy redressal of the grievances. Upon successful registration, a unique user id and a password shall be communicated to the investor through an acknowledgement email / SMS.

b. An investor shall use login credentials for lodging complaint on SCORES (“Login for registered user” section). Details on how to lodge a complaint on SCORES is at Annexure B.

c. The complainant may use SCORES to submit the grievance directly to companies / intermediaries and the complaint shall be forwarded to the entity for resolution. The entity is required to redress the grievance within 30 days, failing which the complaint shall be registered in SCORES

d. Presently, the limitation period for filing an arbitration reference with stock exchanges is three year. In line with the same and in order to enhance ease, speed & accuracy in redressal of investor grievance, the investor may lodge a complaint on SCORES within three years from the date of cause of complaint, where; 

Investor has approached the listed company or registered intermediary for redressal of the complaint and, The concerned listed company or registered intermediary rejected the complaint or,

The complainant does not receive any communication from the listed company or intermediary concerned or,

The complainant is not satisfied with the reply given to him or redressal action taken by the listed company or an intermediary.