TaxTMI 
TaxTMI 
Master Circular for Research Analysts
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....en done or taken under the rescinded circulars, prior to such rescission, shall be deemed to have been done or taken under the corresponding provisions of this Master Circular; b) Any application made to the Board under the rescinded circulars, prior to such rescission, and pending before it shall be deemed to have been made under the corresponding provisions of this Master Circular; c) The previous operation of the rescinded circulars or anything duly done or suffered thereunder, any right, privilege, obligation or liability acquired, accrued or incurred under the rescinded circulars, any penalty, incurred in respect of any violation committed against the rescinded circulars, or any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty as aforesaid, shall remain unaffected as if the rescinded circulars have never been rescinded. 5. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 6. This circu....
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....or issue an addendum to the report with its remarks, as considered appropriate. f) Proxy Advisors shall clearly disclose in their recommendations the legal requirement vis-a-vis higher standard they are suggesting if any, and the rationale behind the recommendation of higher standards. g) Proxy Advisors shall disclose conflict of interest on every specific document where they are giving their advice. Further, the disclosures should especially address possible areas of potential conflict and the safeguards that have been put in place to mitigate possible conflicts of interest. h) Proxy Advisors shall establish clear procedures to disclose, manage and/or mitigate any potential conflicts of interest resulting from other business activities including consulting services, if any, undertaken by them and disclose the same to clients. 1.2 The provisions of Clause 1.1(c) and 1.1(e) became applicable with effect from February 01, 2021.[ Reference: Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/157 dated August 27, 2020 and Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/256 dated December 31, 2020] All other provisions of clause 1.1 became applicable with effect from Jan....
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....ted August 28, 2014 and SEBI/HO/OIAE/IGRD/P/CIR/2022/0150 dated November 07, 2022] 3.1. SEBI has been taking various measures to create awareness among investors about grievance mechanisms available to them through workshops as well as through print and electronic media. 3.2. As an additional measure and for information of all investors who deal/ invest/ transact in the market, the research analysts shall prominently display in their offices the following information about the grievance redressal mechanism available to investors. Dear Investor, In case of any grievance / complaint against the research analyst: • Please contact Compliance Officer of the research analyst (Name and Address) / email-id ([email protected]) and Phone No. - 91- XXXXXXXXXX. • You may also approach CEO / Partner / Proprietor (Name) / email- id ([email protected]) and Phone No. - 91-XXXXXXXXXX. • If not satisfied with the response of the research analyst you can lodge your grievances with SEBI at http://scores.gov.in or you may also write to any of the offices of SEBI. For any queries, feedback or assistance, please contact SEBI Office on Toll Free Hel....
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..... The disclosure requirements under this clause came into effect from January 01, 2022. III. TECHNOLOGY RELATED 5. Advisory for Financial Sector Organizations regarding Software as a Service (SaaS) based solutions [Reference: Circular No. SEBI/HO/MIRSD2/DOR/CIR/P/2020/221 dated November 03, 2020 ] 5.1 Ministry of Electronics & Information Technology, Govt. of India ('MEITy'), has informed SEBI that the financial sector institutions are availing or thinking of availing Software as a Service (Saas) based solution for managing their Governance, Risk & Compliance (GRC) functions so as to improve their cyber Security Posture. As observed by MEITy, though SaaS may provide ease of doing business and quick turnaround, but it may bring significant risk to health of financial sector as many a time risk and compliance data of the institution moves beyond the legal and jurisdictional boundary of India due to nature of shared cloud SaaS, thereby posing risk to the data safety and security. 5.2 In this regard, Indian Computer Emergency Response Team (CERT-in) has issued an advisory for Financial Sector organizations. The advisory has been forwarded to SEBI for bri....
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....omplaint is pending? If yes, steps taken and confirmation that the acquirer/ the person who shall have the control shall resolve the same. e. Details of litigation(s), if any. f. Confirmation that all the fees due to SEBI have been paid. g. Declaration cum undertaking of the applicant and the acquirer/ the person who shall have the control (in a format enclosed at Annexure D), duly stamped and signed by their authorized signatories that: (i) there will not be any change in the Board of Directors of incumbent, till the time prior approval is granted; (ii) pursuant to grant of prior approval by SEBI, the incumbent shall inform all the existing investors/ clients about the proposed change prior to effecting the same, in order to enable them to take informed decision regarding their continuance or otherwise with the new management; and (iii) the 'fit and proper person' criteria as specified in Schedule II of SEBI (Intermediaries) Regulations, 2008 are complied with. h. In case the incumbent is a registered stock broker, clearing member, depository participant, in addition to the above, it shall obtain approval/NOC f....
