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FAQs – Prior Approval

An MIRSD Intermediary (Direct) needs to first determine if the change in shareholding is resulting into change in control. If there is no change in control, then the intermediary needs to give an intimation post change of shareholding by way of making an application for update details in the SI Portal. In the event of any new shareholder is being brought in, who either by himself or together with any other shareholder is considered to be “in control”, then a report in the prescribed format has to be filed establishing how such shareholder fulfils the “fit and proper person” criteria as prescribed under the SEBI (Intermediaries) Regulations, 2008 (refer to the Update Details - FAQs). However, in case of change in shareholding resulting into change in control, prior approval of SEBI is mandatory.

Change in control is defined in

  • Clause 2(ad) of the SEBI (Merchant Bankers) Regulations, 1992,
  • Clause 2(bc) of the SEBI (Registrar to an Issue and Share Transfer Agent) Regulations, 1993,
  • Clause 2(eii) of the SEBI (Credit RatingAgencies) Regulations, 1999,
  • Clause 2(ae) of the SEBI (Debenture Trustee) Regulations, 1993,
  • Clause 2(ad) of the SEBI (Underwriters) Regulations, 1993 and
  • Clause 2(ae) of the SEBI (Bankers to an Issue) Regulations, 1994 respectively.

Kindly note that as per the Regulations, change in control at the level of intermediary itself (direct control) and at the level of the holding company (indirect control) and also at any level above the holding company shall require Prior Approval.

Login to the SI Portal. In the post registration activities, select the option of Prior Approval for Change in Control and fill in the required information as asked.

The following documents need to be submitted along with the application

a. Details of existing and proposed shareholding

b. Certified copy of the Board Resolution passed in the meeting of the Board of the Directors of the Company resolving the change of shareholding.

c. NOC of the sectoral/primary regulator of the applicant (Ex. RBI for Bank)

d. Undertakings as mentioned at Annexure 1

e. Undertakings as mentioned at Annexure 2

f. Information specified in Circular No. CIR/MIRSD/14/2011 dated August 02, 2011

Once the application is approved, you will receive a letter of Prior Approval from MIRSD. The SEBI Prior Approval is valid for a period of 6 months within which the intermediary needs to apply for fresh registration pursuant to change in control. While applying for fresh registration post change in control, SI Portal shall ask NOC number for change in control which will be as per SEBI Prior approval letter number. If the number of the SEBI Prior approval letter is MIRSD/DOR/RS/12345/2018, the NOC number will be 123452018.

Kindly inform MIRSD before the expiry of 6 months and make an application vide email or letter for extension of Prior Approval with reason / justification for delay. The extension of Prior Approval shall be provided only once. However, SEBI discourages such practices. It is also clarified that extension of prior approval validity shall be granted only for the purpose of fresh registration where change in control has already been executed within 6 months of prior approval. If change in control could not be executed within 6 months, then intermediary has to file fresh application of prior approval for change in control.

No, applicants making fresh registration pursuant to obtaining the prior approval for change in shareholding leading to change in control need to start from Self-Registration and pay the application fees. Post that, a new login shall be issued through which fresh registration application needs to be made.

No, it is not necessary that pursuant to fresh registration, you will be allotted a new registration number. You have the option to retain the existing number. For retaining the same registration number, you will have to inform SEBI of the same.

Yes, it is necessary to link the two applications

When you make an application for fresh registration, you will be prompted with a question in the application whether the application is pursuant to obtaining the prior approval for change in control. You have to select the radio button ‘yes’. You will be prompted to key in the NOC number in the online application. Your NOC number is the number as mentioned in the SEBI Prior Approval letter (Please refer clause 5 of this FAQ).

 

By this way, the applications for grant of prior approval and fresh registration pursuant to obtaining the prior approval for change in control in shareholding shall get linked.

ANNEXURE 1

Undertaking by Acquirer (to be signed by acquirers)

 

S No

Declarations

1.

The proposed acquirers/ promoters / ultimate individual beneficiary owners / directors / KMPs pursuant to change in control were / have not at any time been convicted by court for any offence involving moral turpitude or fraud or has been found guilty of any economic offence and sentenced in respect thereof to imprisonment for a period not less than six months.

