Do's and Don'ts ...!!

DO's

Transact only through SEBI-recognised stock exchanges

Deal only through SEBI-registered intermediaries

Complete all required formalities for opening an account with the broker (Client registration, Client agreement forms etc)

Ask for and sign the “Know Your Client” Agreement

Read and properly understand the risks associated with investing in securities before undertaking any transactions

Assess the risk-return profile of the investment as well as the liquidity and safety aspects before making your investment decision

Ask all relevant questions and clear your doubts with your broker before transacting

Invest based on sound reasoning and fundamentals of the company after taking into account all publicly available information

Give clear and unambiguous instructions to your broker/sub-broker/ depository participant

Insist on a contract note for each of your transactions and verify all details in contract note, immediately on receipt. If in doubt, crosscheck details of your trade with details as available on the exchange website

Scrutinize minutely both the transaction and the holding statements that you receive from your Depository Participant

Keep copies of all investment documentation

Handle Delivery Instruction Slips (DIS) Book issued by DPs carefully. Insist that the DIS numbers are pre-printed and your account number (Client ID) is pre stamped

In case you are not transacting frequently, make use of the freezing facility provided for your demat account

Pay the required margins in the prescribed time

Deliver the shares/depository slip in case of sale and pay the money in case of purchase within the prescribed time

Participate and vote in general meetings either personally or through proxy

DONT's

Don’t undertake off-market transactions in securities

Don’t deal with unregistered intermediaries

Don’t fall prey to promises of unrealistic returns

Don’t invest on the basis of hearsays and rumors

Don’t forget to take account of the potential risks that are involved in the investment

Don’t be influenced into buying into fundamentally unsound companies (penny stocks) based on sudden spurts in trading volumes or prices or favourable articles/stories in the media

Don’t follow the herd or play on momentum

Don’t be misled by hot tips

Don’t try to time the market

Don’t hesitate to approach the proper authorities for redressal of your doubts/grievances

Don’t leave signed blank Delivery Instruction Slips of your demat account lying around

Don’t sign blank Delivery Instruction Slips(DIS) and keep them with the Depository Participant (DP) or with the broker to save efforts when required

Derivates

DO's

Go through all rules, regulations, bye-laws and disclosures made by the exchanges

Trade only through the Trading Members (TM) registered with SEBI or through an authorised person of the TM registered with the exchange

While dealing with an authorised person, ensure that the contract note has been issued by the TM of the authorized person only

While dealing with an authorized person, pay the brokerage/ payments/ margins etc. to the TM only

Ensure that for every executed trade you receive duly signed contract note from your TM highlighting the details of the trade along with your unique Client ID

Obtain receipt for collateral deposited with the TM towards margin

Go through the details of Client-Trading Member Agreement

Know your rights and duties vis-à-vis those of the TM/ Clearing Member

Be aware of the risks associated with your positions in the market and margin calls on them

Collect/pay mark-to-market margins on your futures position on a daily basis from / to your TM

DONT's

Don’t start trading in derivatives unless you have understood the Risk Disclosure Documents

Don’t trade on any product without knowing the risk and rewards associated with it

Dealing with Brokers & Sub-brokers

DO's

Deal only with SEBI-registered brokers/sub-brokers

Ensure that the broker/sub-broker has a valid SEBI registration certificate

Ensure that the broker/sub-broker is permitted to transact in the market

State clearly to the broker/sub-broker who will be placing orders on your behalf

Insist on client registration form to be signed by the broker/sub-broker before commencing operations

Enter into an agreement with your broker/sub-broker setting out the terms and conditions clearly

Insist on contract note/ confirmation memo for trades done each day

Insist on bill for every settlement

Ensure that broker’s name, trade time and number, transaction price and brokerage are shown distinctly on the contract note

Insist on periodical statement of accounts

Issue cheques/drafts in trade name of the broker only

Ensure receipt of payment/ deliveries within 48 hours of payout

In case of disputes, file written complaint to the broker/sub-broker, to the stock exchange of which he is a member and to SEBI within a reasonable time

In case of sub-broker disputes, inform the main broker about the dispute within a maximum of 6 months

Familiarise yourself with the rules, regulations and circulars issued by the stock exchanges/SEBI before carrying out any transactions.

DONT's

Don’t deal with unregistered broker/sub-broker

Don’t pay more than the approved brokerage to the intermediary

Don’t undertake deals on behalf of others

Don’t neglect to set out in writing orders for higher value given earlier over the phone

Don’t sign blank delivery instruction slip(s) while meeting security pay-in obligation

Don’t accept unsigned/duplicate contract note/confirmation memo

Don’t accept contract note/confirmation memo signed by any unauthorised person

Don’t delay payment/deliveries of securities to the broker/ sub-broker

Don’t get carried away by luring advertisements

Don’t be led by market rumors or get into shady transactions

Mutual Funds

DO's

Read the offer document carefully before investing

Note that investments in mutual funds may be risky, and do not necessarily result in gains

Mention your bank account number in the application form

Invest in a scheme depending upon your investment objective and risk appetite.

