compliance simplified

Informal Guidance – Purnartha

Query –

In terms of Clause 4 (j) of the SEBI Circular Cir./IMD/DF/13/2010 dated October 05, 2010, if clients write electronically that they have understood the fees/charges structure, using their fingers or a stylus pen on the relevant portion of the Annexure on the fees and charges of portfolio management account opening form accessed by them on touch sensitive screen of their personal computing device, whether this shall satisfy the requirement mandated under Clause 4(j) of the aforesaid SEBI Circular.

SEBI Response –

Clause 4(j) of SEBI Circular dated October 05, 2010 (the “Circular”) states the following :

New clients shall be required to separately sign the annexure on fees and charges and add in their own handwriting that they have understood the fees/ charge structure.”

Clause 4 (j) of the Circular states that the new clients shall sign the annexure on fees and charges and add in their own handwriting that they have understood the fees/charge structure.

In terms of Section 5 of the Information Technology Act, 2000 (the “IT Act”) , the condition of signature of any person shall be deemed to have been satisfied, if such information or matter is authenticated by means of electronic signature affixed in such manner as may be prescribed by the Central Government.

  1. Section 5 of IT Act states the following :

Legal recognition of  [electronic signature]. -Where any law provides that information or any other matter shall be authenticated by affixing the signature or any document shall be signed or bear the signature of any person, then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied, if such information or matter is authenticated by means of  [electronic signature] affixed in such manner as may be prescribed by the Central Government.

 Explanation.- For the purposes of this section, “signed”, with its grammatical variations and cognate expressions, shall, with reference to a person, mean affixing of his hand written signature or any mark on any document and the expression “signature” shall be construed accordingly.”

Further, as noted from the heading of the Clause 4 (j) of the Circular , the intent of the provision is to disclose the fees and charges to the client and to ensure that the client has understood and acknowledged the fees and charges structure.

In view of the above , for compliance with Clause 4 (j) of the Circular, the clients may sign the annexure referred to in the Circular , using electronic signature as per the IT Act and write electronically that they have understood the fees/charge structure, using their fingers or a stylus pen on the relevant portion of the annexure on fees and charges, accessed by them on touch sensitive screen of their personal computing device.