TaxTMI 
TaxTMI 
Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023
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....on (1), i. clause (k) shall be substituted with the following, namely,- "(k) "key management personnel" shall include: i. any person appointed as the managing director or executive director; or ii. a person serving as head of any department or vertical and directly reports to the managing director or to the directors on the governing board of the depository; or iii. a person serving as head of a core function as specified under Fourth Schedule of these regulations; or iv. a person who stands higher in hierarchy to the head of any department(s) handling core function(s) in the depository; or v. reporting officials of key management personnel; or vi. any person defined as a "key managerial personnel" under the Companies Act, 2013; or vii. any other person who is key decision making authority at the level of the depository or its direct or indirect material subsidiaries, as identified by the managing director or its Nomination and Remuneration Committee: Provided that in the case of a subsidiary of a depository that is regulated by a financial sector regulator; the norms specified by such a regul....
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.... - "Nominees of the Board on the governing board of a depository. 24A. The Board may appoint one or more persons not exceeding three in number, as director(s) on the governing board of any depository and such director(s) shall exercise the same powers as the other directors of the governing board." V. in regulation 25, i. in sub-regulation (1) and sub-regulation (7) the words "shareholder directors" shall be substituted with the words and symbol "non-independent directors". ii. in sub-regulation (2), the words "nominated by" shall be substituted with the words "appointed with the prior approval of". iii. in sub-regulation (3), a. the word "nominated" shall be substituted with the word "appointed" b. in the first proviso, the words "nominated" shall be substituted with the words "appointed with the prior approval of the Board" c. in the second proviso, the words "nominated" shall be substituted with the word "appointed" and the symbol "/" shall be substituted with the word "or". VI. in regulation 26, in sub-regulation (3), in second proviso, the words "of two terms not exceeding five years each....
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.... and after the words and symbol "sub-regulation (3)", the words and symbol "and sub-regulation 3A" shall be inserted. ii. in sub-regulation (2), in clause (a), after the words and symbol "committee;" the word "and" shall be inserted. iii. in sub-regulation 2, clause (b)shall be omitted. iv. in sub-regulation (3), clause (b) shall be omitted. v. after sub-regulation (3), the following sub-regulation shall be inserted, namely,- "(3A) Investment Committee." vi. sub-regulation (4) shall be substituted with the following, namely,- "(4) The composition, quorum and functions of the committees under sub-regulation (2), (3) and (3A) shall be in the manner as specified by the Board from time to time." X. after regulation 30 and before regulation 31, the following regulation shall be inserted, namely,- "Grievance Redressal Panel 30A. Every depository shall have Grievance Redressal Panel(s) to resolve investor grievances which shall function in the manner as may be specified by the Board." XI. in regulation 31, after sub-regulation (4), the following sub-regulations shall be inserted, namely,- ....
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....e shared; (c) escalation matrix for data sharing; (d) provisions to have a digital database for recording details of information shared along with recipients and reasons for sharing, etc.; (e) mechanism to monitor the data shared, through use of technology, including periodic audits to ensure compliance with the policy framework; and (f) accountability mechanism including fixing individual accountabilities for any breach of data sharing policy." XV. In Chapter IX, before regulation 84, the following regulation shall be inserted namely, - " Power to call for information 83A. The Board may from time to time call for any information, documents or records from the depository or its governing board or any shareholder or applicant thereof and from depository participant." XVI. After Chapter IX and before Chapter X, the following Chapter shall be inserted namely, - "CHAPTER IX-A ENFORCEMENT Power to issue directions and levy penalty by the Board 91A. (1) Without prejudice to exercise of its powers under the provisions of the Act, Depositories Act, 1996 and rules and regulations made....
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....regulations made thereunder: Provided that the Board while taking action under clauses (a) and (b) above shall have due regard to the factors, including but not limited to any or all of the following:- (i) a mala fide intent; or (ii) an act of commission or an act of omission; or (iii) negligence, or (iv) repeated instances of genuine decision making that went wrong. (3) While adjudging the quantum of monetary penalty under the Act, the Board shall have due regard to the factors, including but not limited to any or all of the following:- (a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; (b) the amount of loss caused to the depository or the securities market as a result of the default; and (c) the repetitive nature of the default." XVII. regulation 94 shall stand omitted. XVIII. regulation 95 shall stand omitted. XIX. After regulation 96 and before regulation 97, the following shall be inserted namely,- "Power to relax the strict enforcement of the regulations. 96A (1) The Board may suo motu ....
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....ay also conduct annual training for every public interest director." shall be omitted. e. sub-clause (4) shall be substituted with the following, namely,- "(4) In case of reappointment of the public interest director, the depository shall apply to the Board four months before the expiry of the term. In addition to the other requirements specified herein, the application for reappointment of the public interest director shall be accompanied with, their attendance details on meetings of various mandatory committees and on the governing board of the depository, performance review and the reasons for extension of term." f. sub-clause (5) shall be substituted with the following, namely,- "(5) The existing public interest director, may continue holding the post for a maximum period of three months from the date of expiry of their term, or till a new public interest director is appointed, whichever is earlier, only if the governing board does not meet the mandatory regulatory requirements on its composition." iii. in clause (IV), a. in the heading, the words "shareholder directors" shall be substituted with the words and symbol "non-in....
