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of <h1>Intermediary's fitness under Schedule II of SEBI Regulations ends with registration certificate; post-surrender disqualification invalidated</h1> <h3>CD Commosearch Pvt. Ltd. Versus Securities and Exchange Board of India, Mumbai</h3> SAT held that fitness to be a 'fit and proper person' under Schedule II of SEBI Regulations is co-terminous with the certificate of registration. Where ... Eligibility for ‘fit and proper person’ in terms of Schedule II under the SEBI Regulations, 2008 - appellant surrendered its certificate of registration and same has been accepted by SEBI, before issuance of show cause notice - HELD THAT:- In our view the aspect of an entity being ‘fit and proper’ is co-terminus with the certificate of registration. Therefore, to declare appellant as ‘not a fit and proper person’ after surrender of certificate is untenable in law. As the intermediary had already surrendered his Certificate of Registration before the issuance of the Show Cause Notice, this appeal merits consideration and it is accordingly allowed. The impugned order is set aside. Appeal against an order dated July 31, 2023 holding the appellant as 'not a 'fit and proper person'' under Schedule II of the SEBI (Intermediaries) Regulations, 2008. Undisputed facts: the appellant surrendered its Certificate of Registration, which SEBI accepted on May 2, 2018; the designated authority had recommended cancellation. The WTM observed (para. 32) that acceptance of surrender occurred before issuance of the show cause notice, rendering an order of cancellation 'infructuous' and making directions under Regulation 27 impracticable. The Tribunal held the concept of being 'fit and proper' is co-terminus with the Certificate of Registration and that declaring the appellant as 'not a fit and proper person' after surrender of the certificate is untenable in law. Given these peculiar facts, the appeal was allowed and the impugned order set aside. The order states: 'This order shall not be treated as a precedent.' Interlocutory application(s) disposed of; no costs.
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