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  • DRA-4 DRA-4 Disciplinary Committees

    • DRA-4.1 DRA-4.1 Disciplinary Action

      • DRA-4.1.1

        All SROs must ensure compliance by the members of the SRO and issuers of securities with its business rules and listing rules respectively.

        Amended: April 2020
        Added: July 2010

      • DRA-4.1.2

        SROs must seek to detect rule breaches quickly, to take action to minimise the impact of the rule breach, and where possible to alert investors and other market participants of the breach. Potential rule breaches shall be uncovered through a range of activities, including the SROs surveillance and investigation functions, and research and data analysis, and from many sources including tip-offs and complaints received from the public and media commentary.

        Amended: April 2020
        Added: July 2010

      • DRA-4.1.3

        (a) Disciplinary action is an important activity for the SROs as the frontline regulators of members and listed companies, but it is not an end in itself. Its principal purpose is to change future behaviour by demonstrating that breaches of the business rules and listing rules will be identified and the sanction imposed will have a cost or adverse impact on the companies and individuals concerned; and
        (b) Through disciplinary actions, the SRO shall seek to:
        (i) Deter future breaches by conveying clear messages that certain conduct is unacceptable and will not be tolerated by the SRO and that there are consequences to follow from a rule breach;
        (ii) Educate the market; and
        (iii) Ultimately influence and bring about change of attitude and behaviour towards an enhanced compliance culture and improved corporate governance.
        Amended: April 2020
        Added: July 2010

      • Disciplinary Committee

        • DRA-4.1.4

          All SROs must constitute a Disciplinary Committee. The Disciplinary Committee will be responsible for adjudicating on any alleged violation of the rules and regulations of the SRO and determine penalties to be imposed against the members of the SRO and issuers of securities.

          Amended: April 2020
          Added: July 2010

      • Constitution of a Disciplinary Committee

        • DRA-4.1.5 DRA-4.1.5

          The Disciplinary Committee must be constituted by a resolution of the Board of the SRO. The constitution and membership of the Disciplinary Committee must be approved by the CBB. The Disciplinary Committee must be independent and separate from the SRO's executive management structure, consisting of a minimum of three members and must not have a member who is, or who within three years of the proposed appointment date was, a director, officer or employee of the SRO or a related corporation of the SRO.

          Amended: April 2020
          Added: July 2010

          • DRA-4.1.5A

            The Disciplinary Committee members must comprise of persons with qualification in the area of law, finance, accounts, economics, management or administration and experience in financial services, including the securities market or any other relevant field. At least one member of the Disciplinary Committee must be legally qualified.

            Added: April 2020

          • DRA-4.1.5B

            Prior to appointing a person as a member of the Disciplinary Committee, the SRO must obtain and assess the following information:

            (a) a declaration that the person has not been involved in any act of fraud, dishonesty or found guilty of any economic or other offence excluding minor traffic offence;
            (b) a declaration that the person has not been disqualified by a court, regulator or other competent body; and
            (c) disclosure regarding the nature of association with securities market including names of family members (spouse, father, mother, sons, daughters, brothers or sisters) associated with securities market.
            Added: April 2020

      • Terms of Reference of the Disciplinary Committee

        • DRA-4.1.6

          The powers and functions and limitations thereon of the Disciplinary Committee are as follows:

