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Merchant Bankers Regulations

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Merchant Banking Regulations and a detailed

Merchant Banking Regulations and a detailed
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Merchant Bankers Regulations Presentation Transcript

  • 1. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Prepared By: Amar Ranu (905) Deepak Thakkar (909) Kumar Dhananjay Rakesh (917) Shakti Shatpathy (930) Under Guidance of : Prof. Dr. Rachana Baid Indian Institute of Capital Markets
  • 2. Contents Introduction Registration Obligations & Responsibilities Procedure for Inspection Procedure for Action incase of Default
  • 3. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Introduction Origination of Merchant Bankers in India Introduction Nature of Merchant Banking Registration Merchant Banker’s Core Business Portfolio Obligations & Responsibilities Need for Regulation Procedure for Definition Inspection Procedure for Action incase of Default
  • 4. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Introduction Origination of Merchant Bankers in India Introduction Nature of Merchant Banking Registration Merchant Banker’s Core Business Portfolio Obligations & Responsibilities Need for Regulation Procedure for Definition Inspection Procedure for Action incase of Default
  • 5. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Introduction Origination of Merchant Bankers in India Introduction  Merchant banking activity was formally initiated into the Indian capital Markets in 1967. Registration  Started with various services like management of capital issues, Obligations & production planning and system design to market research and management consulting services to meet the requirements of small Responsibilities and medium sector rather than large sector. Procedure for  Citibank Setup its merchant banking division in 1970. The various Inspection tasks performed by this divisions namely assisting new entrepreneur, evaluating new projects, raising funds through borrowing and issuing Procedure for Action equity. incase of Default  Indian banks Started banking Services as a part of multiple services they offer to their clients from 1972.  State bank of India started the merchant banking division in 1972. In the Initial years the SBI's objective was to render corporate advice And Assistance to small and medium entrepreneurs.
  • 6. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Introduction Origination of Merchant Bankers in India Introduction Nature of Merchant Banking Registration Merchant Banker’s Core Business Portfolio Obligations & Responsibilities Need for Regulation Procedure for Definition Inspection Procedure for Action incase of Default
  • 7. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Introduction Nature of Merchant Banking Introduction  The services of merchant bank cover project counseling, pre investment activities, feasibility studies, project reports, design of Registration capital structure, issue management, underwriting, loan syndication, mobilization of funds, foreign currency finance, mergers, Obligations & amalgamation, takeover, venture capital and public deposits. Responsibilities  Merchant banking is skill based activities and involves serving Procedure for financial need of every client. Inspection  The depth and sophistication in merchant banking business are improving since the avenues for raising funds are widening and Procedure for Action demands for funds is increasing. incase of Default  Merchant bankers can turn to any of the activities depending upon resources, such as capital, foreign tie-ups for overseas activities and skills.
  • 8. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Introduction Origination of Merchant Bankers in India Introduction Nature of Merchant Banking Registration Merchant Banker’s Core Business Portfolio Obligations & Responsibilities Need for Regulation Procedure for Definition Inspection Procedure for Action incase of Default
  • 9. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Introduction Merchant Banker’s Core Business Portfolio Introduction Core Business Portfolio Registration Non-fund Based Fund Based  Merchant Banking Services for Underwriting Obligations & Management of public offers of equity Responsibilities and debt instruments Market Making  Right issues Bought out deals Procedure for Proprietary investment and trading in  Open offer under the takeover code Inspection equities, bonds and derivatives.  Buyback offers Procedure for Action Advisory and Transaction services in incase of Default  Project financing  Syndicated loans  Private Equity/Venture capital  Business Advisory  Financial Restructuring  Corporate re-organisations such as mergers and demergers, hive-offs, asset sales, divestitures  Acquisition, strategic sale, buyouts and takeovers
  • 10. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Introduction Origination of Merchant Bankers in India Introduction Nature of Merchant Banking Registration Merchant Banker’s Core Business Portfolio Obligations & Responsibilities Need for Regulation Procedure for Definition Inspection Procedure for Action incase of Default
  • 11. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Introduction Need for Regulation Introduction Registration  The merchant banker's regulations, which regulate the raising of funds in the primary market, would assure for the issuer market for Obligations & raising resources at low cost, effectively and easily, ensure high Responsibilities degree of protection of investors interest. Procedure for  The regulations provide for the merchant bankers a dynamic and Inspection competitive market with the high standard of professional competence, dignity, integrity and solvency. Procedure for Action The regulations promote a primary market, which is fair, efficient, incase of Default and flexible, and inspire confidence.
  • 12. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Introduction Origination of Merchant Bankers in India Introduction Nature of Merchant Banking Registration Merchant Banker’s Core Business Portfolio Obligations & Responsibilities Need for Regulation Procedure for Definition Inspection Procedure for Action incase of Default
  • 13. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Introduction Definition Introduction Registration Obligations & quot;Any person who is engaged in the business of issue management Responsibilities either by making arrangements regarding selling, buying or subscribing to securities has manager, consultant, advisor or Procedure for rendering corporate advisory services in relation to such issue Inspection managementquot;. Procedure for Action incase of Default
  • 14. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Registration of Merchant Bankers Categories of the Merchant Bankers Introduction Requirements for Granting of Certificate Registration Capital Adequacy Requirement Obligations & Responsibilities Procedure for Registration Procedure for Renewal of Certificate Inspection Procedure for Action incase of Default
