Description

BSE introduces revised documentation formats and requirements for members seeking approval for changes in designated directors, including resignation, appointment, and re-designation procedures.

Summary

BSE has issued revised formats for submission of applications related to changes in designated directors for trading members and corporate entities. The circular provides comprehensive documentation requirements, eligibility criteria, and procedural guidelines for resignation, appointment, and re-designation of designated directors. The process involves prior approval from the Exchange/Clearing Corporation with specific documentation requirements.

Key Points

  • Designated directors must be at least 21 years of age
  • Minimum two years of capital market experience required as per Securities Contracts (Regulation) Rules, 1957
  • Educational qualification must be at least HSC or equivalent
  • Seven main document categories required: Application form, Board resolutions, PAN card, Address proof, Experience proof, Educational qualification, and Standard undertaking
  • Multiple board resolution formats provided for different scenarios (resignation, appointment, re-designation)
  • Address proof options include Aadhaar card with consent, Passport, Voter ID, utility bills, or bank statements (not older than two months)
  • Experience must be with specified entities including stock brokers, sub-brokers, AMCs, merchant bankers, mutual funds, or IOSCO affiliated foreign entities
  • Educational certificates must be certified by CA/CS; name change proof required if certificates are in different name

Regulatory Changes

The circular introduces standardized and revised formats for designated director change applications, replacing previous formats. Key changes include:

  • Structured document reference numbering system (CDD-1 through CDD-7)
  • Specific Aadhaar consent format requirements (Annexure 4a(i))
  • Enhanced address proof documentation with recency requirements (not older than two months)
  • Clarified experience requirements with specific entity categories
  • Banks and their wholly owned subsidiaries granted specific provisions for currency derivatives segment membership
  • Mandatory certification requirements by CA/CS for educational qualifications

Compliance Requirements

Stage 1 - Prior Approval Documentation:

  1. Application (CDD-1): Complete application form for change in designated director(s)
  2. Board Resolutions (CDD-2): Applicable resolution from five formats:
    • Resignation as Director
    • Resignation as Designated Director
    • Appointment as Designated Director
    • Re-designation from Non-Designated to Designated Director
    • Re-designation from Designated to Non-Designated Director
  3. Identity Proof (CDD-3): Self-certified or officer-certified PAN card copy
  4. Address Proof (CDD-4): Any valid document from approved list with appropriate recency
  5. Experience Proof (CDD-5): Certificate on letterhead showing minimum two years capital market experience
  6. Educational Qualification (CDD-6): CA/CS certified minimum HSC certificate with name change proof if applicable
  7. Standard Undertaking (CDD-7): Completed undertaking with detailed disclosure if any point answered affirmatively

Eligibility Criteria for Incoming Designated Directors:

  • Age: Minimum 21 years
  • Experience: Minimum 2 years in capital market with specified entities
  • Education: Minimum HSC or equivalent
  • Must work in specified capacities: director, portfolio manager, investment consultant, or employee

Important Dates

  • Circular Date: October 15, 2025
  • Effective Date: Not explicitly specified; applicable for all future applications
  • Address Proof Validity: Documents must not be older than two months from submission date
  • Bank Statement Validity: Entries must not be older than two months

Impact Assessment

Operational Impact: Medium impact on trading members and corporate entities planning changes in designated directors. Organizations must ensure compliance with revised documentation formats and enhanced verification requirements.

Market Impact: Minimal direct market impact as this is an administrative compliance matter affecting member governance structure rather than trading operations.

Affected Entities:

  • Stock brokers and trading members
  • Clearing members
  • Corporate entities registered with BSE
  • Designated directors (incoming and outgoing)

Benefits:

  • Standardized documentation process reduces ambiguity
  • Clear eligibility criteria ensures qualified personnel in designated director roles
  • Enhanced verification requirements improve governance standards
  • Streamlined approval process with defined document checklist

Challenges:

  • Members must update internal processes to align with new formats
  • Additional certification requirements (CA/CS for educational documents)
  • Stricter recency requirements for address proofs may require fresh documentation
  • Comprehensive experience documentation needed from previous employers

Impact Justification

Affects all trading members and corporate entities seeking changes in designated directors. Streamlines compliance process through standardized formats but does not impact trading operations or market participants directly.