Sponsor Company or AMC shall be considered as associate directors.

Further, a person who is an "associate"

in accordance with definition in the regulations cannot be appointed as independent director even after he
ceases to be an "associate" unless a cooling off period of three years has elapsed from the date of his
disassociation.

? To bring uniformity in calculation of NAVs and to have proper valuation of Government Securities, all mutual
funds were advised to use the prices for government securities released by an authorised agency.

Investment in Foreign Securities by Mutual Funds

? To broaden the avenues for investments, Mutual Funds as per the Union Budget 2002-03 proposals, were
permitted to make investments in foreign debt securities including government securities in the countries with
fully convertible currencies, short term as well as long term debt instruments with highest rating (foreign currency
credit rating) by accredited/registered credit rating agencies. The mutual funds may also invest in units/securities
issued by overseas mutual funds or unit trusts, which invests in aforesaid securities or are rated and registered
with overseas regulators.

The important measures indicated above and also the steps discussed later in the Report have
helped the SEBI in discharging its statutory responsibility of developing and regulating the
market and protecting the investors. Besides, the securities market in India has become more
modern in terms of infrastructure, adoption of international practices in accounting standards as
well as disclosure norms, settlement cycle through rolling settlement, derivatives trading,
implementation of corporate governance etc. The SEBI has been striving to enhance fund
mobilisation in primary market thus efficiently utilising the domestic savings, diligently
protecting the interest of investors and other stakeholders and minimising or eliminating the
obstacles and problems particularly resulting from the interpretations of law and regulations that
hinder the development and investment in the securities market. The investors’ education has
been given a priority programme of the SEBI with the objectives to provide the public across the
country with the knowledge on basic principles of investment, stimulate domestic savings and to
promote understanding on the role and responsibility of regulatory authority in the securities
market.

While aiming at achieving such targets, the SEBI has continuously followed open and
transparent policy and a consultative approach. It also maintained a close interface with the
market participants and professionals, and the feedback, as well as expert advice obtained from
them in framing its policies and programmes.

The developments in the securities market following the announcement of the Union Budget for
2001-02, a Joint Parliamentary Committee has been set up and is in progress. In response to
these developments, the SEBI also took the following measures to further enhance the safety,
transparency and efficiency of the market -

a. Steps were also taken to implement the program of corporatisation and demutualization
announced by the Government, which would result in the segregation of ownership, trading
rights and management.
b. The rolling settlement on T+5 basis was extended to 200 stocks in the erstwhile ‘A’ group
and to those in which any deferral products such as ALBM, BLESS and MCFS were