Securities And Exchange Board Of India (Custodian Of Securities) Regulations, 1996

Published vide Notification Gazette of India, Extra, Part 2, Section 3(ii), dated 16.5.1996.

1550

S.O. 344(E), dated 16th May, 1996.- In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) the Securities and Exchange Board of India hereby makes the following, namely:-

CHAPTER I

Preliminary

Short title and commencement.-(1) These regulations may be called the Securities and Exchange Board of India (Custodian of Securities) Regulations, 1996.

(2) They shall come into force on the date of their publication in the Official Gazette.

Definitions.-In these regulations unless the context otherwise requires:-

(a) "Act" means the Securities and Exchange Board of India Act, 1992 (15 of 1992);

(b) "certificate" means a certificate of registration granted by the Board under these regulations;

(c) "client" means any person who has entered into an agreement with a custodian of securities to avail of custodial services provided by the custodian of securities;

(d) "custodian of securities" means any person who carries on or proposes to carry on the business of providing custodial services;

(e) "custodial services" in relation to securities means safekeeping of securities of a client and providing services incidental thereto, and includes-

(i) maintaining accounts of securities of a client;

(ii) collecting the benefits or rights accruing to the client in respect of securities;

(iii) keeping the client informed of the actions taken or to be taken by the issuer of securities, having a bearing on the benefits or rights accruing to the client; and

(iv) maintaining and reconciling records of the services referred to in sub-clause (i) to (iii);

(e) "custodial services" in relation to securities means, safe keeping of securities of a client and providing services incidental thereto, and includes—

(i) maintaining accounts of securities of a client;

(ii) collecting the benefits or rights accruing to the client in respect of securities;

(iii) keeping the client informed of the actions taken or to be taken by the issuer of securities, having a bearing on the benefits or rights accruing to the client; and (

(iv) maintaining and reconciling records of the services referred to in sub-clause (i) to (iii);"

(f) "custody account" means an account of a client maintained by a custodian of securities in respect of securities;

(g) "enquiry officer" means an account of a client maintained by a custodian of securities in respect of securities;

(h) "Form" means any of the forms set out in the First Schedule;

(i) "inspecting officer" means an inspecting officer appointed by the Board under regulation 21;

(j) "Schedule" means a Schedule annexed to these regulations.

CHAPTER II

Registration Of Custodians Of Securities

Application for grant of certificate.-(1) Any person proposing to carry on business as custodian of securities on or after the commencement of these regulations shall make an application to the Board for grant of a certificate.

(2) Any person who is carrying on business as a custodian of securities on the date of commencement of these regulations shall make an application to the Board for grant of certificate within a period of three months from the date of such commencement:

Provided that the Board may, in special cases, where it is of the opinion that it is necessary to do so for reasons to be recorded in writing may extend the period up to a maximum of six months from the date of such commencement.

(3) An application for grant of a certificate under sub-regulation (1) or subregulation (2) shall be made in Form A and shall be accompanied by an application fee as specified in Part A of the Second Schedule and be paid in the manner specified in Part B thereof.

(4) Any person referred to in sub-regulation (2) who fails to make an application for grant of certificate within the period or the extended period specified therein, shall cease to carry on any activity as custodian of securities and shall be subject to the directions of the Board with regard to the transfer of records, documents or securities relating to his activities as custodian of securities.

Application to conform to requirements.-An application under regulation 3 which is not complete in all respects or which does not conform to the instructions specified therein shall be rejected:

Provided that, before rejecting any such application, the Board shall give the applicant an opportunity to remove the objection, within such time as may be specified by the Board.

Furnishing of information, clarification, and personal representation.-(1) The Board may require the applicant to furnish such further information or clarification regarding matters relevant to the activities of a custodian of securities for the purpose of consideration of the application.

(2) The applicant or his authorised representative shall, if so required, appear before the Board for personal representation, in connection with the grant of certificate.