Note that Net Asset Value ( NAV) of a scheme is subject to changes depending upon market conditions

Insist on a copy of the offer document/key information memorandum before investing, and read it carefully

Note that past performance of a scheme or a fund is not indicative of the scheme’s or the fund’s future performance. Past performance of a scheme may or may not be sustained in future

Keep regular track of the NAV of the schemes in which you have invested

Ensure that you receive an account statement for the money that you have invested

DONT's

Don’t invest in a scheme just because somebody is offering you a commission or other incentives, gifts etc.,.

Don’t get carried away by the name of the scheme/mutual fund

Don’t fall prey to promises of unrealistic returns

Don’t forget to take note of risks involved in the investment

Don’t hesitate to approach the proper authorities for redressal of your doubts/grievances

Don’t deal with any agent/broker dealer who is not registered with the Association of Mutual Funds in India (AMFI)

Buyback of Securities

DO's

Read the special resolution regarding the proposed buyback in detail and then vote for it

Compare the price offered in the buyback with the market price during last few months as also with the company’s Earning per Share, Book Value etc. and then determine whether the price offered is reasonable

Read the instructions for making the application for tendering of shares carefully

Ensure that your application reaches the collection centre within the prescribed time

If you don’t get the letter of offer within a reasonable period, contact the concerned Merchant Banker

Mention all details as required in the letter of offer legibly

Furnish all the documents asked for in the letter of offer

Send application through the mode (post/courier/hand delivery/ ordinary post etc.) specified in the letter of offer

Contact Merchant Banker if no response is received from the company regarding consideration for tendered shares within the stipulated time

Contact Compliance Officer mentioned in the letter of offer in case of any grievance against the company

Contact the Registrar of Companies in case you feel that provisions of the Companies Act have been violated

Contact the Merchant Banker in case of any grievance against the procedure followed in the buyback

DONT's

Don’t submit multiple applications

Don’t forget to fill up the application legibly

Don’t mutilate the application form

Don’t cross/ cut in the application form

Don’t send the application form to a wrong address

Don’t send the application form after the close of offer

Don’t forget to give complete information in the application form

Don’t forget to sign the application form

Don’t give wrong/ contradictory information on the application form

Open Offers (under Takeover Regulations)

DO's

Ensure that you are aware of all competitive offers and revision of offer before deciding on accepting the offer

Refer to national dailies/ SEBI website for details of competitive offers or revisions of offers

Note that the offer is subject to statutory approvals, if any, mentioned in the letter of offer

Check whether the offer will result in delisting of the company

In case of demateralised equity shares, ensure credit is received to the Special Depository Account before the closure of the Offe

Carefully note the timings/days for hand delivery of the documents mentioned in the letter of offer

Wait till the last date for Offer Revision (i.e. 7 working days prior to date of closing of offer) before tendering your acceptance

Submit the Form of Withdrawal accompanying the letter of offer at any specified collection center up to 3 working days before date of closing of the offer in case you want to withdraw the shares tendered

Ensure that signatures on the Form of Acceptance, Transfer Deed, Depository Instruction and Form of Withdrawal are same and in the same order as those lodged with the company

In case of non receipt of the Offer Document, you can tender or withdraw from the Offer by making an application on a plain paper giving the necessary details

DONT's

Don’t wait for the last date for the closure of the offer for tendering your acceptance

Don’t fill in the details of the buyer/transferee in the transfer deed to be sent

Don’t file an incomplete application form/invalid documents

Collective Investment Schemes

DO's

Ensure that the entity is registered with SEBI

Read the offer document of the scheme carefully

Check the viability of the project

Check and verify the background/expertise of the promoters

Ensure clear and marketable title of the property/assets of the entity

Ensure that the Collective Investment Management Company (CIMC) has the necessary infrastructure to carry out the activities of the scheme

Check the credit rating of the scheme and tenure of the rating

Check for the appraisal of the scheme and read the brief appraisal report

Read carefully the objects of the scheme

Check for the promise vis-a-vis performance of the earlier schemes, if any, in the offer document

Ensure that the CIMC furnishes you with a copy of the Annual Report within two months from the closure of each financial year

Note that SEBI cannot guarantee or undertake the repayment of money to the investors

DONT's

Don’t invest in any CIS entity not having SEBI registration

Don’t get carried away by indicative returns

Don’t invest based on market rumors or advertisements