Internal Policy
Internal Policy & Control Procedure in terms of SEBI (Research Analysts) Regulations, 2014
SEBI vide its Notification No. LAD-NRO/GN/2014-15/07/1414 dated 1st September, 2014 has notified SEBI (Research Analysts) Regulations, 2014 which are effective on/after expiry of 29th November, 2014 (Ninetieth day from the date of their publication if official gazette). These regulations have been introduced by SEBI with the objective of fostering transparency in security research and provide the investors with more reliable and useful information to make investment decisions.
These Internal Policies and Procedures are being implemented in line with these regulations
The policy shall be applicable to Mr. Praveen Pathiyil, (“RA”) Research analyst i.e. a person primarily responsible for preparation or publication of the content of the research report; or providing a research report or Making ‘buy, sell/hold’ or ‘overweight / underweight’ recommendation or giving price target or offering an opinion on any security that are listed or to be listed in a Stock Exchange.
Various terms shall have the following definitions and the other terms shall have the same meaning assigned to them in the captioned SEBI Regulations.
1. “Fund Manager” includes fund managers of a mutual fund or alternative investment fund or Venture Capital Fund or Portfolio Manager.
2. “Merchant Banking or Investment Banking or Brokerage Services” includes :-
- Acting as an underwriter
- Participating in a selling or an offering for the issuer or otherwise acting in furtherance of a public offer of the issuer
- Acting as an adviser in a merger or acquisition
- Providing or arranging Venture Capital or Equity or Debt
- Serving as placement agent for the issuer or otherwise acting in furtherance of a private offering of the issuer
- Offering Brokerage or Market Making Services
3. “Price Target” means expectations of research analyst on the future performance of specific securities.
4. “Public Appearance” means any participation in a conference call, seminar, forum (including interactive and non-interactive electronic forum), radio or television or internet or internet or web or print media broadcast, authoring a print media article or other public speaking activity in public media in which a research analyst makes a recommendation or offers an opinion, concerning securities or public offer provided that it does not include a password protected webcast, conference call or such other events with the clients, if all of the event participants previously received the research report or other documentation that contains the required applicable disclosures and that the research analyst appearing at the event corrects and updates during the public appearance any disclosure in the research report that are inaccurate, misleading or no longer applicable.
5. “Public Offer” includes initial public offer, further public offer, offer for sale, disinvestment, takeover, buy-back or delisting of securities.
6. “Relative” means a person as defined in sub section (77) of section 2 of the Companies Act, 2013 and who is financially dependent on independent research analyst or individual research analyst employed by research entity.
7. “Research Analyst” means an RA who is primarily responsible for: Preparation or publication of the content of the research report or Providing research report or Making ‘buy/sell/hold’ or ‘Overweight / Underweight’ recommendation or Giving price target or Offering an opinion concerning public offer.
8. “Research Entity” means RA or any other intermediary registered with SEBI who is / shall also engaged in Merchant Banking or Investment Banking or Brokerage Services or underwriting services and issue research report or research analysis in its own name through the individuals employed by it as research analyst and includes any other intermediary engaged in issuance of research report or research analysis.
9. “Research Report” means any written or electronic communication that includes research analysis or research recommendation or an opinion concerning securities or public offer, providing a basis for investment decision and does not include the following communications :
- Comments on general trends in the securities market
- Discussions on the broad based indices
- Commentaries on economic, political or market conditions
- Periodic reports or other communications prepared for unit holders of mutual fund or alternative investment fund or clients of portfolio managers and investment advisers
- Internal communications that are not given to current or prospective clients
- Communications that constitute offer documents or prospectus that are circulated as per regulations made by the Board
- Statistical summaries of financial data of the companies
- Technical analysis relating to the demand and supply in a sector or index
- Any other communication which the Board may specify from time to time
10. “Significant news or event” means any news or event which is expected to have a material impact on or that reflects a material change to, the subject company’s earnings, operations or financial condition, other than unpublished price sensitive information, as specified in the internal policies and procedure of the research analyst or research entity.
11. “Subject Company” means the company whose securities are the subject of a research report or a public appearance.
12. “Third Party Research Report” means a research report produced by a person or entity other than RA.
