| Research_Analysts_Sep01_2020 |
| 3 (1) On and from the commencement of these regulations , no person shall act as a research analyst or research entity or hold itself out as a research analyst unless he has obtained a certificate of registration from the Board under these regulations : Provided that any person acting as research analyst or research entity before the commencement of these regulations may continue to do so for a period of six months from such commencement or, if it has made an application for a certificate of registration under sub-regulation (2) within the said period of six months, till the disposal of such application: Provided further that an investment adviser, credit rating agency , asset management company or fund manager, who issues research report or circulates/distributes research report to public or its director or employee who makes public appearance, shall not be required to seek registration under regulation 3, subject to compliance of Chapter III of these regulations . |
| 3 (2) An application for grant of certificate of registration shall be made in Form A as specified in the First Schedule to these regulations and shall be accompanied by a non-refundable application fee to be paid in the manner specified in Second Schedule. |
| 4 Any person located outside India engaged in issuance of research report or research analysis in respect of securities listed or proposed to be listed on a stock exchange shall enter into an agreement with a research analyst or research entity registered under these regulations. |
| 5 (1) The Board may require the applicant to furnish further information or clarification for the purpose of consideration of the application filed under sub-regulation (2) of regulation 3. |
| 5 (2) The applicant or his authorised representative , if so required, shall appear before the Board for personal representation. |
| 6 For the purpose of the grant of certificate the Board shall take into account all matters which are relevant to the grant of certificate of registration and in particular the following, namely:-(i) whether the applicant is an individual or a body corporate or limited liabilitypartnership firm;(ii) whether in case the applicant is an individual, he is appropriately qualified and certifiedas specified in regulation 7;(iii) whether in case the applicant is a body corporate , the individuals employed as researchanalyst are qualified and certified as specified in regulation 7;(iv) whether in case the applicant is a partnership firm or a limited liability partnership,partners engaged in issuance of research report or research analysis are qualified andcertified as specified in regulation 7;(v) whether in case the applicant is a research entity, the individuals employed as researchanalyst are qualified and certified as specified in regulation 7;(vi) whether the applicant fulfills the capital adequacy requirements as specified inregulation 8;(vii) whether the applicant , individuals employed as research analyst and partners of the applicant , if any, are fit and proper persons based on the criteria as specified inSchedule II of the Securities and Exchange Board of India (Intermediaries)Regulations, 2008;(viii) whether the applicant has the necessary infrastructure to effectively discharge theactivities of research analyst;(ix) whether the applicant or any person directly or indirectly connected with the applicant has in the past been refused certificate by the Board and if so, the grounds for suchrefusal;(x) whether any disciplinary action has been taken by the Board or any other regulatoryauthority against the applicant or any person directly or indirectly connected to the applicant under the respective Act, rules or regulations made thereunder. |
| 7 (1) An individual registered as research analyst under these regulations, individuals employed as research analyst and partners of a research analyst, if any, engaged in preparation and/or publication of research report or research analysis shall have the following minimum qualifications, at all times:(i) A professional qualification or post-graduate degree or post graduate diploma in finance,accountancy, business management, commerce, economics, capital market, financialservices or markets provided by:(a) a university which is recognized by University Grants Commission or by any othercommission/council/ board/body established under an Act of Parliament in India forthe purpose; or(b) an institute/association affiliated with such university; or(c) an institute/ association/university established by the central government or stategovernment; or(d) autonomous institute falling under administrative control of Government of India;or(ii) professional qualification or post-graduate degree or post graduate diploma which isaccredited by All Indian Council for Technical Education, National Assessment andAccreditation Council or National Board of Accreditation or any othercouncil/ board/body set up under an Act of Parliament in India for the purpose; or(iii) a graduate in any discipline with an experience of at least five years in activities relatingto financial products or markets or securities or fund or asset or portfolio management. |
