1. This is in continuation to the Exchange notice nos. 20160106-6 dated January 6, 2016, 20160303-20 dated March 3, 2016, 20160310- 13 dated March 10, 2016, 20160316-16 dated March 16, 2016 on the captioned matter prescribing the procedures for ensuring compliance with Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 (SECC Regulations) by Listed Stock Exchanges.
2. SEBI vide its notification dated October 3, 2018, had issued Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, (“The SECC Regulations”) enforcing it with effect from October 3, 2018.
3. Sub-Clause (b) of Sub-Clause 1 of Clause 2 of the aforesaid regulations defines the word “Associate”. According to the said clause “Associate”, would, amongst others, includes any person who holds control of atleast twenty percent of the total voting power of the first person.
4. As per the erstwhile SECC Regulations, 2012, the aforesaid threshold limit triggering the definition of “Associate” was, amongst others, holding control of atleast fifteen percent of the total voting power of the first person. The word “control” has been defined in sub-clause (e) of Clause 2 of SEBI Takeover Regulations, 2011.
5. In view of the above, the term “associate” revised under Regulation 2(1) (b) of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, is as under:
“2 (1) (b) "associate" in relation to a person shall include another person : -
(i) who, directly or indirectly, by himself, or in combination with other persons, exercises control over the first person;
(ii) who holds control of atleast twenty percent of the total voting power of the first person;
(iii) who is a holding company or a subsidiary company of the first person
(iv) who is a relative of the first person;
(v) who is a member of a Hindu Undivided Family wherein the first person is also a member;
(vi) such other cases where the Board is of the view that a person shall be considered as an associate based on the facts and factors including the extent of control, independence, conflict of interest;
6. In order to comply with the requirement specified in point no. (5) above, the “Capturing Member Details” page on BEFS has been suitably modified for trading members to furnish the details of their associates as per the revised term “associate” under Regulation 2(1) (b) of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018. i.e. Shareholding 20% and above – Corporate and Shareholding 20% and above – Others
7. The trading members may refer to the below table while entering the details in “Associate/Group Company” in “Capturing Member Details” page on BEFS.
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Type of Entity
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Category of “Associate”
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Criteria of selection
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Subsidiary
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Corporate
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All Subsidiaries including Step down Subsidiaries
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Group Company
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Corporate
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Group companies of trading member
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Holding Company – Corporate
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Corporate
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Holding company including all step up holding companies
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Relative
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Individual
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Who is a relative of the Trading member
“Relative” is defined as
1) Husband
2) Wife
3) Father, including step-father
4) Mother, including step-mother
5) Son, including step-son
6) Daughter
7) Son’s wife
8) Daughter’s husband
9) Brother, including step-brother
10) Sister, including step-sister
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HUF Member
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Individual
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Member of a Hindu Undivided Family wherein the Trading member is also a member
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Control – Others
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Other than Corporate
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i) Control of TM over any other non-corporate entity
ii) Control of any non-corporate entity over TM
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Shareholding 20% and above – Corporate
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Corporate
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i) All Shareholders holding 20% and above in Trading Member
ii) Trading Member holding more than 20% and above in any other Corporate
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Shareholding 20% and above – Others
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Others
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Trading Member holding more than 20% and above in any non-corporate entity
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In this regard, the members are requested to refer detailed procedure given in Annexure – I alongwith the screen shots of the each page for updating the above details on BEFS.
Trading Members are required to provide the aforesaid information in the BEFS latest by February 28, 2019 and continuously update the same thereafter.
In respect of the data already updated under the heading “Associate/Group Company Details”, Trading members are requested to tag the said details under appropriate category of Associate as applicable. Further, trading members who have categorized any entity under Shareholding-Corporate (holding more than 15%) are required to review the same and appropriately reclassify them under Shareholding 20% and above, in case it is so.
The aforesaid BEFS page will be made available to the members w.e.f. 21st February, 2019.
In case of any clarification, the members may contact Ms. Bina Khaneria (22728348)
Gopalkrishnan Iyer Hemant Dharap
Chief General Manager Dy. General Manager
Brokers Supervision, Membership Compliance
Membership Compliance & Investor Services & Investor Services
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