Consideration of application for grant of certificate.-(1) For the purpose of the grant of a certificate the Board shall take into account all matters which are relevant to the activities of a custodian of securities and in particular, whether:-

(a) the applicant fulfils the capital requirement in accordance with regulation 7;

(b) the applicant has the necessary infrastructure, including adequate office space, vaults for safe custody of securities and computer systems capability, required to effectively discharge his activities as custodian of securities;

(c) the applicant has in his employment adequate and competent persons who have the experience, capacity and ability of managing the business of the custodian of securities;

(d) the applicant has prepared a complete manual, setting out the systems and procedures to be followed by him for the effective and efficient discharge of his functions and the arms length relationships to be maintained with the other businesses, if any, of the applicant;

(e) the applicant is a person who has been refused a certificate by the Board or whose certificate has been cancelled by the Board;

(f) the applicant, his director, his principal officer or any of his employees is involved in any litigation connected with the securities market;

(g) the applicant, his director, his principal officer or any of his employees has at any time been convicted of any offence involving moral turpitude or of any economic offence;

[(gg)the applicant is a fit and proper person;] and

(h) the grant of certificate is in the interest of investors.

(2) Notwithstanding anything contained in sub-regulation (1) the Board shall not consider an application made under regulation 3 unless the applicant is a body corporate.

Capital requirement.-(1) The capital requirement referred to in clause (a) of sub-regulation (1) of regulation 6 shall be a net worth of a minimum of rupees fifty crores.

Explanation.- For the purposes of this regulation, the expression "net worth" means the paid-up capital and the free reserves as on the date of the application.

(2) Notwithstanding anything contained in sub-regulation (1) any custodian of securities which:

(a) has been approved by the Board under the provisions of Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, or the Government of India Guidelines for Foreign Institutional Investors dated September 14, 1992, even if it does not have the net worth specified in sub-regulation (1) may continue to function as a custodian of securities and shall within a period of one year from the date of commencement of these regulations raise its net worth to that specified in sub-regulation (1);

[Provided that the period specified above may be extended by the Board upto a maximum of 5 years;]

(b) has made an application under regulation 3 shall be permitted to fulfil his capital adequacy requirements within one month of the receipt of certificate under regulation 8.

Procedure and grant of certificate.-(1) After considering the application under regulation 3, with reference to the matters specified in regulation 6, if the Board on being satisfied that all particulars sought have been furnished and the applicant is eligible for the grant of a certificate, shall send an intimation of the same to the applicant.

(2) On receipt of an intimation from the Board under sub-regulation (1), the applicant shall pay to the Board a registration fee specified in Part A of Second Schedule in the manner specified in Part B thereof.

(3) The Board shall thereafter grant a certificate in Form B to the applicant on receipt of the registration fee.

Conditions of certificate.-The certificate granted to custodian of securities shall be subject to the following conditions, namely:-

(a) it shall not commence any activities as custodian of securities unless it fulfils the capital requirement specified in regulation 7;

(b) it shall abide by the provisions of the Act and these regulations in the discharge of its functions as custodian of securities;

(d) it shall pay annual fees as specified in Part A of the Second Schedule in the manner specified in Part B thereof;

(e) if any information previously submitted by it to the Board is found by it to be false or misleading in any material particular, or if there is any change in such information, it shall forthwith inform the Board in writing; and

(f) besides providing custodial services, it shall not carry on any activity other than activities relating to rendering of financial services.

9-A. Period of validity.- 9A. (1) Every certificate granted under sub-regulation (3) of regulation 8 on and after the commencement of the Securities and Exchange Board of India (Custodian of Securities) (Second Amendment) Regulations, 2006, shall be valid for a period of three years from the date of grant of registration or its renewal.

(2) Every certificate granted under sub-regulation (3) of regulation 8 before the commencement of the Securities and Exchange Board of India (Custodian of Securities) (Second Amendment) Regulations, 2006, shall be valid for a period of three years from such commencement or its renewal.

9-B. Renewal of certificate.- (1) A custodian of securities, desirous of having its certificate renewed shall make an application to the Board for renewal of the certificate in Form A, not less than three months before the expiry of its period of validity under regulation 9A.

(2) The application for renewal of certificate shall be dealt with, as far as may be, as if it were an application for the grant of a fresh certificate under regulation 3 and shall be accompanied with the application fee as specified in Schedule II.]

Procedure where certificate is not granted.-(1) After considering an application for grant of certificate made under regulation 3, if the Board is satisfied that a certificate should not be granted, the Board may reject the application after giving the applicant a reasonable opportunity of being heard.