| 7 (2) An individual registered as research analyst under these regulations , individuals employed as research analyst and partners of a research analyst, if any, shall have, at all times, a NISM certification for research analyst s as specified by the Board or other certification recognized by the Board from time to time: Provided that research analyst or research entity already engaged in issuance of research report or research analysis seeking registration under these regulations shall ensure that it or the individuals employed by it as research analyst and/or its partners obtain such certification within two years from the date of commencement of these regulations : |
| 8 (1) A research analyst who is individual or partnership firm shall have net tangible assets of value not less than one lakh rupees. |
| 8 (2) A research analyst who is body corporate or limited liability partnership firm shall have a networth of not less than twenty five lakh rupees. |
| 8 (3) All existing research analysts shall comply with the capital adequacy requirement within one year from the date of commencement of these regulations. up share capital plus free reserves (excluding reserves created out of revaluation) reduced by the aggregate value of accumulated losses. |
| 9 The Board on being satisfied that the applicant complies with the requirements specified in regulation 6, shall send intimation to the applicant and on receipt of the payment of registration fees as specified in Second Schedule, grant certificate of registration in Form B under First Schedule, subject to such terms and conditions as the Board may deem fit and appropriate. |
| 10 The certificate of registration granted under regulation 9 shall be valid 1[till it is suspended or cancelled by the Board]. |
| 11 11. The research analyst who has already been granted certificate of registration by the Board, prior to the commencement of the Securities and Exchange Board of India (Research Analysts) (Amendment) Regulations, 2016 shall be deemed to have been granted a certificate of registration, subject to payment of fee, as prescribed in Schedule II of these regulations .] |
| 12 (1) After considering an application made under regulation 3, if the Board is of the opinion that a certificate should not be granted to the applicant , it may reject the application after giving the applicant a reasonable opportunity of being heard. |
| 12 (2) The decision of the Board to reject the application shall be communicated to the applicant within thirty days of such decision. |
| 12 (3) Where an application for a certificate is rejected by the Board , the applicant shall forthwith cease to act as a research analyst : Provided that nothing contained in this regulation shall affect the liability of the applicant under the law. |
| 13 The certificate granted under regulation 9 shall, inter alia, be subject to the following conditions:-(i) the research analyst shall abide by the provisions of the Act and these regulations;Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016w.e.f. 08-12-2016.2 Substituted vide the Securities and Exchange Board of India (Change In Conditions Of Registration Of CertainIntermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016. Prior to substitution regulation 11 read as under:“11 . (1) Three months before the expiry of the period of validity of the certificate, the research analyst may, if he sodesires, make an application in Form A for grant of renewal of certificate of registration.(2)The application for renewal under sub-regulation (1) shall be dealt with in the same manner as if it were anapplication made under sub-regulation (2) of regulation 3 for grant of certificate.”(ii) the research analyst shall forthwith inform the Board in writing, if any information orparticulars previously submitted to the Board are found to be false or misleading in anymaterial particular or if there is any material change in the information already submitted; |
| 14 (1) The Board may recognize any body or body corporate for the purpose of regulating researchanalysts. |
| 14 (2) The Board may, at the time of recognition of such body or body corporate, delegate administration, supervision and regulation of research analysts to such body or body corporate on such terms and conditions as may be specified by the Board. |
| 14 (3) The Board may specify that no person shall act as research analyst unless he is a member of a |
| 15 (1) Research analyst or research entity shall have written internal policies and control procedures governing the dealing and trading by any research analyst for:(i) addressing actual or potential conflict of interest arising from such dealings or trading ofsecurities of subject company;(ii) promoting objective and reliable research that reflects the unbiased view of researchanalyst; and(iii) preventing the use of research report or research analysis to manipulate the securitiesmarket. |
| 16 (1) Personal trading activities of the individuals employed as research analyst by research entity shall be monitored, recorded and whereever necessary, shall be subject to a formal approvalprocess. |
| 16 (2) Independent research analysts, individuals employed as research analyst by research entity or their associates shall not deal or trade in securities that the research analyst recommends or follows within thirty days before and five days after the publication of a research report. |
