2007 (8) TMI 819 - AT - SEBI

Tribunal Rules on Stock Broker Registration Fees Calculation, Clarifies Single Registration Requirement

The Tribunal ruled in favor of the appellant in a case concerning the calculation of registration fees for stock brokers. It held that the block period ... - Issues Involved:1. Calculation of registration fee commencement date.2. Entitlement to benefit under paragraph 4 of Schedule III.3. Contemplation of multiple registrations for stock brokers under the Act.4. Proper computation of registration fee by the Board.Summary:1. Calculation of Registration Fee Commencement Date:The primary question was whether the 'block of five financial years' for calculating the registration fee should commence from 17.10.1995, when the appellant was initially registered as a stock broker with the Securities and Exchange Board of India (SEBI) upon becoming a member of the National Stock Exchange (NSE), or from 1.4.1998, when it was registered afresh upon becoming a member of the Calcutta Stock Exchange (CSE). The Tribunal concluded that the block period should commence from the initial registration date of 17.10.1995.2. Entitlement to Benefit Under Paragraph 4 of Schedule III:The appellant claimed exemption from the registration fee for the period for which Srikant Mantri had already paid, asserting compliance with paragraph 4 of Schedule III to the Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992. The Tribunal upheld the Board's rejection of this claim, noting that Srikant Mantri was not a whole-time director in the company during the requisite period, thus failing to meet the conditions for exemption. The Tribunal emphasized that the benefit under paragraph 4 applies only if an individual or partnership membership is converted into a corporate entity, which was not the case here.3. Contemplation of Multiple Registrations for Stock Brokers:The Tribunal addressed whether the Act contemplates multiple registrations for stock brokers. It referred to a Division Bench of the Delhi High Court in National Stock Exchange Member vs. Union of India & Ors., which held that the Act envisages only one registration even if a broker is a member of several stock exchanges. The Tribunal agreed with this view, stating that each stock broker should be registered with the Board only once, regardless of multiple memberships.4. Proper Computation of Registration Fee by the Board:The Tribunal found that the Board had improperly calculated the registration fee based on two separate registrations of the company. It concluded that the fee should have been computed based on the initial registration date of 17.10.1995. The Tribunal set aside the impugned order and remitted the case back to the Board for fresh computation of the registration fee, emphasizing that the company should have only one block period starting from its initial registration date.Conclusion:The appeal was allowed, and the Board was directed to recompute the registration fee based on the company's initial registration date of 17.10.1995, with no order as to costs.