Fit and proper requirement mandates prior regulator approval for substantial stock exchange shareholdings and annual compliance filings. Persons may not acquire or hold equity shares or voting rights in a recognised stock exchange or recognised clearing corporation unless they are fit and proper. The exchange or clearing corporation must ensure its shareholders meet that standard, subject to a limited exception for minimal holdings. Acquisition or holding of substantial share capital requires prior Board approval obtained through the exchange/clearing corporation in the prescribed manner; the exchange/clearing corporation must verify declarations and forward its recommendation. Holders at or above the reporting threshold must file an annual declaration confirming compliance with the fit and proper criteria.