**Summary:**
SEBI Circular SEBI/HOM/RDMRD/PoD/2/CIR/2024-25, issued on April 24, 2024, announces a relaxation in the requirements for contract notes to ease the burden of doing business for market participants. Specifically, it removes the mandatory inclusion of the full text of Regulation 19 of the SEBI (Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018) concerning the "fit and proper" status of shareholders. Instead, contract notes in post-listing scenarios now only need to provide a reference to the applicable regulation by mentioning the URL/weblink of Regulation 19 and 20 of the SCR (SECC) Regulations, 2018. This amends clause 2.4.2.2.2 under Chapter 6 of the Master Circular for Stock Exchanges and Clearing Corporations dated October 16, 2023. Stock Exchanges are instructed to amend their bylaws accordingly, inform their members, disseminate the circular on their websites, and report the implementation status in their Monthly Development Reports to SEBI. This circular is issued under Section 11(1) of the Securities and Exchange Board of India Act, 1992, to protect investor interests. Contact Vishal Shukla, General Manager, at vishals@sebi.gov.in or 022-26449959 for further information.
Key Entities Referenced
SEBI: Securities and Exchange Board of India, the regulatory body.
Stock Exchanges: All recognised Stock Exchanges regulated by SEBI.
Industry Standards Forum ISF: A forum representing market participants that made representations to SEBI.
Master Circular Stock Exchanges and Clearing Corporations: A circular issued by SEBI on October 16, 2023, regarding stock exchanges and clearing corporations.
SEBI Securities Contract Regulation Stock Exchanges and Clearing Corporation Regulations, 2018: Regulations governing securities contracts, stock exchanges and clearing corporations. Referred to as SCR SECC Regulations, 2018.
Regulation 19: Regulation concerning fit and proper criteria, part of the SCR SECC Regulations, 2018.
Regulation 20: Regulation concerning fit and proper criteria, part of the SCR SECC Regulations, 2018.
Securities and Exchange Board of India Act, 1992: The act establishing SEBI and defining its powers.
CIRCULAR
SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/25 April 24, 2024
To
All recognised Stock Exchanges
Dear Sir/ Madam,
Sub: Ease of Doing Business: Text on Contract Note with respect to Fit and
Proper status of shareholders
1. SEBI has received representations from market participants through the
Industry Standards Forum (ISF) to relax the requirement, under chapter 6 at
Para 2.4.2.2.2 of the Master Circular (Stock Exchanges and Clearing
Corporations) dated October 16, 2023, of publishing the text pertaining to ‘fit
and proper’ on the contract note in terms of Regulation 19 and 20 of the SEBI
(Securities Contract (Regulation) (Stock Exchanges and Clearing Corporation)
Regulations, 2018 (i.e. SCR (SECC) Regulations, 2018).
2. As a step towards ease of doing business, the requirement to publishing the
text of Regulation 19 of the SCR(SECC) Regulations, 2018 on the contract
notes is no longer required and Clause 2.4.2.2.2 under Chapter 6 of the Master
Circular (Stock Exchanges and Clearing Corporations) dated October 16, 2023
stands amended as under:
“In the post listing scenario, in lieu of text only a reference of the applicable
regulation with regard to fit and proper (by mentioning the URL/weblink of
Regulation 19 and 20 of the SCR(SECC) Regulations, 2018) shall be made
part of the contract note.”
3. The Stock Exchanges are accordingly advised to:
a. make necessary amendments to the relevant bye-laws, rules and
regulations for the implementation of the above decision immediately, as
may be necessary/applicable.
b. bring the provisions of this circular to the notice of their members and to
disseminate the same on their website.
c. communicate to SEBI the status of implementation of the provisions of this
circular in the Monthly Development Report.a. This circular is being issued in exercise of powers conferred under
Section 11 (1) of the Securities and Exchange Board of India Act,
1992 to protect the interests of investors in securities market.
Yours faithfully,
Vishal Shukla
General Manager
vishals@sebi.gov.in
022-26449959