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....s risk appetite iii. acceptability of breaches and trigger response(s), if any. iv. zero tolerance for areas such as cyber security, system stability, surveillance, fair access, fraud or corruption, compliance, etc. (g) make key stakeholders (executive and non-executive) aware of the use and value of risk appetite across the organization (including implications of breaches) and review and approve risk appetite metrics and thresholds periodically. (h) ensure adequate independence of key functions such as regulatory and control functions (risk management, compliance and audit functions) such that; i. regulatory and control functions have sufficient stature to perform their tasks effectively. ii. regulatory and control functions operate independently and have appropriate direct access to the governing board of the depository and senior management. iii. control functions are proactively involved in all relevant decisions and activities. (i) Provide for three lines of defense construct where: i. the first line of defense incorporates business units and support functions as it has the responsibility to own a....
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....ate training programs to help employees better understand expectations of behavior (for example, trainings on dilemmas); ii. mechanisms to measure and track indicators related to culture at regular intervals; iii. accountability mechanisms; and iv. performance management mechanisms which take into account adherence to culture, conduct and behavior related dimensions. II. Code of Conduct for Directors, Committee Members and key management personnel A. Applicable to directors, committee members and key management personnel of Depository: 1. General Responsibility. Every director, committee members and key management personnel of the depository shall- (a) analyse and administer the depositories' issues with professional competence, fairness, impartiality, efficiency and effectiveness; (b) submit the necessary disclosures or statement of holdings or dealings in securities as required by the depository from time to time as per their Rules, Bye-laws or Articles of Association; (c) unless otherwise required by law, maintain confidentiality and not divulge or disclose any information obtained in the d....
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....s commensurate to honour the time limit stipulated by Board for corrective action. 3. Disclosures of Beneficial Interest. All directors, committee members and key management personnel shall disclose to the governing board of depository, upon assuming office and during their tenure in office, whenever the following arises:- (a) any fiduciary relationship of self and family members and directorship/ partnership of self and family members in any trading member or clearing member or depository participant or registrar and transfer agent; (b) shareholding, in cases where the shareholding of the director/ key management personnel, directly or through his family exceeds 5 percent in any listed company or in other entities related to the securities markets; (c) any other business interests. 4. Access to Information. (a) There shall be prescribed channels through which information shall move and further there shall be audit trail of the same. Any retrieval of confidential documents or information shall be properly recorded. (b) All such information, especially which is non-public and price sensitive, shall be kept confi....
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....s shall not interfere in the day to day functioning of the depositories and shall limit their role to decision making on policy issues and to issues as the governing board of depository may decide. (b) The directors and committee members shall abstain from influencing the employees of the depositories in conducting their day to day activities. (c) The directors and committee members shall not be directly involved in the function of appointment and promotion of employees unless specifically so decided by the governing board of depository. 3. Avoidance of Conflict of Interest. (a) No Director or committee member of the depository shall participate in any decision making/adjudication in respect of any person/ matter in which he or she is in any way, directly or indirectly, concerned or interested. (b) Conflict of interest in a matter, if any, shall be decided by the governing board of the depository. 4. Strategic Planning. Every director and committee member of the depository shall- (a) participate in the formulation and execution of strategies in the best interest of the depository and contribute towards pro-acti....
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....may be decided by the depository. (d) Public interest directors shall have regular oversight on regulatory requirements and observations of Board's inspection particularly on issues of governance standards, technology and cyber security and system audit and cyber security audit observations. (e) Public interest directors should be proactive in identifying any issues concerning functioning of the depository and report the same to the Board. Public interest directors should ensure all regulatory communication or letter from the Board are placed before governing board with comments/report of managing director. (f) Public interest directors shall put in place an evaluation mechanism to assess the performance of managing directors on a continuing basis in line with evaluation guidelines for public interest directors. (g) Public interest directors shall ensure that appointments of managing director be held within specified timelines. Identification of key management personnel be closely scrutinized as per the laid down procedure and exceptions should be brought to the notice of the Board. (h) Public interest directors should take proactive par....
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....the Depositories Act, 1996, rules, regulations, circulars, guidelines or any other directions by any of its issuer or issuer's agent. (g) take a proactive and responsible attitude towards safeguarding the interests of investors, integrity of depository's systems and the securities market. (h) endeavor for introduction of best business practices amongst itself and its members. (i) act in utmost good faith and shall avoid conflict of interest in the conduct of its functions. (j) not indulge in unfair competition, which is likely to harm the interests of any other Depository, their participants or investors or is likely to place them in a disadvantageous position while competing for or executing any assignment. (k) segregate roles and responsibilities of key management personnel within the depository including a. Clearly mapping legal and regulatory duties to the concerned position b. Defining delegation of powers to each position c. Assigning regulatory, risk management and compliance aspects to business and support teams (l) be responsible for the acts or omissions of its employees in respect of the con....