(2) The decision of the Board to reject the application shall be communicated within thirty days of such decision to the applicant in writing stating therein the grounds on which the application has been rejected.

(3) An applicant, who is aggrieved by the decision of the Board under subregulation (1) may, within a period of thirty days from the date of receipt of communication under sub-regulation (2), apply to the Board for re-consideration of its decision.

(4) The Board shall, as soon as possible, in the light of the submissions made in the application for reconsideration made under sub-regulation (3) and wherever necessary, after giving the applicant a reasonable opportunity of being heard, convey its decision in writing to the applicant.

Effect of refusal to grant certificate.-Any custodian of securities whose application for grant of certificate has been rejected by the Board shall, on and from the date of the receipt of the communication under sub-regulation (2) of regulation 10 cease to carry on any activity as custodian of securities and shall be subject to the directions of the Board with regard to the transfer of records documents or securities that may be in its custody or control relating to its activity as custodian of securities.

CHAPTER III

General Obligations And Responsibilities Of Custodians

Code of conduct.-Every custodian of securities shall abide by the Code of Conduct as set out in the Third Schedule.
Segregation of activities.-Where a custodian of securities is carrying on any activity besides that of acting as custodian of securities, then,-

(i) the activities relating to his business as custodian of securities shall be separate and segregated from all other activities;

(ii) its officers and employees engaged in providing custodial services shall not be engaged in any other activity carried on by him.

Monitoring, review evaluating and inspecting systems and controls.-(1) Every custodian of securities shall have adequate mechanisms for the purposes of reviewing, monitoring and evaluating the custodian's controls, systems, procedures and safeguards.

(2) The custodian of securities shall cause to be inspected annually the mechanism referred to in sub-regulation (1) by an expert and forward the inspection report to the Board within three months from the date of inspection.

Prohibition of assignment.-No custodian of securities shall assign or delegate its functions as a custodian of securities to any other person unless such person is a custodian of securities:

[Provided that a custodian of securities may engage the services of a person not being a custodian, for the purpose of physical safekeeping of gold belonging to its client being a mutual fund having a gold exchange traded fund scheme, subject to the following conditions-

(a) the custodian of securities shall remain responsible in all respects to its client for safekeeping of the gold kept with such other person, including any associated risks;

(b) all books, documents and other records relating to the gold so kept with the other person shall be maintained in the premises of the custodian or if they are not so maintained, they shall be made available therein, if so required by the Board;

(c) the custodian of securities shall continue to fulfill all duties to the clients relating to the gold so kept with the other person, except for its physical safekeeping.]

Separate custody account.-Every custodian of securities shall open a separate custody account for each client, in the name of the client whose securities are in its custody and the assets of one client shall not be mixed with those of another client.
Agreement with the client.-Every custodian of securities shall enter into an agreement with each client on whose behalf it is acting as custodian of securities and every such agreement shall provide for the following matters namely:-

(a) the circumstances under which the custodian of securities will accept or release securities from the custody account;

(b) the circumstances under which the custodian of securities will accept or release monies from the custody account;

(c) the circumstances under which the custodian of securities will receive rights or entitlements on the securities of the client;

(d) the circumstances and the manner of registration of securities in respect of each client; and

(e) details of the insurance, if any, to be provided for by the custodian of securities.

Internal controls.-(1) Every custodian of securities shall have adequate internal controls to prevent any manipulation of records and documents including audits for securities and rights or entitlements arising from the securities held by it on behalf of its client.

(2) Every custodian of securities shall have appropriate safekeeping measures to ensure that such securities are protected from theft and natural hazard.

Maintenance of records and documents and furnishing of information.-(1) Without prejudice to the provisions of any other law for the time being in force every custodian of securities shall maintain the following records and documents, namely-

(a) records containing details of securities received and released on behalf of each client;

(b) records containing details of monies received and released on behalf of each client;

(c) records containing details of rights or entitlements of each client arising from the securities held on behalf of the client;

(d) records containing details of registration of securities in respect of each client;

(e) ledger for each client;

(f) records containing details of instructions received from and sent to clients;

(g) records of all reports submitted to the Board.

(2) Every custodian of securities shall intimate to the Board the place where the records and documents under sub-regulation (1) are maintained.