| 16 (3) Independent research analysts, individuals employed as research analysts by research entity or their associates shall not deal or trade directly or indirectly in securities that he reviews in a manner contrary to his given recommendation. |
| 16 (4) Independent research analysts, individuals employed as research analysts by research entity or their associate shall not purchase or receive securities of the issuer before the issuer's initial public offering, if the issuer is principally engaged in the same types of business as companies that the research analyst follows or recommends. |
| 16 (5) Provisions of sub-regulations (2) to (4) shall apply mutatis mutandis to a research entity unless it has segregated its research activities from all other activities and maintained an arms-length relationship between such activities. |
| 16 (6) Notwithstanding anything contained in sub-regulations (2) to (4), such restrictions to trade or deal in securities may not apply in case of significant news or event concerning the subject company or based upon an unanticipated significant change in the personal financial circumstances of the research analyst, subject to prior written approval as per the terms specified in the approved |
| 17 (1) Research entity shall not pay any bonus, salary or other form of compensation to any individual employed as research analyst that is determined or based on any specific merchant banking or investment banking or brokerage services transaction. |
| 17 (2) The compensation of all individuals employed as research analyst shall be reviewed, documented and approved annually by board of directors/committee appointed by board of directors of the research entity , which does not consist of representation from its merchant banking or investment banking or brokerage services divisions. |
| 17 (3) The board of directors/committee appointed by board of directors of the research entity approving or reviewing the compensation of individual employed as research analyst shall not take into account such individual’s contribution to the research entity's investment banking or merchant banking or brokerage services business. |
| 17 (4) An individual employed as research analyst by research entity shall not be subject to the supervision or control of any employee of the merchant banking or investment banking or brokerage services divisions of that research entity. Limitations on publication of research report, public appearance and conduct of business, |
| 18 (1) Research analyst or research entity shall not publish or distribute research report or research analysis or make public appearance regarding a subject company for which he has acted as a manager or co-manager at any time falling within a period of:(a) Forty days immediately following the day on which the securities are priced if theoffering is an initial public offering; or(b) Ten days immediately following the day on which the securities are priced if the offeringis a further public offering:Provided that research analyst or research entity may publish or distribute research report orresearch analysis or make public appearance within such forty day and ten day periods, subject toprior written approval of legal or compliance personnel as specified in the internal policies andprocedures. |
| 18 (2) A research entity who has agreed to participate or is participating as an underwriter of an issuer's initial public offering shall not publish or distribute a research report or make public appearance regarding that issuer before expiry of twenty five days from the date of the offering. first date on which the security was offered to the public. |
| 18 (3) Research analyst or research entity who has acted as a manager or co-manager of public offering of securities of a company shall not publish or distribute a research report or make a public appearance concerning that company within fifteen days prior to date of entering into and fifteen days after the expiration/waiver/termination of a lock-up agreement or any other agreement that the research analyst or research entity has entered into with a subject company that restricts or prohibits the sale of securities held by the subject company after the completion of public offering of securities : Provided that research analyst or research entity may publish or distribute research report or research analysis or make public appearance regarding that company within such fifteen days subject to prior written approval of legal or compliance personnel as specified in the internal policies and procedures. |
| 18 (4) Research analyst or individuals employed as research analyst by research entity shall not participate in business activities designed to solicit investment banking or merchant banking or brokerage services business, such as sales pitches and deal road shows. |
| 18 (5) Research analyst or individuals employed as research analyst by research entity shall not engage in any communication with a current or prospective client in the presence of personnel from investment banking or merchant banking or brokerage services divisions or company management about an investment banking services transaction. |
