SEBI Guidelines for NOC Applications in GIFT IFSC for Stock Brokers

Introduction

This circular issued by the Securities and Exchange Board of India (SEBI) provides essential guidelines for Stock Brokers and Clearing Members seeking a No Objection Certificate (NOC) for establishing Wholly Owned Subsidiaries, Step Down Subsidiaries, or Joint Ventures in GIFT IFSC. The aim is to streamline the application process in line with regulatory requirements.

Application Guidelines for NOC

Application Process

Submission Format: The application form and a list of supporting documents for obtaining an NOC are included in Annexure-A.
Channel of Application: Stock Brokers and Clearing Members must submit their applications through a Stock Exchange where they hold membership. This must include all relevant documentation and NOC received from each Stock Exchange, Clearing Corporation, and Depository associated with the applicant.
Verification and Forwarding: Stock Exchanges and Clearing Corporations (for Clearing Members) are required to verify applications and forward them to SEBI along with their recommendations.

Effective Date

This circular is effective immediately upon issuance.

Legal Authority

This document has been issued under the authority granted by Section 11(1) of the Securities and Exchange Board of India Act, 1992, to safeguard investor interests and promote the development and regulation of the securities market.

Enclosures and Required Documents

The application must be accompanied by specified enclosures. The checklist includes:

General Information Required

Registrations: List of all registrations of the applicant in India and abroad, including:
- Entity name (previous names if applicable)
- Type of Intermediary (e.g., Broker or Depository Participant)
- Registration number and date
Net Worth: Current net worth of the applicant company (in INR).
Personnel Details: Information regarding:
- Promoters (Name and PAN)
- Directors (Name, DIN, and PAN)
- Key personnel (Name and PAN)
Regulatory Actions: Any regulatory actions taken, pending, or initiated against the applicant or its key personnel.
Pending Fees: Disclosure of any unpaid fees to SEBI by the applicant or its associates.
Proposed Investment: Details of the proposed investment amount (in INR).
Types of Setups: Specify if establishing a Wholly Owned subsidiary, Step Down Subsidiary, Joint Venture, or acquiring stake in an existing company.
Details of Proposed Entities: Information about the proposed entity in GIFT IFSC:
- Name
- Purpose
- Nature of activities

Undertaking

The applicant must provide a declaration affirming the maintenance of net worth as per SEBI Act, 1992 and related regulations.

Enclosure Requirements

Net Worth Certificate:
- Latest audited net worth certificate, certified by a Chartered Accountant.
- If older than six months, include provisional net worth certification.
NOC from Exchanges: Obtain NOC from all relevant Stock Exchanges or Depositories.
Fit and Proper Criteria: Details of any non-compliance with the 'fit and proper person' criteria.
Declaration Cum Undertaking: This document should confirm compliance with SEBI regulations and must be duly stamped and signed.
Shareholding Pattern: Provide the latest shareholding structure and identify significant shareholders.

Declaration Cum Undertaking

The intermediary must declare that all personnel involved meet the criteria for integrity and compliance with SEBI regulations, specifically Schedule II of the SEBI (Intermediaries) Regulations, 2008. The declaration includes:

Confirmation of no pending regulatory issues or legal disqualifications.
Assurance of integrity and ethical behavior among key personnel.
Acknowledgment of the absence of pending fees or any prior declaration of not being a 'fit and proper person' by SEBI.

Conclusion

This circular serves to clarify and enhance the application process for Stock Brokers and Clearing Members looking to establish new entities in GIFT IFSC. By adhering to these guidelines, applicants can expect a more streamlined experience in securing NOCs for their business ventures. For any queries or additional information, contact Dinesh Joshi at SEBI.