Membership Compliance

 

*Kindly note that this is not the complete compendium ,only relevant extracts are   included.

 Primary  requirements 

1. Eligibility

For Individuals

No person shall be eligible to be qualified as a Trading Member, if such person is less than 21 years of age;

For Companies / Bodies corporate

A company / body corporate shall be eligible to be admitted / selected as a Trading Member  of the exchange,  if such a company / body corporate fulfils the following legal and financial requirements and other norms  for admission.

A company as defined in the Companies Act, 1956 (1 of 1956) shall be eligible to be admitted as a Trading Member  of the Exchange if- 

 Such company is formed in compliance with the provisions of Section 322 of the said Act.

         A majority  of the directors of such company are shareholders of the company and also trading members ; and

         The directors of the company , who are Trading Members of the Exchange , have unlimited liability in the company. 

 A company as defined in the companies Act, 1956 (1of 1956) shall also be eligible to be elected/ selected as a  Trading Member of a Stock Exchange, if

 such company is formed in compliance with the provisions of section 12 of the said act; and

        such company undertakes to comply with such financial requirements and norms as may be specified by the securities and Exchange  Board of India  for registration of such company  under the sub- section (1) of section 12 of the Securities and Exchange  Board of India Act. 1992 (15of 1992);

General Conditions 

No person shall be eligible to be qualified as a trading member if he :

  • Educational Qualification

            has not passed graduation / degree examination of a recognized university from any discipline or such higher qualification, as may be prescribed by the Governing Board  from time to time; provided wherever any trading member  with less qualification has already been admitted prior to these Rules  coming into force, such trading member  would be allowed to continue  without acquiring the prescribed qualification. However such continuing trading member  shall be required to undergo refresher course as prescribed under these Rules.

  • Past Experience

                            has not worked for a minimum period of two years as partner with or as  a sub broker / remisier or as an assistant in the dealing room or in the back office of a trading member, or as a dealer in securities, or as a port  folio manager, or as an investment consultant;  or has not succeeded to the established  business of a deceased or retiring trading member, who is his family member, where he has worked for a minimum period of two years, unless he agrees to work for a minimum period of two years or such period short of the period of two years specified above, as a partner or to work for a such period as a representative trading member  with another  trading member  and enter into transactions on the automated trading system  of the exchange  not in his  own name but in the name of such other trading member; 

  • Financial Soundness

          does not have a minimum net worth , does not possess a minimum working capital of cash and / or marketable securities and does not possess assets belonging to himself and / or his spouse or children of such nature and values as the Governing Board may from time to time determine and consider acceptable; 

  • Bankruptcy

           has been adjudged  bankrupt or a receiving order in bankruptcy  has been made against him or he has been proved to be insolvent even though he has obtained his financial discharge; 

  • Compounded with Creditors

            has compounded with his creditors unless he had paid 100 paise in a rupee;

  • Fraud

           has been convicted of an offence involving fraud or dishonesty;

  • Unsound Mind

            has been found to be of unsound mind , by a court of competent    jurisdiction;

  • Insolvent

             has applied to be  adjudicated as an insolvent and the application is pending or has been adjudged an insolvent. 

  • Moral Turpitude

                         has been convicted by a court of competent jurisdiction of any offence involving fraud or dishonesty or moral turpitude and sentenced in respect thereof to imprisonment for more than six months , and a period of five years has not elapsed from the date of expiry of the sentence; 

  • Other business

            is engaged as principal or employee in any business other than that of securities or stock broking except as a broker or agent not involving any personal financial liability unless he undertakes to sever his connection with such business within a period of not more than three months from the date this requirement comes into force; 

  • Expelled Trading Member  or Defaulter

            has been at any time expelled or declared a defaulter by any other stock Exchange

  • Guilty of Contravention

             has been punished for contravention of any of the provisions of the SCRA and/or the SEBI Act or any Rules or Regulations made there under or any other applicable Act or any Rules or regulations made there under and a period of at least two years or any longer period , as may have been specified by SEBI in its order , has not elapsed from the date of order of punishment , and in  case such  person is sentenced to imprisonment by a competent court of law, a period of five years has not elapsed from the date of expiry of the sentence, and 

  • Previous Rejection

            has been previously refused admission to trading membership unless a period of one year has elapsed since the date of such rejections.

 Continuous requirements 

  • Refresher Course

   A person admitted to trading membership is required to undergo, at least at an interval of every three calendar years , a refresher course on the syllabus  covering the stock market / capital market, as may be prescribed by the Governing Board  and /or SEBI

  • Capital Adequacy

A person admitted to trading membership of the Exchange even if he is inactive, is required to maintain at any time  the base minimum capital , as may be prescribed by the Governing Board and / or SEBI from time to time and such other  additional  base capital  and /or  margins as may be required and payable in accordance with the Rules Bye laws and Regulations of the exchange  and the Resolutions or orders issued in that regard , and also pay his dues   to the settlement / trade Guarantee Fund of the exchange , as may be prescribed by the Governing Board , from time to time

  • Right of nomination For Deceased Members.

            In the case of deceased Trading Members where no recorded nomination exists, the legal heirs / legal representatives  will be given a notice of maximum period of two years to exercise the right to nominate and if the legal heirs / legal representatives  fail  to do so , the right of nomination shall vest in the Governing Board . The Governing Board shall  then cause to dispose of the right of trading membership of the deceased  trading member and release to the legal heirs / legal representatives  of the deceased  trading member  the amount of realization after recovering any cost or expenses  incurred in the process  of disposal of such right and other liabilities , if any of the deceased  trading member. 

  • Payment of dues

A person admitted to trading membership of the exchange , is required to pay within the prescribed time  all the dues payable to the  Exchange including  the dues to the settlement  Guarantee Fund / Investor protection Fund or any other fund that may be established by the Exchange.

  • Prior Approval

Trading Members shall obtain prior approval of the Exchange/SEBI, for changes proposed in the shareholding pattern, for change of designated directors/ordinary directors and for changes amounting to change in status and constitution.

 

  • Submission of Documents

A trading member is required to submit the audited annual accounts, networth certificate, shareholding pattern, half yearly audit reports and such other declarations and forms, as may be prescribed by the Exchange/SEBI/relevant authority from time to time.

 

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Cochin Stock Exchange, Kochi, India