| 18 (6) Investment banking or merchant banking or brokerage services division’s personnel of research entity shall not direct the individuals employed as research analyst to engage in sales or marketing related to an investment banking or merchant banking or brokerage services and shall not direct the research analyst to engage in any communication with a current or prospective client about such division’s transaction: Provided that sub-regulations (4) to (6) shall not prohibit research analyst or research entity from engaging in investor education activities including publication of pre-deal research and briefing the views of the research analyst on the transaction to the sales or marketing personnel. |
| 18 (7) Research analyst or research entity shall have adequate documentary basis, supported by research, for preparing a research report. |
| 18 (8) Research analyst or research entity shall not provide any promise or assurance of favourable review in its research report to a company or industry or sector or group of companies or business group as consideration to commence or influence a business relationship or for the receipt of compensation or other benifits. |
| 18 (9) Research analyst or research entity shall not issue a research report that is not consistent with the views of the individuals employed as research analyst regarding a subject company. |
| 18 (10) Research entity shall ensure that the individuals employed as research analyst are separate from other employees who are performing sales trading, dealing, corporate finance advisory or any other activity that may affect the independence of its research report: |
| 19 A research analyst or research entity shall disclose all material information about itself including its business activity, disciplinary history, the terms and conditions on which it offers research report, details of associates and such other information as is necessary to take an investment decision, including the following:(i) Research analyst or research entity shall disclose the following in research report and inpublic appearance with regard to ownership and material conflicts of interest:(a) whether the research analyst or research entity or his associate or his relative hasany financial interest in the subject company and the nature of such financialinterest;(b) whether the research analyst or research entity or its associates or relatives, haveactual/beneficial ownership of one per cent. or more securities of the subjectcompany, at the end of the month immediately preceding the date of publicationof the research report or date of the public appearance;(c) whether the research analyst or research entity or his associate or his relative, hasany other material conflict of interest at the time of publication of the researchreport or at the time of public appearance;(ii) Research analyst or research entity shall disclose the following in research report withregard to receipt of compensation:(a) whether it or its associates have received any compensation from the subjectcompany in the past twelve months;(b) whether it or its associates have managed or co-managed public offering ofsecurities for the subject company in the past twelve months;(c) whether it or its associates have received any compensation for investmentbanking or merchant banking or brokerage services from the subject company inthe past twelve months;(d) whether it or its associates have received any compensation for products orservices other than investment banking or merchant banking or brokerage servicesfrom the subject company in the past twelve months;(e) whether it or its associates have received any compensation or other benefits fromthe subject company or third party in connection with the research report.(iii)Research analyst or research entity shall disclose the following in public appearance withregard to receipt of compensation:(a) whether it or its associates have received any compensation from the subjectcompany in the past twelve months;(b) whether the subject company is or was a client during twelve months precedingthe date of distribution of the research report and the types of services provided:Provided that research analyst or research entity shall not be required to make adisclosure as per sub-clauses (c), (d) and (e) of clause (ii) or sub-clauses (a) and(b) of clause (iii) to the extent such disclosure would reveal material non-publicinformation regarding specific potential future investment banking or merchantbanking or brokerage services transactions of the subject company.(iv) whether the research analyst has served as an officer, director or employee of the subjectcompany;(v) whether the research analyst or research entity has been engaged in market makingactivity for the subject company; |
| 20 (1) Research analyst or research entity shall take steps to ensure that facts in its research reports are based on reliable information and shall define the terms used in making recommendations, and these terms shall be consistently used. |
| 20 (2) Research analyst or research entity that employs a rating system must clearly define the meaning of each such rating including the time horizon and benchmarks on which a rating isbased. |
| 20 (3) If a research report contains either a rating or price target for subject company’s securities and the research analyst or research entity has assigned a rating or price target to the securities for at least one year, such research report shall also provide the graph of daily closing price of such |
