Description
NSE introduces revised documentation formats and procedures for members seeking approval for changes in designated directors, including resignation, appointment, and re-designation.
Summary
NSE has issued revised formats for submission of applications related to changes in designated directors of member entities. The circular provides detailed documentation requirements and procedures for members seeking exchange approval for resignation, appointment, or re-designation of designated directors. This update standardizes the submission process and clarifies compliance requirements for corporate members.
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 minimum HSC or equivalent
- Seven main document categories (CDD-1 through CDD-7) must be submitted for prior approval
- Board resolutions required for resignation, appointment, and re-designation scenarios
- Self-certified or authorized signatory-certified documents acceptable
- Valid address proof required (Aadhaar with consent, Passport, Voter ID, utility bills, or bank statements)
- Experience must be with specific capital market entities (stock brokers, AMCs, merchant bankers, mutual funds, banks for currency derivatives, etc.)
- Standard undertaking required from incoming designated directors
Regulatory Changes
The circular revises and consolidates the application formats for changes in designated directors. Key regulatory aspects include:
- Standardized two-stage approval process (Stage 1: Prior approval submission)
- Specific board resolution formats for different scenarios (resignation as director, resignation as designated director, appointment, re-designation between designated/non-designated status)
- Aadhaar consent format requirement as per Annexure 4a(i)
- Enhanced documentation standards with certification requirements
- Experience criteria aligned with SCRA Rule 8 and sub-rule 4A
Compliance Requirements
For Member Entities:
- Submit application (CDD-1) for change in designated director(s)
- Provide appropriate board resolutions based on change type (CDD-2)
- Submit certified PAN card copy of incoming designated director (CDD-3)
- Provide valid address proof with Aadhaar consent if applicable (CDD-4)
- Submit proof of minimum two years capital market experience (CDD-5)
- Provide educational qualification proof (minimum HSC) certified by CA/CS (CDD-6)
- Submit standard undertaking (CDD-7)
- Ensure name consistency across documents or provide proof of name change
- Experience certificates must be on letterhead of issuing entity
For Incoming Designated Directors:
- Must be 21 years or older
- Minimum HSC or equivalent qualification
- Two years capital market experience with qualifying entities
- Provide KYC documentation including PAN, address proof, educational certificates
- Execute standard undertaking
Important Dates
- Effective Date: Not specified in the provided content
- Address proof documents must not be older than two months (utility bills, bank statements)
Impact Assessment
Operational Impact:
- Member entities must ensure compliance with revised documentation formats when making changes to designated directors
- Enhanced documentation requirements may increase processing time for approvals
- Clearer guidelines reduce ambiguity and potential rejection of applications
Compliance Impact:
- Strengthens KYC and due diligence framework for designated directors
- Ensures designated directors meet minimum qualification and experience standards
- Aadhaar consent requirement aligns with data protection regulations
Market Impact:
- No direct impact on trading or market operations
- Improves governance standards for member entities
- Ensures qualified personnel in key compliance roles at member firms
Impact Justification
Procedural update affecting member entities making changes to designated directors. Important for compliance but does not directly impact trading or market operations.