Schedule - III - Code of Conduct - Securities And Exchange Board Of India (Issue And Listing Of Securitised Debt Instruments And Security Receipts) Regulations, 2008

SCHEDULE - III 2 [Securities and Exchange Board of India (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008] [See regulation 7(g)] CODE OF CONDUCT 1. Schemes of a special purpose distinct entity shall not be organised, operated, managed in the interest of the originator or sponsor or a special class of investors. Interests of all classes of investors of the scheme shall be taken into account in such organisation, operation and management. 2. A special purpose distinct entity and its trustee shall ensure the dissemination to all investors of adequate, accurate, explicit and timely information fairly presented in a simple language about the asset pools, transactions arrangements with originator, credit enhancer, underwriter, liquidity provider, securitised debt instruments, financial position, credit ratings and general affairs of the scheme or any other party to the securitisation or regulated activity. 3. A special purpose distinct entity and its trustee shall avoid conflicts of interest in managing the affairs of the schemes and other regulated activities and shall keep the interest of all investors paramount in all matters. 3 [ 3A. A special purpose distinct entity and its trustee shall ensure that good corporate policies and corporate governance is in place and shall develop internal code of conduct for governing its internal operations and laying down standards of appropriate conduct for its employees for carrying out their duties. Such a code may extend to the maintenance of professional excellence and standards, integrity, confidentiality, objectivity, avoidance of conflict of interests, disclosure of shareholdings and interests, etc. ] 4. A special purpose distinct entity and its trustee shall ensure scheme-wise segregation of bank accounts, asset pools and securitised debt instruments holders accounts or folios. 5. A special purpose distinct entity and its trustee shall carry out the business in accordance with objectives stated in the offer documents and take decision solely in the interest of investors. 6. A special purpose distinct entity and its trustee shall not use any unfair or unethical means, directly or indirectly, to sell or market the securitised debt instruments or induce any investor to buy such instruments. 7. A special purpose distinct entity and its trustee shall not employ any unfair or unethical means in valuation and conversion of asset pools or in the course of securitisation or any other regulated activity. 8. A special purpose distinct entity and its trustee shall maintain high standards of integrity and fairness in all their dealings and in the conduct of their business. 9. A special purpose distinct entity and its trustee shall render at all times high standards of service, exercise due diligence and independent professional judgment and take reasonable care and skill in performing its functions. 10. A special purpose distinct entity and its trustee shall not make any exaggerated statement, whether oral or written, either about their qualifications or capability to render services or their achievements or in respect of asset pools. 11. A special purpose distinct entity and its trustee shall always ensure that the debt and receivables acquired by it are through a genuine transaction amounting to a true sale and legally realizable by it. 1 [ 12. A special purpose distinct entity and its trustee shall fulfill its obligations in a prompt, ethical and professional manner. 13. A special purpose distinct entity and its trustee shall not divulge to anybody either orally or in writing, directly or indirectly, any confidential information about its investors which has come to its knowledge, without taking prior permission of its investors, except where such disclosures are required to be made in compliance with any law for the time being in force. 14. A special purpose distinct entity and its trustee or any of its directors, partners or managers, shall not either through its account or through associates or family members, relatives or friends indulge in any insider trading. 15. A special purpose distinct entity and its trustee shall have internal control procedures and financial and operational capabilities which can be reasonably expected to protect its operations, its investors and other registered entities from financial loss arising from theft, fraud, and other dishonest acts, professional misconduct or omissions. 16. A special purpose distinct entity and its trustee shall ensure that good corporate policies and corporate governance is in place and shall develop internal code of conduct for governing its internal operations and laying down standards of appropriate conduct for its employees for carrying out their duties. 17. A special purpose distinct entity and its trustee shall not be party to- i. creation of false market; ii. price rigging or manipulation. ] 4 [ (iii) passing of unpublished price sensitive information in respect of securities which are listed and proposed to be listed in any stock exchange to any person or intermediary. ] 5 [ 18. A special purpose distinct entity and its trustee shall take all reasonable steps to establish the true and full identity of each of its clients, and of each client s financial situation and maintain record of the same. 19. The trustee shall ensure that any change in registration status or any penal action taken by Board or any material change in financial position which may adversely affect the interests of investors is promptly informed to the clients and any business remaining outstanding is transferred to another registered intermediary in accordance with any instructions of the affected clients. 