(3) Every custodian of securities shall preserve the records and documents maintained under sub-regulation (1) for a minimum period of five years.

Information to the Board.-(1) The Board may, at any time, call for any information from a custodian of securities with respect to any matter relating to its activity as custodian of securities.

(2) Where any information is called for by the Board under sub-regulation (1), it shall be the duly of the custodian of securities to furnish such information within such reasonable period as the Board may specify.

CHAPTER IV

Inspection And Audit

Board's right to inspect.-(1) The Board may appoint one or more persons as inspecting officer to undertake inspection of the hooks of account, records and documents of the custodian of securities for any of the following purposes, namely-

(a) to ensure that the books of account, records and documents are being maintained by the custodian of securities in the manner specified in these regulations;

(b) to investigate into complaints received from investors, clients or any other person, on any matter having a bearing on the activities of the custodian of securities;

(c) to ascertain whether the provisions of the Act and these regulations are being complied with by the custodian of securities; and

(d) to investigate suo motu into the affairs of the custodian of securities in the interest of the securities market or in the interest of investors.

Notice before inspection.-(1) Before ordering an inspection under regulation 21 the Board shall give not less than ten days notice to the custodian of securities.

(2) Notwithstanding anything contained in sub-regulation (1), where 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 custodian of securities be taken up without such notice.

(3) During the course of an inspection, the custodian of securities against whom the inspection is being carried out shall be bound to discharge his obligations as provided in regulation 23.

Obligations of custodian on inspection by the Board.-(1) It shall be the duty of the custodian of securities whose affairs are being inspected, and of every director, officer and employee thereof to produce to the inspecting officer such books, securities, accounts, records and other documents in its custody or control and furnish him with such statements and information relating to his activities of the custodian of securities, as the inspecting officer may require, within such reasonable period as the inspecting officer may specify.

(2) The custodian of securities shall allow the inspecting officer to have reasonable access to the premises occupied by such custodian or by any other person on his behalf and also extend reasonable facility for examining any books, records, documents and computer data in the possession of the custodian of securities 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.

(3) The inspecting officer, in the course of inspection, shall be entitled to examine or to record the statements of any director, officer or employee of the custodian of securities.

(4) It shall be the duty of every director, officer or employee of the custodian of securities to give to the inspecting officer all assistance in connection with the inspection, which the inspecting officer may reasonably require.

Submission of report to the Board.-The inspecting officer shall, as soon as possible, on completion of the inspection submit an inspection report to the Board:

Provided that if directed to do so by the Board, he may submit an interim report.

Communication of findings etc. to the custodian of securities of securities.-The Board shall, after consideration of the inspection report or the interim report referred to in regulation 24, communicate the findings of the inspection officer to the custodian of securities and give him an opportunity of being heard.

(2) On receipt of the reply if any, from the custodian of securities, the Board may call upon the custodian of securities to take such measures as the Board may deem fit in the interest of the securities market and for due compliance with the provisions of the Act, the rules framed thereunder and these regulations.

CHAPTER V

Procedure Eor Action In Case Of Default

Suspension of certificate.-The Board may suspend the certificate granted to a custodian of securities where the custodian of securities:

(a) contravenes any of the provisions of the Act, the rules framed thereunder or these regulations;

(b) fails to furnish any information relating to his activity as custodian of securities as required by the Board;

(d) does not submit periodic returns or reports as required by the Board;

(e) does not co-operate in any enquiry or inspection conducted by the Board;

(f) fails to update its systems and procedures as recommended by the Board;

(g) fails to resolve the complaints of clients or fails to give a satisfactory reply to the Board in this behalf;

(h) is guilty of misconduct or makes a breach of the Code of Conduct specified in the Third Schedule;

(i) fails to pay annual fees.” Page 20 of 29

(h) is guilty of misconduct or makes a breach of the Code of Conduct specified in the Third Schedule;

(i) fails to pay annual fees.

Cancellation of certificate.-The Board may cancel the certificate granted to a custodian of securities:

(a) when it is guilty of fraud or has been convicted of an offence involving moral turpitude; or

(b) it has been guilty of repeated defaults of the nature specified in regulation 26

Explanation.- In this regulation, "fraud" has the same meaning as is assigned to it in section 17 of the Indian Contract Act, 1872. (9 of 1872)

Manner of making order of cancellation or suspension.-No order of suspension or cancellation of certificate shall be made by the Board against a custodian of securities, except after holding an enquiry in accordance with the procedure specified in regulation 29.
Manner of holding enquiry before suspension or cancellation.-(1) For the purpose of holding an enquiry under regulation 28, the Board may appoint one or more enquiry officer.