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....lude pamphlets, circulars, brochures, notices, research reports or any other literature, document, information or material published, or designed for use in any publication or displays (such as newspaper, magazine, sign boards/hoardings at any location), in any electronic, wired or wireless communication (such as electronic mail, text messaging, messaging platforms, social media platforms, radio, telephone, or in any other form over the internet) or over any other audio-visual form of communication (such as television, tape recording, video tape recordings, motion pictures) or in any other manner whatsoever. b. Information/disclosures in the advertisement: The information/disclosures that the advertisement shall contain, include the following- i. Name of the RA as registered with SEBI, registered office address, SEBI Registration No., logo/brand name/trade name of RA, and CIN of the RA, if applicable. ii. Information which is accurate, true and complete in unambiguous and concise language. iii. Standard warning in legible fonts (minimum 10 font size) which states "Investment in securities market are subject to market risks. Read all the ....
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.... Any statement that is exaggerated or is inconsistent with or unrelated to the nature and risk and return profile of the product. viii. Extensive use of technical or legal terminology or complex language and the inclusion of excessive details which may distract the investors. ix. Reference to any report, analysis, or service as free, unless it actually is free and without condition or obligation. x. Any promise or guarantee of assured or risk free return to the investors. The advertisement shall not imply any assured returns or minimum returns or target return or percentage accuracy or service provision till achievement of target returns or any other nomenclature that gives the impression to the client that the recommendation of research report is risk-free and/or not susceptible to market risks and/or that it can generate returns with any level of assurance. xi. Any statement which directly or indirectly discredits other advertisements or intermediaries or makes unfair comparisons or ascribes any qualitative advantage over other intermediaries directly or indirectly. xii. Reference to past performance of the RA. xiii. ....
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....rmediary or provide any assurance of returns to investors" shall be mentioned on portal/web site, if any, notice board, display boards, advertisements, publications, know your client forms, client agreements, if any, statements or reports or any other form of correspondence with the client. iv. SEBI logo shall not be used by RA. 7.3. The aforesaid provisions on advertisement code and usage of brand name/ trade name became applicable with effect from May 01, 2023. 8. Unauthenticated news circulated by SEBI Registered Market Intermediaries through various modes of communication [Reference: Circular No. CIR/ISD/1/2011 dated March 23, 2011] 8.1. Due to lack of proper internal controls and poor training, employees of intermediaries are sometimes not aware of the damage which can be caused by circulation of unauthenticated news or rumours. It is a well established fact that market rumours can do considerable damage to the normal functioning and behaviour of the market and distort the price discovery mechanisms. 8.2. In view of the above facts, SEBI Registered Market Intermediaries are directed that: a. Proper internal code of conduct and co....
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....g their activities shall not, however, outsource their core business activities and compliance functions. An example of core business activity may be - execution of orders and monitoring of trading activities of clients in case of stock brokers. Regarding Know Your Client (KYC) requirements, the intermediaries shall comply with the provisions of SEBI {KYC (Know Your Client) Registration Agency} Regulations, 2011 and Guidelines issued thereunder from time to time. 9.6. Other Obligations: Reporting to Financial Intelligence Unit (FIU) - The intermediaries shall be responsible for reporting of any suspicious transactions / reports to FIU or any other competent authority in respect of activities carried out by the third parties. 10. Framework for Regulatory Sandbox [Reference: Circular No. SEBI/HO/ITD/ITD/CIR/P/2021/575 dated June 14, 2021 and SEBI/HO/MIRSD/MIRSD_IT/P/CIR/2021/0000000658 dated November 16, 2021 ] 10.1. The Objective of Regulatory Sandbox is to grant certain facilities and flexibilities to the entities regulated by SEBI so that they can experiment with FinTech solutions in a live environment and on limited set of real users for a limited ti....