          (a) To exercise all the powers and functions of the SRO on all disciplinary matters relating to the members and issuers of securities;
          (b) Without prejudice to the generality of the foregoing:
          (i) To exercise all the powers and functions reserved to the Disciplinary Committee in the "Disciplinary Procedures" approved by the SRO's senior management from time-to-time;
          (ii) To convene and conduct hearings of charges against member(s) of an SRO or an issuer(s) of a security and to decide whether those charges are proven or not;
          (iii) To impose such penalty as the Disciplinary Committee may think fit on a member(s) of an SRO or an issuer(s) of a security, against whom charges are so proven, provided that such penalty shall be within the range of penalties set out in the rules of the SRO and the "Disciplinary Procedures" approved by the SRO's senior management from time-to-time;
          (iv) To summon member(s) of an SRO or an issuer(s) of a security and their employees to attend and make representations before the Disciplinary Committee;
          (v) To review the operation of the "Disciplinary Procedures" approved by the senior management from time-to-time on a regular basis and to report with recommendations to the board of an SRO on any proposals for the improvement of those procedures which the Disciplinary Committee considers necessary; and
          (vi) To request a member(s) of an SRO or an issuer(s) of a security or their employees to produce their books and records for inspection by the Disciplinary Committee;
          (c) To liaise with the CMSD as necessary in relation to its powers and duties, or as the CMSD may require;
          (d) To review the provisions of the rules of the SRO relating to the disciplinary matters of a member(s) of an SRO or an issuer(s) of a security from time-to-time and to consider and advise on any amendments to those provisions and to recommend such amendments as it sees fit for the approval of the board of the SRO and the CBB;
          (e) To submit written and/or oral reports to the board of the SRO or to the CMSD regarding its activities and proceedings as and when requested; and
          (f) To conform to any written and/or oral advice (which shall include any direction) that may from time-to-time be prescribed by the board of the SRO or CMSD.
          Amended: April 2020
          Amended: January 2020
          Added: July 2010

      • Penalties

        • DRA-4.1.7

          The following penalties can be imposed by the Disciplinary Committee:

          (a) Reminder;
          (b) Warning;
          (c) Confiscation of all or part of the CMSP's guarantee;
          (d) Suspension of trading by violating companies for a period not exceeding four months;
          (e) Striking off the listed companies and unlisted companies, or the transfer of a listed company into an unlisted company whose securities are admitted for trading;
          (f) Suspension of a CMSP's membership for a period not exceeding four months;
          (g) Cancellation of membership of a CMSP, and any other person with a similar status membership; or
          (h) Any other penalty available, as per the rules of the SRO.
          Amended: April 2020
          Added: July 2010

        • DRA-4.1.8

          Deliberations of the Disciplinary Committee must be confidential. Resolutions must be adopted by majority vote and the concerned parties must be notified not later than 15 calendar days following adoption of resolution(s).

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.9

          The chief executive officer of the SRO must refer the violation record to the Disciplinary Committee if an investigation has been carried out by the SRO, or where the violation has been referred by the CBB for investigation.

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.10

          Violations referred to disciplinary proceedings must be raised in the form of a statement, which must, at a minimum, contain the name and address of the defendant, date of the violation and a summarised description of the violation and the available evidence. The Disciplinary Committee must not consider any violation unless it is submitted in accordance with this method.

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.11

          The record of the violation referred to in the Disciplinary Committee must be submitted to the Chairman of the Disciplinary Committee for fixing a date for the hearing by issuing an order to that effect. The Disciplinary Action Cell must serve summons on the defendant, requiring him to appear on the date fixed for the hearing.

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.12

          A staff member of the Disciplinary Action Cell must attend the hearing of the Disciplinary Committee, in order to keep the record under the supervision of the Chairman thereof. The record must contain names of members of the Disciplinary Committee, date, time and place of the hearing, names of parties who appear, or their representatives, all proceedings carried out in the hearing, and any statements and applications made by the parties. The Chairman and the staff of the Disciplinary Action Cell must sign the record.

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.13

          The defendant must appear on the date fixed for hearing the violation, and the committee must enable him to state his defence in respect thereof, after notifying him of the violation and of the supporting evidence.

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.14

          If the defendant does not appear at the sitting fixed for hearing the violation, the committee may, if it is proved that the summons was duly served, proceed to hear and decide on the violations in his absence.

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.15

          Records of investigations carried out prior to the disciplinary proceedings must be attached to the violation record. The Disciplinary Committee, if not satisfied with the investigation, may carry out its own investigation or order further investigations by the SRO or by an independent professional firm.

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.16

          The Disciplinary Committee may, for the proof of any facts, rely on the evidence obtained from the investigations carried out in respect of the facts which constitute the violation, and may, at its absolute discretion, prefer one item of evidence to the other. The Disciplinary Committee shall may formulate its valuation according to its own satisfaction. The Disciplinary Committee must not base its decision on the personal knowledge of its members.

