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Sebi clears single-window clearance for prior approvals
August, 04th 2011

Market regulator the Securities and Exchange Board of India (Sebi) today approved a single-window clearance system for market entities, including stock brokers, merchant bankers and credit ratings agencies, for grant of prior approval for change in control of their management structures.

"With a view to expedite the process of granting prior approval [in case of change of control], it has been decided to adopt a single window clearance at Sebi, for the... intermediaries in case of their having multiple registrations with Sebi," the regulator said in a notification.
Market intermediaries such as stock brokers, merchant bankers, debenture trustees, registrar to an issue and share transfer agents, underwriters, depository participants, bankers, and credit rating agencies, that have more than one registrations with the Sebi, have to submit multiple applications for prior approval to change in control.

The notification said that in case an applicant holds multiple registrations with the regulator, it shall make only one application to Sebi providing certain information about itself and the acquirer and its directors or partners.

The information sought is whether any application was made in the past to Sebi seeking registration in any capacity which was not granted and its details, and what kind of action was initiated on the application and its current status.

"The acquirer shall also confirm that it shall honour all past liabilities/obligations of the applicant, if any," Sebi said.

The applicant has also to furnish details on any investor complaint pending against it, details of litigation, payment of due fees to Sebi, and a guarantee that there will be no change in the Board of Directors of the firm, till the time prior approval is granted.

It also have to pledge to inform all its existing investors and clients in order to enable them to take informed decision regarding their continuance or otherwise with the entity with new management.

In case, the applicant is registered stock broker and or depository participant, it shall also have to obtain approval or non-objection certificate from all the stock exchanges of which it is a member and submit a self attested copy of the same to Sebi.

Any prior approval granted under the single-window system shall be valid for a period of 180 days from the date of communication.

In June this year, Sebi had waived the requirement for bankers, debenture trustees and credit rating agencies to seek prior approval from it to change their status and constitution, in a move aimed at doing away with unnecessary rules and red-tapism.

However, market entities still need to seek Sebi's prior approval in case of change in control.

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