SEC revises merchant banker, portfolio manager rules:
The securities regulator has revised the Merchant Banker and Portfolio Manager Rules 1996,
incorporating some provisions concerning, among others, appointment, termination and suspension of
chief executives of the merchant banks. The move comes after surfacing of some allegations about chief
executives of some merchant banks playing 'controversial' roles during the recent stock market debacle.
The Securities and Exchange Commission (SEC) issued a gazette notification on December 20 on the
revised merchant banker and portfolio manager rules.
The revised rules have imposed restrictions on the direct or indirect connections of managing directors
(MDs) or chief executive officers (CEOs) of the merchant banks with any securities-related business.
At the same time, their involvement with any stock exchange, its members or issuer companies will also
not be allowed under the new rules.
The tenure of the chief executives will be a three-year period and this tenure can be extended only after
approval by the securities regulator. But no CEO will be allowed to continue his job, if his age reaches 65.
The revised rules have empowered the board of directors of the merchant banks to terminate or suspend
the chief executives, if they fail to discharge their responsibilities or they are found guilty of any
misconduct or for reasons of moral turpitude or degradation.
However, two-third members of the board of directors of a merchant bank will have to approve such a
decision and the accused CEO must be provided a reasonable period of time to put forward his written
and verbal opinions in response to the allegation(s).
The securities regulator has revised the Merchant Banker and Portfolio Manager Rules 1996,
incorporating some provisions concerning, among others, appointment, termination and suspension of
chief executives of the merchant banks. The move comes after surfacing of some allegations about chief
executives of some merchant banks playing 'controversial' roles during the recent stock market debacle.
The Securities and Exchange Commission (SEC) issued a gazette notification on December 20 on the
revised merchant banker and portfolio manager rules.
The revised rules have imposed restrictions on the direct or indirect connections of managing directors
(MDs) or chief executive officers (CEOs) of the merchant banks with any securities-related business.
At the same time, their involvement with any stock exchange, its members or issuer companies will also
not be allowed under the new rules.
The tenure of the chief executives will be a three-year period and this tenure can be extended only after
approval by the securities regulator. But no CEO will be allowed to continue his job, if his age reaches 65.
The revised rules have empowered the board of directors of the merchant banks to terminate or suspend
the chief executives, if they fail to discharge their responsibilities or they are found guilty of any
misconduct or for reasons of moral turpitude or degradation.
However, two-third members of the board of directors of a merchant bank will have to approve such a
decision and the accused CEO must be provided a reasonable period of time to put forward his written
and verbal opinions in response to the allegation(s).