(2) The enquiry officer shall issue to the custodian of securities, at its registered office or its principal place of business, a notice setting out the grounds on which action is proposed to be taken against it and calling upon it to show cause against such action within a period of fourteen days from the date of receipt of the notice.

(3) The custodian of securities may, within fourteen days from the date of receipt of such notice, furnish to the enquiry officer a written reply, together with copies of documentary or other evidence relied on by it or sought by the Board from the custodian of securities.

(4) The enquiry officer shall give a reasonable opportunity of hearing to the custodian of securities to enable him to make submissions in support of its reply made under sub-regulation (3).

(5) Before the enquiry officer, the custodian of securities may either appear in person or through any person duly authorised by the custodian of securities; Provided that no lawyer or advocate shall be permitted to represent the custodian of securities at the enquiry;

Provided further that where a lawyer or an advocate has been appointed by the Board as a presenting officer under sub-regulation (6), it shall be lawful for the custodian of securities to present its case through a lawyer or advocate.

(6) The enquiry officer may, if he considers it necessary, ask the Board to appoint a presenting officer to present its case.

(7) The enquiry officer shall, after taking into account all relevant facts and submissions made by the custodian of securities, submit a report to the Board and recommend the penal action, if any, to be taken against the custodian of securities as also the grounds on which the proposed action is justified.

Show-cause notice and order.-(1) On receipt of the report from the enquiry officer, the Board shall consider the same and issue to the custodian of securities a show-cause notice as to why the penal action as proposed by the enquiry officer should not be taken against it.
The custodian of securities shall, within fourteen days of the date of the receipt of the show-cause notice, send a reply to the Board.
The Board, after considering the reply of the custodian of securities to the show-cause notice, if received within a period of fourteen days shall, as soon as possible but not later than thirty days from the receipt of the reply or the date of hearing, if any, whichever is later, pass such order as it deems fit, including an order for the suspension or cancellation of the certificate.

(4) Every order made under sub-regulation (3) shall be self-contained and shall give reasons for the conclusions stated therein, including the justification for the penalty if any, imposed by that order.

Effect of suspension and cancellation of certificate.-(1) On and from the date of the suspension of the certificate, the custodian of securities shall cease to carry on any activity as a custodian of securities during the period of suspension, and shall be subject to the directions of the Board with regard to any records, documents or securities that may be in its custody or control, relating to its activities as custodian of securities.

(2) On and from the date of cancellation of the certificate, the custodian of securities shall, with immediate effect, cease to carry on any activity as a custodian of securities, and shall be subject to the directions of the Board with regard to any records, documents or securities that may be in its custody or control, relating to its activities as custodian of securities.

Publication of order of suspension or cancellation.-The order of suspension or cancellation of certificate passed under sub-regulation (3) of Regulation 30 shall be published by the Board in at least two daily newspapers.

FIRST SCHEDULE-FORMS

[See regulation 2(h)]

FORM A

SECURITIES AND EXCHANGE BOARD OF INDIA (CUSTODIAN OF SECURITIES) REGULATIONS, 1996

(See Regulation 3(3))

APPLICATION FOR GRANT OF CERTIFICATE OF REGISTRATION AS CUSTODIAN OF SECURITIES

SECURITIES AND EXCHANGE BOARD OF INDIA MITTAL COURT, 'B' WING, 1ST FLOOR NARIMAN POINT, MUMBAI 400021 - INDIA

INSTRUCTIONS:

This form is meant for use by the applicant for application for grant of certificate of registration as custodian of securities.
The applicant should complete this form, and submit it, along with all supporting documents to the Board at its head office at Mumbai.

iii. This application form should be filled in accordance with the SEBI (Custodian of Securities) Regulations, 1996.

The application will be considered by the Board provided it is complete in all respects.
All answers must be typed.
Information which needs to be supplied in more detail may be given on separate sheets which should be attached to the application form.

vii. The application must be signed and all signatures must be original.

viii. The application must be accompanied by an application fee as specified in the Second Schedule to the SEBI (Custodian of Securities) Regulations, 1996.

