SECTION 6 6.1 AGENTS 6.1.1 A Stockbroker Firm may appoint any person mentioned below who satisfies the criteria mentioned in Rule 6.2 herein as an agent of the Stockbroker Firm and shall notify the CSE and SEC together with a copy of the Declaration mentioned in Rule 6.4.2, within three (3) Market Days prior to such (1) Anybody corporate having as its primary object, business relating to financial services. (2) An individual. 6.1.2 The primary role of an agent shall be to introduce new clients to the Stockbroker Firm. For the purpose of these Rules, a new client is defined as; a person who does not maintain a CDS account. or; a person, who maintains a CDS account, on which there were no transactions for a period of 12 months preceding the date of introduction to the Stockbroker Firm by the agent. 6.1.3 For the purposes of these Rules, agent shall mean any person appointed by a Stockbroker Firm to introduce new clients to the Stockbroker Firm and shall include a local agent or a foreign agent. foreign agent shall mean a body corporate incorporated outside Sri Lanka or an individual permanently resident outside Sri Lanka appointed as an agent of a Stockbroker Firm which/who introduces new clients resident outside Sri Lanka to such Stockbroker Firm local agent shall mean a body corporate incorporated in Sri Lanka or an individual resident in Sri Lanka appointed as an agent of a Stockbroker Firm 6.2 CRITERIA FOR APPOINTMENT The Stockbroker Firm shall ensure that the agent complies with the following criteria prior to being appointed as an agent: (1) Body Corporate: (a) have a suitable permanent office with adequate communication facilities and facilities to display price schedules and market information to investors. (b) employees transacting business on behalf of the body 5 th August 2013-1 -
corporate shall hold; if the agent is a local agent, a certification from the SEC/CSE (as applicable) to deal with investors. if the agent is a foreign agent, a certification from the relevant regulatory authority to deal with investors or a Stockbroker Firm. For the avoidance of doubt the agents who only hold Stockbroker Firm without a certification from a regulatory authority shall not give investment advice to investors. (c) (d) none of the Directors of the Board, have been a Director of a Company that has been denied a licence as a Stockbroker, whose licence as a Stockbroker has been revoked by the appropriate Authority. the Board of Directors of the body corporate and/or employees transacting business on behalf of the body corporate and/or any person providing services on behalf of the agent as an independent contractor or otherwise shall be persons who; (iii) have not been convicted by any Court of competent jurisdiction, in Sri Lanka or abroad subsequent to a finding of guilt for the commission of any capital market offence and/or any offence which involves fraud, deceit or dishonesty under any other written Law; or have not been found guilty or fined or administratively dealt with by any regulatory or supervisory authority in Sri Lanka or abroad for the commission of any capital market offence and/or any offence which involves fraud, deceit or dishonesty under any other written Law; or have not been compounded in terms of the Securities and Exchange Commission of Sri Lanka Act No. 36 of 1987 (as amended) during the past three years preceding the date of appointment unless prior approval of the SEC is obtained for such (2) Individual: 5 th August 2013-2 -
(a) (b) shall be at least 18 years of age. shall be a person of sound financial standing. (c) shall hold a certification from the SEC/CSE (as applicable) to deal with investors, if the agent is a local agent. shall hold a certification from the relevant regulatory authority to deal with investors or a degree/professional qualification acceptable to the Stockbroker Firm, if the agent is a foreign agent. For the avoidance of doubt the agents who only hold Stockbroker Firm without a certification from a regulatory authority shall not give investment advice to investors. (d) (e) (f) (g) (h) shall have access to price schedules and market information. shall have a suitable and permanent office with adequate communication facilities to ensure real time access between the Stockbroker Firm and the Agent. has never been a Director of a Company that has been denied a licence as a Stockbroker, or whose licence as a Stockbroker has been revoked by the appropriate Authority. has never been declared bankrupt. shall not be a person who has been; (iii) convicted by any Court of competent jurisdiction, in Sri Lanka or abroad subsequent to a finding of guilt for the commission of any capital market offence and/or any offence which involves fraud, deceit or dishonesty under any other written Law; or found guilty or fined or administratively dealt with by any regulatory or supervisory authority in Sri Lanka or abroad for the commission of any capital market offence and/or any offence which involves fraud, deceit or dishonesty under any other written Law; or compounded in terms of the Securities and Exchange Commission of Sri Lanka Act No. 36 of 1987 (as amended) during the past three years preceding the date of appointment unless prior approval of the SEC is obtained for such 6.3 COMMISSION 5 th August 2013-3 -
6.3.1 The commission payable to an agent (local or foreign) shall be negotiable between the agent and the Stockbroker Firm, subject to a maximum of 50% of the brokerage fees. 6.3.2 An agent who introduces a client, other than a new client, is precluded from claiming commission for a period of two (2) years. 6.4 AGREEMENT / DECLARATION 6.4.1 AGREEMENT The Stockbroker Firm shall enter into a written Agreement with the agent setting out the following amongst any other conditions agreed to between the Stockbroker Firm and the agent: (1) the terms and conditions, responsibilities and obligations of either party. (2) the amount of commission payable to the agent. (3) responsibility for any losses or liabilities as a result of any acts or omissions of the agent. (4) that the agent is bound by the applicable rules of the CSE, CDS provisions of the SEC Act and any other applicable laws which the Stockbroker Firm is bound by. 6.4.2 DECLARATION A Stockbroker Firm shall obtain a Declaration from the agent stating inter alia that the agent; (1) has not been convicted by any Court of competent jurisdiction, in Sri Lanka or abroad subsequent to a finding of guilt for the commission of any capital market offence and/or any offence which involves fraud, deceit or dishonesty under any other written Law; or (2) has not been found guilty or fined or administratively dealt with by any regulatory or supervisory authority in Sri Lanka or abroad for the commission of any capital market offence and/or any offence which involves fraud, deceit or dishonesty under any other written Law; or (3) has not been compounded in terms of the Securities and Exchange of Sri Lanka Act No. 36 of 1987 (as amended) during the past three years preceding the date of With respect to agents which fall under Rule 6.1.1(1), the Declaration shall be obtained from the employees transacting business on behalf of the body corporate. 6.5 TERMINATION OF AN AGENT (1) The Stockbroker Firm shall immediately notify the CSE and the SEC 5 th August 2013-4 -
of any termination of an Agent. (2) The Stockbroker Firm shall publish a notice of such termination in a daily newspaper. 6.6 RESPONSIBILITY FOR VIOLATION OF THE RULES / APPLICABLE LAWS A Stockbroker Firm shall be liable for any violation committed by its agent with regard to Rules of the CSE, CDS, provisions of the SEC Act and any other applicable laws. 6.7 AGENT / REPRESENTATIVE OF AN AGENT OF ANOTHER STOCKBROKER FIRM A body corporate or an individual appointed as an agent of a Stockbroker Firm shall not be an agent or a representative of an agent with any other Stockbroker Firm. However, licensed commercial banks and financial institutions may be agents of more than one Stockbroker Firm. 5 th August 2013-5 -