In a move aimed at streamlining regulatory compliance and enhancing ease of doing business in the securities market, the Securities and Exchange Board of India (SEBI) has issued a circular dated July 04, 2024 modifying the timelines for submission of annual audited accounts and net worth certificates by stock brokers and depository participants (DPs).
Background
SEBI, through Circular no. SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016, and the subsequent Master Circular for Stock Brokers dated May 22, 2024, had previously stipulated specific deadlines for the submission of annual audited accounts and net worth certificates. These requirements form a crucial part of SEBI’s monitoring criteria to ensure financial transparency and stability in the market.
Existing Provision: The circular mandated that stock brokers submit their annual audited accounts by September 30th of the relevant year as per Para 6.1.1.c (Monitoring criteria for Stock Brokers) of Annexure to Circular and Para 15.8.1.1.c of Master Circular, and Depository provide net worth certificates by the same date for the year ending March 31st as per Para 6.1.2.a (Monitoring criteria for Stock Brokers) of Annexure to Circular and Para 15.8.1.2.a of Master Circular.
Modified Provision: As per the recent circular issued by SEBI, effective immediately, the deadlines for submission have been extended to October 31st of the relevant year for both stock brokers and DPs i.e. Stock brokers are now required to furnish their annual audited accounts by October 31st (Para 6.1.1.c), and DPs must submit their net worth certificates to the depository by the same date (Para 6.1.2.a).
This adjustment aims to provide additional time for market intermediaries to comply with regulatory obligations without compromising the integrity and efficiency of the oversight process.
Implementation Guidelines
To ensure seamless implementation across the securities market ecosystem, SEBI has directed stock exchanges and depositories to undertake the following actions:
- Stock exchanges and depositories are instructed to disseminate the revised provisions to their members and participants promptly. This includes publishing the circular on their respective websites to facilitate awareness.
- Necessary amendments to the bye-laws, rules, and regulations governing stock exchanges and depositories should be made to align with the new timelines.
- Regular updates on the implementation status of these provisions are to be communicated to SEBI through Monthly Development Reports, reflecting the industry’s compliance and progress.
Conclusion
The modification of timelines for submission of annual accounts and net worth certificates by SEBI underscores its commitment to regulatory reform and easing administrative burdens on market participants. By extending the deadline to October 31st, SEBI aims to strike a balance between stringent oversight and facilitating business operations in the securities market. Market intermediaries are encouraged to promptly adhere to these revised timelines to ensure compliance and uphold market integrity.
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