Every page of the form and every additional sheet must be initialled by the authorised signatory of the applicant.
All copies of documents should be attested as true by an authorised notary.
Name, address of the registered office, address for correspondence, telephone number(s), fax number(s), telex number(s) of the applicant and the name of the contact person.
Please indicate to which of the following categories the applicant belongs:

(i) Foreign bank

(ii) Domestic bank

(iii) Financial Institution

(iv) Other

(a) Date and place of incorporation or establishment and date of commencement of business (enclose certificate of incorporation, memorandum and articles of association or statutory provisions, if any, under which incorporated or established).

(b) Details of the activities carried on by the applicant, in India or overseas.

(d) Details of registration with the Securities and Exchange Board of India or with the Reserve Bank of India or with any regulatory authority overseas of the applicant, and of its affiliates and subsidiaries operating in India.

(e) In case the applicant is buying, selling or otherwise dealing with the securities market as a custodian of securities immediately before the 24th March, 1995.

(i) Date of commencement of business as "custodian of securities" in case of banks, please enclose copies of the Reserve Bank of India's permission, and if applicable, copies of approval from the Central Government, to carry on activities as custodian of securities.

(ii) Type and number of existing clients (Financial Institutions, Mutual Funds, Foreign Institutional Investors, Depository Receipts, Portfolio Managers, Non Banking Finance Companies, Stock Brokers, Corporates, Individuals.)

(iii) Volume of assets under custody.

Please state whether the applicant, director or principal officer is involved in any litigation connected with the securities market which has an adverse bearing on the business of the applicant; or has at any time been convicted for any moral turpitude or at anytime has been found guilty of any economic offence.
Please also state whether there has been any instance of violation or nonadherence to the securities laws, code of ethics/conduct, code of business rules, for which the applicant, or its parent or holding company or affiliate may have been subject to economic, or criminal, liability, or suspended from carrying out its operations, or the registration revoked temporarily.
Please indicate the net worth and paid-up capital in Rupees as per the latest audited financial statements of the applicant (enclose copy).
Please indicate services that are provided to clients or are proposed to be provided to clients as custodian of securities.
Please provide the following details regarding infrastructure:

(i) space owned in square feet (please indicate location and enclose copy of title);

(ii) space on lease in square feet (please indicate location and enclose copy of lease agreement);

(iii) space on rent in square feet (please indicate location and enclose copy of rental agreement);

(iv) details of vault, for each vault (in case the vault is built to any specific standard, give details and documentary evidence thereof).

Please provide the following details regarding staff involved in activities as custodian of securities:

(i) organisation structure;

(ii) experience and background of key personnel.

Please provide the following details regarding safekeeping and security systems and procedures:

(i) vault security and access control systems;

(ii) systems for tracking securities;

(iii) risk control and operations manuals (enclose copies);

(iv) give details of independent internal control mechanisms for monitoring, evaluation and review of accounting safekeeping and reporting systems and procedures.

Please provide the following details regarding automatic data processing systems and record keeping:

(i) details of hardware, software and communications systems, their capability, function and location;

(ii) details of data storage and back up procedures and sites, their capability, function and location;

(iii) details of disaster recovery systems and procedures.

Declaration statement (to be given as below)

We hereby agree and declare that the information supplied in the application, including the attachment sheets, is complete and true.

We further agree that, we shall notify the Securities and Exchange Board of India immediately any change in the information provided in the application.

We further agree that we shall comply with, and be bound by the Securities and Exchange Board of India Act, 1992, and the Securities and Exchange Board of India (Custodian of Securities) Regulations, 1996, and such other guidelines/instructions as may be announced by the Securities and Exchange Board of India from time to time.

We further agree that as a condition of registration, we shall abide by such operational instructions/directives as may be issued by the Securities and Exchange Board of India from time to time.

For and on behalf of ............

(Name of the applicant)

Authorised signatory .................

Date:.............

Place :.............