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.17

          The members of the Disciplinary Committee must deliberate on the decision before issuing it. Every member must express his opinion in secret, and the decision must be taken by majority vote.

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.18

          The decision passed by the Disciplinary Committee must be in writing. It must contain a review of the violation, statements and defence of the offender, proceedings carried out, reasons for the decision and the decree thereof, and date and place of issue of the decision. The draft decision must be signed by the Chairman and members of the Disciplinary Committee.

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.19

          The Chairman of the Disciplinary Committee may pronounce the decision in a public hearing. The decision should be filed in the violation record, after pronouncement thereof.

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.20

          [This Paragraph was deleted in April 2020].

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.21

          [This Paragraph was deleted in April 2020].

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.22

          The Disciplinary Action Cell must, in the case of the defendant's non-appearance in the hearing, notify him of the decision within five days from the date of issue thereof.

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.23

          Service of all documents, decisions and notices relating to the disciplinary proceedings shall be effected by registered mail or any other acceptable means of correspondence including electronic means of correspondence.

          Amended: April 2020
          Added: July 2010

        • DRA-4.1.24

          Decisions of the Disciplinary Committee must be submitted to the CBB, in writing, as soon as possible after the decision has been made.

          Added: April 2020

    • DRA-4.2 DRA-4.2 Disciplinary Appeals Committee

      • DRA-.4.2.1

        The decisions passed by the Disciplinary Committee of an SRO referred to in section DRA-4.1 may be appealed to the Disciplinary Appeals Committee (DAC).

        July 2010

      • DRA-4.2.2 DRA-4.2.2

        The Disciplinary Appeals Committee, consisting of a minimum of three members, must be established and constituted by a Resolution of the Board of the SRO. The Disciplinary Appeals Committee must not have a member who is, or who within three years of the proposed appointment date was a director, officer or employee of the SRO or a related corporation of the SRO. The constitution and membership of the Disciplinary Appeals Committee must be approved by the CBB.

        Amended: April 2020
        Added: July 2010

        • DRA-4.2.2A

          The Disciplinary Appeals Committee members must comprise of persons with qualification in the area of law, finance, accounts, economics, management or administration and experience in financial services, including the securities market or any other relevant field. At least one member of the Disciplinary Appeals Committee must be legally qualified.

          Added: April 2020

        • DRA-4.2.2B

          Prior to appointing a person as a member of the Disciplinary Appeals Committee, the SRO must obtain and assess the following information:

          (a) a declaration that the person has not been involved in any act of fraud, dishonesty or found guilty of any economic or other offence excluding minor traffic offence;
          (b) a declaration that the person has not been disqualified by a court, regulator or other competent body; and
          (c) disclosure regarding the nature of association with securities market including names of family members (spouse, father, mother, sons, daughters, brothers or sisters) associated with securities market.
          Added: April 2020

      • Terms of Reference of the Disciplinary Appeals Committee

        • DRA-4.2.3

          The powers, functions and limitations thereon of the Disciplinary Appeals Committee are as follows:

          (a) To exercise all the powers and functions relating to the referrals against the decisions of the Disciplinary Committee of the SROs; and
          (b) Without prejudice to the generality of the foregoing:
          (i) To convene and conduct hearings of cases referred to it and to decide whether those referrals have been made on satisfactory grounds;
          (ii) To summon members of SROs and issuers of securities and their representatives or employees to attend and make representations before the Disciplinary Appeals Committee;
          (iii) To request members of SROs and issuers of securities or their representatives or employees to produce their books and records for inspection by the Disciplinary Appeals Committee;
          (iv) To remit the case back to the Disciplinary Committee for reconsideration where fresh evidence put up on referral is allowed; and
          (v) To dismiss the charges referred to it or to uphold the verdict of the Disciplinary Committee and, as the case may be, to impose the same or substitute a lesser or a greater penalty to that imposed by the Disciplinary Committee.
          Amended: April 2020
          Added: July 2010

        • DRA-4.2.4

          Decisions of the Disciplinary Appeals Committee must be submitted to the CBB, in writing, as soon as possible after the conclusion of the proceeding.

          Amended: April 2020
          Added: July 2010