Section 36D: Registration of self­regulatory organizations

36D. Registration of self­regulatory organizations.—(1) The application for registration as a self­regulatory organization shall be made in such form and manner and subject to such fee as may be specified. (2) Upon receipt of application under sub­section (1), the Commission may grant certificate of registration after making such inquiries and after obtaining such information as it considers necessary, including but not limited to the following, namely:— (a) applicant fulfills the eligibility criteria; (b) applicant has the ability to efficiently handle its functions as self­regulatory organization and its obligations under this Act and regulations made by the Commission; (c) the regulations of the applicant contain satisfactory provisions for the matters specified in this section; (d) it shall be in the interest of financial services market and the public to grant registration to the applicant; and (e) any other condition as may be specified. (3) The certificate of registration as self­regulatory organization shall be valid for a period of five years and may be renewed by the Commission subject to fulfillment of such conditions as may be specified. (4) Self­regulatory organization shall be responsible to perform the functions which may include any or all of the following, namely:— (a) effective training and education of the members of self­regulatory organization and investors in general; (b) conducting examinations and providing certifications to its members and investors in general; (c) providing research and development assistance to its members and investors in general; (d) conducting the grading of its members with respect to their compliance with the applicable law and other norms as may be specified; (e) providing information to the investors regarding general and specific risks of financial services market, information pertaining to its members and other information useful for taking informed investment decisions and protecting the interest of investors; and (f) any other functions as may be specified. (5) It shall be responsibility of the self­regulatory organization to — (a) specify code of conduct for its members and take measures for ensuring compliance thereof; (b) implement mechanism for monitoring and supervising activities of its members and ensuring compliance with applicable laws; (c) implement mechanism for inspection of its members on regular basis; (d) take disciplinary action against its members in cases of violation of code of conduct and other applicable law; (e) treat all its members in an equitable manner and must ensure that no member gains unfair advantage to other member as a result of oversight activities of self­regulatory organization; (f) promptly inform the Commission regarding any non­compliance of laws by its members; (g) act in good faith and take measures to avoid conflict of interest in conduct of its duties and functions; (h) submit annual report to the Commission which shall contain such information as may be specified; (i) comply with all the requirements of this Act, regulations made thereunder and directions given by the Commission from time to time; (j) comply with the code of corporate governance specified by the Commission; (k) submit periodical returns to the Commission in the manner and frequency specified; (I) provide such assistance to the Commission as and when required, including the furnishing of such returns and the provision of such information relating to its operations or required under this Act or any administered legislation and applicable rules and regulations, directions, notifications, etc.; (m) extend full cooperation to the Commission in relation to any inspection or investigation against its members and in ensuring compliance with the law by its members; and (n) perform such other duties and responsibilities as may be specified.

Effective date: 1997-01-01

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