| 21 (1) Research analyst or research entity including its director or employee shall disclose the registration status and details of financial interest in the subject company, if he makes publicappearance. |
| 21 (2) If any person including a director or employee of an investment adviser or credit rating agency or asset management company or fund manager, makes public appearance or makes a recommendation or offers an opinion concerning securities or public offers through public media, all the provisions of regulations 16 and 17 shall apply mutatis mutandis to him and he shall disclose his name , registration status and details of financial interest in the subject company at the time of,-(i) making such recommendation or offering such opinion in personal capacity;(ii) responding to queries from audiences or journalists in personal capacity;(iii)communicating the research report or substance of the research report through the publicmedia. |
| 22 (1) A research report shall not be made available selectively to internal trading personnel or a particular client or class of clients in advance of other clients who are entitled to receive the research report. |
| 22 (2) Research analyst or research entity who distributes any third party research report shall review the third party research report for any untrue statement of material fact or any false or misleadinginformation. |
| 22 (3) Research analyst or research entity who distributes any third party research report shall disclose any material conflict of interest of such third party research provider or he shall provide a web address that directs a recipient to the relevant disclosures. |
| 22 (4) Provisions of sub-regulations (2) and (3) shall not apply to a research analyst or research entity if he has no direct or indirect business or contractual relationship with such third party researchprovider. |
| 23 (1) All the provisions of Chapter II, III, IV, V and VI shall apply mutatis mutandis to the proxy adviser: Provided that the employees of proxy advisors engaged in providing proxy advisory services shall be required to have a minimum qualification of being a graduate in any discipline: Provided further that certification requirements for employees of proxy advisors engaged in providing proxy advisory services shall be as specified by the Board : Provided further that time period for compliance with capital adequacy as provided in sub- regulation (3) of regulation 8, for proxy advisors shall be three years. |
| 23 (2) The proxy adviser shall additionally disclose the following:(i) the extent of research involved in a particular recommendation and the extent and/oreffectiveness of its controls and procedures in ensuring the accuracy of issuer data;(ii) policies and procedures for interacting with issuers, informing issuers about therecommendation and review of recommendations; |
| 23 (3) Proxy adviser shall maintain the record of his voting recommendations and furnish the same to the Board on request. |
| 23 (4) In case of any inconsistency or difficulty in respect of applicability of provisions of these regulations to proxy advisers, the Board may issue such clarifications or exemptions as may be |
| 24 (1) Research analyst or research entity shall maintain an arms-length relationship between its research activity and other activities. |
| 24 (2) Research analyst or research entity shall abide by Code of Conduct as specified in Third Schedule. |
| 24 (3) In case of change in control of the research analyst or research entity, prior approval from the Board shall be taken. |
| 24 (4) Research analyst or research entity shall furnish to the Board information and reports as may be specified by the Board from time to time. |
| 24 (5) It shall be the responsibility of the research analyst or research entity to ensure that its employees or partners, as may be applicable, comply with the certification and qualification requirements under regulation 7 at all times. |
| 25 (1) Research analyst or research entity shall maintain the following records:(i) research report duly signed and dated;(ii) research recommendation provided;(iii)rationale for arriving at research recommendation;(iv) record of public appearance. |
| 25 (2) All records shall be maintained either in physical or electronic form and preserved for a minimum period of five years: Provided that where records are required to be duly signed and are maintained in electronic form, such records shall be digitally signed. |
| 25 (3) Research analyst or research entity shall conduct annual audit in respect of compliance with these regulations from a member of Institute of Chartered Accountants of India or Institute of |
| 26 Research analyst or research entity which is a body corporate or limited liability partnership firm shall appoint a compliance officer who shall be responsible for monitoring the compliance of |
