Few things you want to know about 'Fit and Proper'

Business Standard brings to you regulations governing Sebi's criteria for exchanges

The Forward Markets Commission (FMC)'s letter to the board of directors of National Spot Exchange (NSEL) saying that it is considering declaration that they failed to meet "fit and proper" criteria has put the focus on other group entities such as MCX and MCX stock exchange, whose ownership may also get affected.

Business Standard brings to you the regulations governing Securities and Exchange Board of India (Sebi)'s fit and proper criteria for exchanges.

Which regulation provides for “Fit and Proper” criteria for stock exchanges?

Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012

When did it come into effect?

June 20, 2012

Which clause under these regulations defines the criteria?

Clause 20

Who is a fit and proper person?

A person shall be deemed to be a fit and proper person if—

(a) such person has a general reputation and record of fairness and integrity, including but

not limited to—

(i) financial integrity;

(ii) good reputation and character; and

(iii) honesty;

How many disqualifications are listed by the regulations?

Seven

What are these disqualifications?

(i) 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;

(ii) an order for winding up has been passed against the person;

(iii) the person, or any of its whole time directors or managing partners, has been declared insolvent and has not been discharged;

(iv) 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;

(v) 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 the Board or any other regulatory authority, and a period of three years from the date of the order has not elapsed;

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

(vii) the person is financially not sound

Can Sebi decision be challenged?

The regulation says that if any question arises as to whether a person is a fit and proper person, the Board’s decision on such question shall be final.