RA shall maintain arms-length relationship between its research activity and other activities. Research Activity shall be carried by Ms. Praveen Pathiyil.
Research Analysts shall not
- (a) deal / trade in securities recommended / followed by the research analyst within 30 days before and five days after the publication of a research report;
- (b) deal / trade in securities that the research analyst reviews in a manner contrary to his given recommendation;
- (c) purchase or receive securities of the issuer before the issuer’s initial public offering, if the issuer is principally engaged in the same types of business as companies that the research analyst follows or recommends.
However, the above restrictions to trade/ deal in securities shall not be applicable in case of significant news or event concerning the subject company or based upon an unanticipated significant change in the personal financial circumstances of the research analyst.
- The Research Report issued by Research Analyst shall be based on adequate documentary research evidence.
- Research Analyst shall not provide any promise or assurance of favourable review in research report to the Company or Industry as a consideration to commence or influence a business relationship of for the receipt of compensation or other benefits.
However, the above restrictions to trade/ deal in securities shall not be applicable in case of significant news or event concerning the subject company or based upon an unanticipated significant change in the personal financial circumstances of the research analyst.
Research Analyst shall disclose all material information about himself including the following in its research reports:
- Business Activity
- Disciplinary History
- Terms and conditions on which it offers research report
- Details with respect to Ownership and Material Conflict of Interest such as:
- Whether Research Analyst or its/his associate or relatives has any Financial interest in the subject company, if yes, together with nature of such financial interest.
- Whether Research Analyst or its/his associate or relatives have actual / beneficial ownership of 1 % or more securities of subject company at the end of the month immediately preceding the date of publication of research report or date of public appearance, as the case may be.
- Details of actual / beneficial ownership of one percent or more securities of the subject company, at the end of month immediately preceding the date of publication the research report or date of public appearance.
- Details of any material conflict of interest at the time of publication of research report or at the time of public appearance.
- Details of any compensation received by Research Analyst or its/his/her/their associates from the subject company in past 12 months.
- Details of whether Research Analyst or its associates have managed or co-managed the public offering of subject company in past 12 months.
- Details of whether Research Analyst or its associates have received any compensation for investment banking or merchant banking of brokerage services from the subject company in past 12 months.
- Details of whether Research Analyst or its associates have received any compensation for products or services other than above from the subject company in past 12 months.
- Details of any compensation or other benefits received by Research Analyst or its/his/her/their associates from the subject company or 3rd party in connection with the research report.
- Research Analyst shall disclose in public appearance with regard to receipt of compensation
- Whether Research Analyst or its/his/her/their associates have received any compensation from the subject company in past 12 months
- Whether the subject company is / was client of Research Analyst during 12 months preceding the date of distribution of research report and the types of such services provided by Research Analyst
- Whether the Research Analyst has served as an officer, director or employee of the subject company.
- Whether Research Analyst has been engaged in market making activity of the subject company
- Such other disclosures in research reports / public appearance as specified by SEBI under any other regulations.
- Such Research Reports reflects the factual information about the subject company and are based on reliable information. Such reports also contain the definition of terms which are used in making recommendations and such terms have been used consistently.
- If such Research Reports contain either a rating or price target for atleast 1 year, the same shall also provide for the graph of daily closing price of such securities for the period assigned or for a 3 year period, whichever is shorter.
- Such Research Report Shall not be issued selectively to internal trading personnel or to a particular client or group of other clients in advance of other clients who are entitled to receive the research report.
- In case, Research Analyst appears in public media and make any recommendation, the disclosure of his / its name, registration status and details of financial interest shall invariably made at the time of making such recommendation or offering any opinion in his personal capacity, responding to any queries of audience or journalists in personal capacity and communicating the research report or its substance through public media.
- Research Analyst shall be NISM Certified or such other certification for research analysts as specified by SEBI.
- Research Analyst shall maintain and preserve following records for a minimum period of 5 years:
- Research recommendation provided
- Rationale for arriving at research recommendation
- Record of public appearance
- Research Analysts shall forthwith inform the Board in writing about any information or particulars about him/her/them submitted to SEBI, which are found to be false or misleading in any material particular or are there is any change in information already submitted.
- Research Analyst shall conduct annual audit in respect of compliance with the captioned SEBI Regulations from member of ICAI or ICSI.