FORM B

(See regulation 8)

Securities And Exchange Board Of India (Custodian Of Securities) Regulations, 1996

Certificate Of Registration As Custodian Of Securities

In exercise of the powers conferred by sub-section (1) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), read with the regulations made thereunder, the Board hereby grants a certificate of registration to ________________ as a custodian of securities subject to the conditions specified in the Act and in the regulations made thereunder.
The Registration Number of the custodian of securities is IN/

Date :

Place : Mumbai

By order

Sd/-

For and on behalf of

Securities and Exchange Board of India

Second Schedule

[See regulation 3(3), 8 and 9(C)]

Securities And Exchange Board Of India (Custodian Of Securities) Regulations, 1996

Fees Payable Under The Regulations

[PART A

Amount to be paid as fees

(i) Application fee Rs.	1,00,000
(ii) Registration fee Rs.	15,00,000
(iii) Annual fee Rs.	10, 00,000 or [0.0005 per cent] of the "assets under custody" of the custodian of securities, whichever is higher.

Explanation I.-For the purpose of this part, the expression "assets under custody" shall mean the value of the assets held by the custodian of securities as disclosed by him under sub-paragraph (4) of paragraph II.

Explanation II.-It is clarified that no Registration fee shall be payable under clause (ii), in case of renewal of the certificate of registration.]

PART B

The fees specified above shall be payable by demand draft or bankers cheque in favour of "The Securities and Exchange Board of India" at Mumbai.

[II. Payment of annual fee.-(1) On and from the commencement of the Securities and Exchange Board of India (Custodian of Securities) (Second Amendment) Regulations, 2006, the annual fee shall be payable with reference to each financial year, within one month of completion of the financial year.

(2) A custodian of securities who is granted registration on and after the commencement of the Securities and Exchange Board of India (Custodian of Securities) (Second Amendment) Regulations, 2006, shall pay proportionate annual fee in respect of the financial year in which he was granted registration and full annual fee for every subsequent financial year during which the registration subsists.

(3) A custodian of securities who is granted registration before the commencement of the Securities and Exchange Board of India (Custodian of Securities) (Second Amendment) Regulations, 2006, shall pay proportionate annual fee in respect of the financial year of such commencement and full annual fee for every subsequent financial year during which the registration subsists.

Provided that any annual fee paid by a custodian of securities before the commencement of the Securities and Exchange Board of India (Custodian of Securities) (Second Amendment) Regulations, 2006, in respect of a period, the whole or part of which falls after such commencement, shall be proportionately adjusted against the amount payable under this subparagraph.

(4) The payment of annual fee shall be accompanied by a statement of assets under custody which shall be in such format as may be specified by the Board and shall be certified to be true and complete by the functional head of the custody services of the custodian of securities.]

THIRD SCHEDULE

(See regulation 12)

Securities And Exchange Board Of India (Custodian Of Securities) Regulations, 1996

Code of conduct

The custodian of securities shall maintain the highest standard of integrity, fairness and professionalism in the discharge of his duties.
The custodian of securities shall be prompt in distributing dividends, interest or any such accruals of income received or collected by him on behalf of his clients on the securities held in custody.
The custodian of securities shall be continuously accountable for the movement of securities in and out of custody account, deposit, and withdrawal of cash from the client's account and shall provide complete audit trail, whenever called for by the client or Securities and Exchange Board of India.
The custodian of securities shall establish and maintain adequate infrastructural facility to be able to discharge custodial services to the satisfaction of clients, and the operating procedures and systems of the custodian of securities shall be well documented and backed by operations manuals.
The custodian of securities shall maintain client confidentiality in respect of the client's affairs.
Where custodian records are kept electronically, the custodian of securities shall take precautions necessary to ensure that continuity in record keeping is not lost or destroyed and that sufficient back up of records is available.
The custodian of securities shall create and maintain the records of securities held in custody in such manner that the tracing of securities or obtaining duplicate title documents is facilitated, in the event of loss of original records for any reason.
The custodian of securities shall extend to other custodial entities, depositories and clearing organizations all such co-operation that is necessary for the conduct of business in the areas of inter custodial settlements, transfer of securities and transfer of funds.
The custodian of securities shall ensure that an arms length relationship is maintained, both in terms of staff and systems, from his other businesses.
Every custodian of securities shall exercise due diligence in safe-keeping and administration of the assets of his clients in his custody for which he is acting as custodian of securities.