2

The proposed acquirers/ promoters / ultimate individual beneficiary owners / directors / KMPs pursuant to change in control are not involved in any litigation connected with the securities market and there are no charges against them as on date. If any litigation, details of the same may be provided.

3

The proposed acquirers/ promoters / ultimate individual beneficiary owners / directors / KMPs pursuant to change in control, are not facing any charges/ disciplinary action from any stock exchange/clearing corporations / depository if they are Sock-broker/DP.

4

The proposed acquirers/ promoters / ultimate individual beneficiary owners / directors / KMPs pursuant to change in control, have not been declared insolvent nor is any proceeding pending against them in this regard.

5

No order for suspending or debarring the proposed acquirers/ promoters / ultimate individual beneficiary owners / directors / KMPs from carrying on any activity in the financial sector has been passed by any regulatory authority.

6

No application was made by the proposed acquirers in the past to SEBI seeking registration in any capacity but was not granted.

7

No action has been initiated/ taken/pending under SCRA/ Depository /SEBI Act or rules and regulations made there under against the proposed acquirers/directors/KMPs. If any action is taken/pending, details of the same shall be provided. 

8

The applicant and the proposed acquirers shall also ensure resolution of complaints pertaining to period prior to change in control.

9

The applicant and the proposed acquirers would be liable for all liabilities/obligations (including monetary penalties, if any) of the applicant for violations of the provision of the SEBI/ Depository Act, Rules, Regulations, Law, Circular etc. that have taken place before change in control.

10

The applicant and the proposed acquirers would be liable for fee that may accrue for the period before change in control. 

11

There are no adverse comments against the proposed acquirers/ promoters / ultimate individual beneficiary owners / directors / KMPs as per following database and they are fit and proper person as per provision of schedule II of SEBI (Intermediaries) Regulations, 2008. If any action is pending or taken, details of the same shall be provided:

Ø Database of prosecution cases launched against CIS entities across the country

Ø  Database of the prosecution cases launched against other than CIS entities across the country

Ø  Vanishing Companies database

Ø  Database of entities debarred from the securities market by SEBI

Ø  RBI / CIBIL database of wilful defaulter for suit filed accounts for Rs 25 Lakh & above

Ø  RBI / CIBIL database of defaulters for suit filed accounts for Rs 1 Crore & above

Ø  IOSCO Database

Ø  United Nation Sanction List

Ø  SCORES database

 

 

 

 

12

No proceeding has been initiated against the proposed acquirers/ promoters / ultimate individual beneficiary owners / directors / KMPs for declaring them as willful defaulter by any bank or financial institutes. 

Annexure 2 – Undertaking by applicant (to be signed by 2 directors)

S No

Particulars

1

It has paid all the fees due to SEBI. No SEBI fee is outstanding against it.

2

No investor complaints is pending against applicant. 

3

There will not be any change in the Board of Directors/partners of incumbent till prior approval is granted.

4

That it will inform all its existing investors/clients in order to enable them to take informed decision regarding their continuance or otherwise with the entity with new management.

5

No action (11B/enquiry/adjudication/prosecution proceedings or any other action) has been initiated/taken/pending under SCRA/ Depository/SEBI Act or rules and regulations made there under against the applicant by SEBI. If any action is pending/taken, details of the same shall be provided and an undertaking may be submitted that the same has been communicated to acquirer.

6

The applicant would be liable for fee that may accrue for the period before change in control. 

7

No litigation is pending against applicant (Details of litigation may be provided to SEBI if any and informed to acquirer also).

 

8

There are no adverse comments against applicant and its proposed acquirers/directors/KMPs as per following database and they are fit and proper person as per provision of schedule II of SEBI (Intermediaries) Regulations, 2008. If any action is pending or taken, details of the same shall be provided:

Ø  Database of prosecution cases launched against CIS entities across the country

Ø  Database of the prosecution cases launched against other than CIS entities across the country

Ø  Vanishing Companies database

Ø  Database of entities debarred from the securities market by SEBI

Ø  RBI / CIBIL database of wilful defaulter for suit filed accounts for Rs 25 Lakh & above

Ø  RBI / CIBIL database of defaulters for suit filed accounts for Rs 1 Crore & above

Ø  IOSCO Database

Ø  United Nation Sanction List

Ø  SCORES database