20. A special purpose distinct entity and its trustee shall put in place a mechanism to resolve any conflict of interest situation that may arise in the conduct of its business or where any conflict of interest arises, shall take reasonable steps to resolve the same in an equitable manner. 21. A special purpose distinct entity and its trustee shall make appropriate disclosure to the client of its possible source or potential areas of conflict of duties and interest while acting as trustee which would impair its ability to render fair, objective and unbiased services. 22. A special purpose distinct entity and its trustee shall not indulge in any unfair competition, which is likely to harm the interests of other trustees or subscriber to the securitised debt instrument or is likely to place such other trustees in a disadvantageous position while competing for or executing any assignment nor shall it wean away the clients of another trustee on assurance of lower fees. 23. A special purpose distinct entity and its trustee shall not discriminate among schemes or their clients, except and save on ethical and commercial considerations. 24. A special purpose distinct entity and its trustee shall share information available with it regarding special purpose distinct entity with registered credit rating agencies. 25. A special purpose distinct entity and its trustee shall provide the holders of securitised debt instrument with adequate and appropriate information about its business, including contact details, services available to holders, and the identity and status of employees and others acting on its behalf with whom the holder may have to contact. 26. A special purpose distinct entity and its trustee shall ensure that adequate disclosures are made to the holders of securitised debt instrument and security receipt, in a comprehensible and timely manner so as to enable them to make a balanced and informed decision. 27. A trustee shall endeavour to ensure that (a) inquiries from holders of securitised debt instrument and security receipt are adequately dealt with; (b) grievances of holders of securitised debt instrument and security receipt are redressed in a timely and appropriate manner; and (c) where a complaint is not remedied promptly, the holders of securitised debt instrument and security receipt is advised of any further steps which may be available to the investor under the regulatory system. 28. A special purpose distinct entity and its trustee shall make reasonable efforts to avoid misrepresentation and ensure that the information provided to the investor is not misleading. 29. A special purpose distinct entity and its trustee shall maintain required level of knowledge and competency and abide by the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992), regulations and circulars and guidelines. 30. A special purpose distinct entity and its trustee shall not make untrue statement or suppress any material fact in any documents, reports, papers or information furnished to the Board. 31. A special purpose distinct entity and its trustee ensure that the Board is promptly informed about any action, legal proceeding, etc., initiated against it in respect of any material breach or non-compliance by it, of any law, rules, regulations, directions of the Board or of any other regulatory body. 32. A special purpose distinct entity and its trustee or any of his employees shall not render, directly or indirectly, any investment advice about any security in the publicly accessible media, whether real-time or non-real-time unless a disclosure of his interest including long or short position in the said security has been made, while rendering such advice. 33. In case the special purpose distinct entity and its trustee is rendering such advice, such entity shall ensure that he discloses his interest, the interest of his dependent family members and that of the employer, including their long or short position in the said security, while rendering such advice. 34. A special purpose distinct entity and its trustee shall ensure that any person it employs or appoints to conduct business is fit and proper and otherwise qualified to act in the capacity so employed or appointed (including having relevant professional training or experience). 35. A special purpose distinct entity and its trustee shall ensure that it has adequate resources to supervise diligently and does supervise diligently persons employed or appointed by it to conduct business on its behalf. 36. A special purpose distinct entity and its trustee shall have internal control procedures and financial and operational capabilities which can be reasonably expected to protect its operations, its clients, investor and other registered entities from financial loss arising from theft, fraud, and other dishonest acts, professional misconduct or omissions. 37. A special purpose distinct entity and its trustee shall be responsible for the acts or omissions of its employees and agents in respect to the conduct of its business. 38. A special purpose distinct entity and its trustee shall provide adequate freedom and powers to its compliance officer for the effective discharge of its duties. 39. A special purpose distinct entity and its trustee shall ensure that the senior management, particularly decision makers, have access to all relevant information about the business on a timely basis. ] *************** NOTES:- 1. Inserted vide Notification No. SEBI-NRO/OIAE/GN/2015-16/001 dated 09-04-2015 2. Substituted vide Notification No. SEBI/LAD-NRO/GN/2018/26 dated 26-06-2018 before it was read as, Securities and Exchange Board of India (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008 3. Inserted vide F. No. SEBI/LAD-NRO/GN/2025/247 dated 05-05-2025 4. Inserted vide F. No. SEBI/LAD-NRO/GN/2025/247 dated 05-05-2025 5. Inserted vide F. No. SEBI/LAD-NRO/GN/2025/247 dated 05-05-2025