SEBI (Intermediaries) (Amendment) Regulations 2021: A Complete Guide

The SEBI (Securities Board of India) on 21.01.2021 has issued the SEBI (Intermediaries) (Amendment) Regulations 2021, which seek to amend the provisions of the SEBI (Intermediaries) Regulations 2008. Further, these regulations will come into force from the date of publication in the Official Gazette.

In this blog, we will discuss the changes bought by way of SEBI (Intermediaries) (Amendment) Regulations 2021.

Key Provisions of the SEBI (Intermediaries) (Amendment) Regulations 2021

The key provisions of the SEBI (Intermediaries) (Amendment) Regulations 2021 are as follows:

Substitution of Regulation 25 with Holding of Enquiry

The newly amended provisions of Regulation 25 deals with the procedure for holding an enquiry. Further, based on the said provisions, the designated authority will send the show cause notice to the person against whom the action will be initiated.

After that, the noticee will need to file a written reply for the same within 21 days, starting from the date of service. However, the said period will only be extended in the case of sufficient cause.

Further, it shall be noted that every notice sent must specify the contravention made by the noticee. Also, all the documents, necessary copies on which the designated authority has relied during the process of investigation, inquiry must be annexed with the notice as well.

Moreover, if in case the noticee wants to examine the documents relied upon, the designated authority may grant him/ her the permission of the same. However, such an inspection must be allowed within 30 days from the date of request.

The designated authority, if of the opinion, may grant the chance of personal hearing, but the same is not allowed if the noticee has failed to pay the fees applicable or has been declared Fugitive Offender or Wilful Defaulter.

Lastly, if in case the noticee does not reply to the notice issued, then the designated authority may pass ex-parte order based on the material present on record.

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Substitution of Regulation 26 with Recommendation of Action

Based on the new provisions of Regulation 26, the designated authority, after considering the material record available, may pass either of the measures listed through a report:

• Dispose of the proceedings with taking any adverse action;
• Cancellation of the registration certificate;
• Suspension of the registration certificate for a certain period;
• Prohibition to the noticee from taking any new project or assignment;
• Debarment of an officer of the noticee from being appointed or employed with any registered intermediary;
• Issuance of regulatory censure to the said noticee;

Substitution of Regulation 27 with Order

Based on the new provisions of Regulation 27, the designated member, after receiving the report containing measures suggested by the designated authorities, will forward a copy of the same to the noticee and will record his/ her submission in writing as to why such measures shall not take place.

Further, it will be the duty of the noticee to file his/ her reply within a period of twenty one days, together with the documentary proof for his/ her submission.

After that, if the designated member is of the opinion that the submission made by the noticee is justified, then, in that case, it may resubmit the report back to the designated authority.

Conclusion

In a nutshell, SEBI, by way of the powers conferred under the provisions of section 30 of the SEBI Act 1992, has notified the SEBI (Intermediaries) (Amendment) Regulations 2021 on 21.01.2021. These amended rules will substitute the existing provisions of Rule 25 – 27 of the SEBI (Intermediaries) Regulations 2008.

Official Notification passed by SEBI

Official-Notification-passed-by-SEBI

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