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....es not, at any time conflict with their duty to their clients and client's interest always takes primacy in their advice, investment decisions and transactions; e. make appropriate disclosure to the clients of possible source or potential areas of conflict of interest which would impair their ability to render fair, objective and unbiased services; f. endeavor to reduce opportunities for conflict through prescriptive measures such as through information barriers to block or hinder the flow of information from one department/ unit to another, etc .; g. place appropriate restrictions on transactions in securities while handling a mandate of issuer or client in respect of such security so as to avoid any conflict; h. not deal in securities while in possession of material non published information; i. not to communicate the material non published information while dealing in securities on behalf of others; j. not in any way contribute to manipulate the demand for or supply of securities in the market or to influence prices of securities; k. not have an incentive structure that encourages sale of products not suiting the....
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....ndia. The USA enacted FATCA in 2010 to obtain information on accounts held by US taxpayers in other countries. As per the aforesaid agreement, foreign financial institutions (FFIs) in India will be required to report tax information about US account holders / taxpayers directly to the Indian Government which will, in turn, relay that information to the U.S. Internal Revenue Service (IRS). 13.3. For implementation of the MCAA and agreement with USA, the Government of India has made necessary legislative changes to Section 285BA of the Income Tax Act, 1961. Further, the Government of India has notified Rules 114F to 114H (herein after referred to as "the Rules") under the Income Tax Rules, 1962 and form No. 61B for furnishing of statement of reportable account specified in the Rules. The Rule is presently available at the following link: http://www.incometaxindia.gov.in/communications/notification/notification% 20no.%2062%20dated%2007-08-2015.pdf 13.4. A "Guidance Note on implementation of Reporting Requirements under Rules 114F to 114H of the Income Tax Rules" as issued by the Department of Revenue, Ministry of Finance vide F.No.500/137/2011-FTTR-III dated....
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....n the current month divided by total number of complaints resolved in the current month. Trend of monthly disposal of complaints Sr. No. Month Carried forward from previous month * Received Resolved Pending# 1 April, YYYY 2 May, YYYY 3 June, YYYY 4 ... 5 March, YYYY Grand Total *Inclusive of complaints of previous months resolved in the current month. #Inclusive of complaints pending as on the last day of the month. Trend of annual disposal of complaints Sr. No Year Carried forward from previous year Received Resolved* Pending# 1 2018-19 2 2019-20 3 2020-21 4 20XX-XX Grand Total *Inclusive of complaints of previous yea....
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....s complaint is not redressed satisfactorily, one may lodge a complaint with SEBI on SEBI's SCORES portal which is a centralized web based complaints redressal system. SEBI takes up the complaints registered via SCORES with the concerned intermediary for timely redressal. SCORES facilitates tracking the status of the complaint. With regard to physical complaints, investors may send their complaints to: Office of Investor Assistance and Education, Securities and Exchange Board of India, SEBI Bhavan, Plot No. C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (E), Mumbai - 400 051. E. Expectations from the investors (Responsibilities of investors) • Do's i. Always deal with SEBI registered Research Analyst. ii. Ensure that the Research Analyst has a valid registration certificate. iii. Check for SEBI registration number. iv. Please refer to the list of all SEBI registered Research Analysts which is available on SEBI website in the following link: https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=y es&intm Id=14) V. Always pay attention towards disclosures made in the research reports before investing. vi. ....
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....d Total * Inclusive of complaints of previous months resolved in the current month. # Inclusive of complaints pending as on the last day of the month. Trend of annual disposal of complaints Sr. No. Year Carried forward from previous year Received Resolved* Pending# 1 2018-19 2 2019-20 3 2020-21 4 20XX-XX Grand Total * Inclusive of complaints of previous years resolved in the current year. # Inclusive of complaints pending as on the last day of the year. ANNEXURE C ADVISORY FOR FINANCIAL SECTOR ORGANIZATIONS REGARDING SOFTWARE AS A SERVICE (Saas) BASED SOLUTION TLP:AMBER CERT-Fin Advisory- 201155100308 Advisory for Financial Sector Organisations - RBI and SEBI Overview It has been learnt that some of the financial sector institutions are availing or thinking of availing Software as a Service (SaaS) based solution for managing their Governance, Risk....