| 27 The Board may suo motu or upon receipt of information or complaint appoint one or more persons as inspecting authority to undertake inspection of the books of accounts, records and documents relating to research analyst or research entity for any of the following reasons, namely:-(i) to ensure that the books of account, records and documents are being maintained inthe manner specified in these regulations;(ii) to inspect into complaints received from any person, on any matter having a bearingon the activities of a research analyst ;(iii)to ascertain whether the provisions of the Act and these regulations are beingcomplied with by the research analyst or research entity ;(iv) to inspect into the affairs of research analyst or research entity in relation to researchactivities, in the interest of the securities market or in the interest of investors . |
| 28 (1) Before ordering an inspection under regulation 27, the Board shall give not less than seven days notice to research analyst or research entity. |
| 28 (2) Notwithstanding anything contained in sub-regulation (1), where the Board is satisfied that in the interest of the investors no such notice should be given , it may by an order in writing direct that the inspection of the affairs of the research analyst or research entity be taken up without suchnotice. |
| 29 (1) It shall be the duty of every research analyst or research entity in respect of whom an inspection has been ordered under the regulation 27 and any other associate person who is in possession of relevant information pertaining to conduct and affairs of such research analyst or research entity including their representative , if any, to produce to the inspecting authority such books, accounts and other documents in his custody or control and furnish him with such statements and information as the inspecting authority may require for the purposes of inspection. |
| 29 (2) It shall be the duty of research analyst or research entity and any other associate person who is in possession of relevant information pertaining to conduct and affairs of the research analyst to give to the inspecting authority all such assistance and shall extend all such co-operation as may be required in connection with the inspection and shall furnish such information as sought by the inspecting authority in connection with the inspection . |
| 29 (3) The inspecting authority shall, for the purposes of inspection , have power to examine on oath and record the statement of any employee, director, partner or person responsible for or connected with the activities of research analyst or research entity or any other associate person having relevant information pertaining to such research analyst or research entity. |
| 29 (4) The inspecting authority shall, for the purposes of inspection, have power to obtain authenticated copies of documents, books, accounts of research analyst or research entity, from any person having control or custody of such documents, books or accounts. |
| 30 The inspecting authority shall, as soon as possible, on completion of the inspection submit an inspection report to the Board : Provided that if directed to do so by the Board , the inspecting authority may submit an interimreport. |
| 31 The Board may after consideration of the inspection report and after giving reasonable opportunity of hearing to research analyst or research entity or its authorized representatives, without prejudice to any other action under the Act, issue such directions as it deems fit in the interest of securities market or the investors including requiring research analyst or research entity not to provide research recommendation for a particular period;(i) requiring the research analyst or research entity to refund any money collected as fees,charges or commissions or otherwise to the concerned clients along with the requisiteinterest. |
| 32 Research analyst or research entity who:(i)(ii)contravenes any of the provisions of the Act or any regulations or circulars issuedthereunder;fails to furnish any information relating to its activity as a research analyst as requiredby the Board;(iii) furnishes to the Board information which is false or misleading in any materialparticular;(iv) does not submit periodic returns or reports as required by the Board;(v) does not co-operate in any enquiry, inspection or investigation conducted by the Board;(vi) fails to resolve the complaints or fails to give a satisfactory reply to the Board in thisbehalf,shall be dealt with in the manner provided under the Act or the Securities and Exchange Board of |
| 32A (1) The Board may, exempt any person or class of persons from the operation of all or any of the provisions of these regulations for a period as may be specified but not exceeding twelve months, for furthering innovation in technological aspects relating to testing new products, processes, services, business models, etc. in live environment of regulatory sandbox in the securities markets . |
| 32A (2) Any exemption granted by the Board under sub-regulation (1) shall be subject to the applicant satisfying such conditions as may be specified by the Board including conditions to be complied with on a continuous basis. environment where new products, processes, services, business models, etc. may be deployed on a limited set of eligible customers for a specified period of time, for furthering innovation in the |
| 33 In order to remove any difficulties in the application or interpretation of these regulations , the Board may issue clarifications and guidelines in the form of circulars. |
| 34 The Board reserves the right to alter, modify and overrule any decision, action taken or |