Definition of Associates in Relation to a Stock Broker

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Sep 17, 2001 |

Circulars

SECURITIES AND EXCHANGE BOARD OF INDIA

SECONDARY MARKET DEPARTMENT

Mittal Court, A Wing, Gr. Floor,

224, Nariman Point, Mumbai 400 021

SMDRP/POLICY /CIR-45/2001 September 17, 2001

To:

The Executive Directors / Managing Directors,

All Stock Exchanges

Dear Sir,

Sub :Associates in relation to a stock broker

SEBI vide its circular no. SMD/POLICY/CIR-24/97 dated September 26, 1997 had, inter alia, stated that if associates of defaulter-broker are holding membership in other stock exchanges, then action, if any, required to be taken against such associate members, should be decided by the respective stock exchanges after examining the relevant facts.

The associates in this regard may be defined as follows:

'Associate' in relation to a stock broker, individual, body corporate or firm, shall include a person:

(i) who, directly or indirectly, by himself, or in combination with other persons, exercises control over the stock broker,whether individual, body corporate or firm or holds substantial share of not less than 15% in the capital of such entities, or

(ii) in respect of whom the stock broker, individual or body corporate or firm, directly or indirectly, by itself or in combination with other persons, exercises control or

(iii) whose director or partner is also a director or partner of the stock broker, body corporate or the firm, as the case may be.

The expression 'control' shall have the same meaning as defined under clause (c) of Regulation 2 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

Yours faithfully

P K Bindlish

General Manager

Secondary Market Depository,

Research & Publications Department

e-mail : pkb@sebi.gov.in