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....mation to protect themselves or prevent further harm. Sources are at liberty to specify additional intended limits of the sharing: these must be adhered to.) ANNEXURE D DECLARATION CUM UNDERTAKING FOR SEEKING PRIOR APPROVAL FOR CHANGE IN CONTROL We M/s. (Name of the intermediary/the acquirer/person who shall have the control), hereby declare and undertake the following with respect to the application for prior approval for change in control of (name of the intermediary along with the SEBI registration no.): 1. The applicant/intermediary (Name) and its principal officer, the directors or managing partners, the compliance officer and the key management persons and the promoters or persons holding controlling interest or persons exercising control over the applicant, directly or indirectly (in case of an unlisted applicant or intermediary, any person holding twenty percent or more voting rights, irrespective of whether they hold controlling interest or exercise control, shall be required to fulfill the 'fit and proper person' criteria) are fit and proper person in terms of Schedule II of SEBI (Intermediaries) Regulations, 2008. 2. We bear integrity, honesty, eth....
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....mped and signed by the Authorised Signatories) ANNEXURE E PRINCIPLES FOR OUTSOURCING FOR INTERMEDIARIES 1. An intermediary seeking to outsource activities shall have in place a comprehensive policy to guide the assessment of whether and how those activities can be appropriately outsourced. The Board / partners (as the case may be) {hereinafter referred to as the "the Board"} of the intermediary shall have the responsibility for the outsourcing policy and related overall responsibility for activities undertaken under that policy. 1.1. The policy shall cover activities or the nature of activities that can be outsourced, the authorities who can approve outsourcing of such activities, and the selection of third party to whom it can be outsourced. For example, an activity shall not be outsourced if it would impair the supervisory authority's right to assess, or its ability to supervise the business of the intermediary. The policy shall be based on an evaluation of risk concentrations, limits on the acceptable overall level of outsourced activities, risks arising from outsourcing multiple activities to the same entity, etc. 1.2. The Board shall mandate a re....
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....t of the corporate governance review by the management of the intermediary. 2.4. Regular reviews by internal or external auditors of the outsourcing policies, risk management system and requirements of the regulator shall be mandated by the Board wherever felt necessary. The intermediary shall review the financial and operational capabilities of the third party in order to assess its ability to continue to meet its outsourcing obligations. 3. The intermediary shall ensure that outsourcing arrangements neither diminish its ability to fulfill its obligations to customers and regulators, nor impede effective supervision by the regulators. 3.1. The intermediary shall be fully liable and accountable for the activities that are being outsourced to the same extent as if the service were provided in- house. 3.2. Outsourcing arrangements shall not affect the rights of an investor or client against the intermediary in any manner. The intermediary shall be liable to the investors for the loss incurred by them due to the failure of the third party and also be responsible for redressal of the grievances received from investors arising out of activities rendered by ....
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....contract: 5.2.1. clearly defines what activities are going to be outsourced, including appropriate service and performance levels; 5.2.2. provides for mutual rights, obligations and responsibilities of the intermediary and the third party, including indemnity by the parties; 5.2.3. provides for the liability of the third party to the intermediary for unsatisfactory performance/other breach of the contract 5.2.4. provides for the continuous monitoring and assessment by the intermediary of the third party so that any necessary corrective measures can be taken up immediately, i.e., the contract shall enable the intermediary to retain an appropriate level of control over the outsourcing and the right to intervene with appropriate measures to meet legal and regulatory obligations; 5.2.5. includes, where necessary, conditions of sub-contracting by the third-party, i.e. the contract shall enable intermediary to maintain a similar control over the risks when a third party outsources to further third parties as in the original direct outsourcing; 5.2.6. has unambiguous confidentiality clauses to ensure protection of proprietary and custo....
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.... fulfill its obligations to other market participants/clients/regulators and could undermine the privacy interests of its customers, harm the intermediary's reputation, and may ultimately impact on its overall operational risk profile. Intermediaries shall, therefore, seek to ensure that third party maintains appropriate IT security and robust disaster recovery capabilities. 6.4. Periodic tests of the critical security procedures and systems and review of the backup facilities shall be undertaken by the intermediary to confirm the adequacy of the third party's systems. 7. The intermediary shall take appropriate steps to require that third parties protect confidential information of both the intermediary and its customers from intentional or inadvertent disclosure to unauthorised persons. 7.1. An intermediary that engages in outsourcing is expected to take appropriate steps to protect its proprietary and confidential customer information and ensure that it is not misused or misappropriated. 7.2. The intermediary shall prevail upon the third party to ensure that the employees of the third party have limited access to the data handled and only on ....