  • 15. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Registration of Merchant Bankers Categories of the Merchant Bankers Introduction Requirements for Granting of Certificate Registration Capital Adequacy Requirement Obligations & Responsibilities Procedure for Registration Procedure for Renewal of Certificate Inspection Procedure for Action incase of Default
  • 16. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Registration of Merchant Bankers Categories of Merchant Bankers Introduction (a) Category I  to carry on any activity of the issue management, which will inter- Registration alia consist of preparation of prospectus and other information relating to the issue, determining financial structure, tie-up of Obligations & financiers and final allotment and refund of the subscription; and Responsibilities  to act as adviser, consultant, manager, underwriter, portfolio manager. Procedure for Inspection (b) Category II To act as adviser, consultant, co-manager, underwriter, portfolio Procedure for Action manager incase of Default (c) Category III To act as underwriter, adviser, consultant to an issue (d) Category IV To act only as adviser or consultant to an issue.
  • 17. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Registration of Merchant Bankers Categories of the Merchant Bankers Introduction Requirements for Granting of Certificate Registration Capital Adequacy Requirement Obligations & Responsibilities Procedure for Registration Procedure for Renewal of Certificate Inspection Procedure for Action incase of Default
  • 18. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Registration of Merchant Bankers Requirements for Granting of Certificate Introduction The Applicant . . . . Registration  shall be a body corporate other than a NBFC  has the necessary infrastructure to effectively discharge his Obligations & activities. Responsibilities  Should have minimum two experienced employees to conduct the Procedure for business of the merchant banker. Inspection  Should fulfill the capital adequacy requirement as specified. Procedure for Action  his partner, director or principal officer should not be involved in any incase of Default litigation connected with the securities market which has an adverse bearing on the business of the applicant.  his partner, director or principal officer has not at any time been convicted for any offence involving moral turpitude or has been found guilty of any economic offence.  Should have the professional qualification from an institution recognized by the Government in finance, law or business management.  Should be a fit and proper person.
  • 19. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Registration of Merchant Bankers Categories of the Merchant Bankers Introduction Requirements for Granting of Certificate Registration Capital Adequacy Requirement Obligations & Responsibilities Procedure for Registration Procedure for Renewal of Certificate Inspection Procedure for Action incase of Default
  • 20. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Registration of Merchant Bankers Capital Adequacy Requirements Introduction  The Capital Adequacy Requirement(CAR) shall not be less than the net worth of the person making the application for grant of Registration registration. Obligations &  The net worth shall be as follows, namely: - Category Minimum Amount Responsibilities 1) Category I Rs. 5, 00, 00, 000 Procedure for 2) Category II Rs. 50, 00, 000 3) Category III Rs. 20, 00, 000 Inspection 4) Category IV Nil Procedure for Action  Explanation: incase of Default For the purposes of this regulation quot;net worthquot; means in the case of an applicant which is a partnership firm or a body corporate, the value of the capital contributed to the business of such firm or the paid up capital of such body corporate plus free reserves as the case may be at the time of making application.
  • 21. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Registration of Merchant Bankers Categories of the Merchant Bankers Introduction Requirements for Granting of Certificate Registration Capital Adequacy Requirement Obligations & Responsibilities Procedure for Registration Procedure for Renewal of Certificate Inspection Procedure for Action incase of Default
  • 22. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Registration of Merchant Bankers Procedure for Registration Introduction  The SEBI on being satisfied that the applicant is eligible shall grant a certificate in Form B. Registration  On the grant of a certificate the applicant shall be liable to pay the Obligations & fees in accordance with Schedule II as shown below: Responsibilities Procedure for Registration Fees Inspection Merchant Initial Fees for 2 Continuation Banker Yrs Fees Procedure for Action Category I Rs. 2.5 Lakhs Rs. 1 Lakh incase of Default Category II Rs. 1 Lakh Rs. 50,000 Category III Rs. 1 Lakh Rs. 25,000 Category IV Rs. 5000 Rs. 1000
  • 23. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Registration of Merchant Bankers Categories of the Merchant Bankers Introduction Requirements for Granting of Certificate Registration Capital Adequacy Requirement Obligations & Responsibilities Procedure for Registration Procedure for Renewal of Certificate Inspection Procedure for Action incase of Default
  • 24. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Registration of Merchant Bankers Renewal of Certificate Introduction  Three months before expiry of the period of certificate, the merchant banker, may if he so desires, make an application for Registration renewal in Form A.  The application for renewal shall be dealt within the same manner Obligations & as if it were a fresh application for grant of a certificate. Responsibilities  The SEBI on being satisfied that the applicant is eligible for Procedure for renewal of certificate shall grant a certificate in Form B and send Inspection intimation to the applicant. Procedure for Action  On the grant of a certificate the applicant shall be liable to pay the incase of Default fees in accordance with Schedule II as shown below: Renewal Fees Merchant Initial Fees for 2 Continuation Banker Yrs Fees Category I Rs. 1 Lakh Rs. 20,000 Category II Rs. 75,000 Rs. 10,000 Category III Rs. 50,000 Rs. 5,000 Category IV Rs. 5000 Rs. 2500
  • 25. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Obligations & Responsibilities Code of Conduct Introduction Maintenance of Books of Accounts, Records, etc. Registration Submission of Half Yearly Results Obligations & Responsibilities Appointment of Lead Merchant Bankers & Restrictions Procedure for Responsibilities of Lead Managers Inspection Underwriting Obligations Procedure for Action incase of Default Appointment of Compliance Officers
  • 26. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Obligations & Responsibilities Code of Conduct Introduction Maintenance of Books of Accounts, Records, etc. Registration Submission of Half Yearly Results Obligations & Responsibilities Appointment of Lead Merchant Bankers & Restrictions Procedure for Responsibilities of Lead Managers Inspection Underwriting Obligations Procedure for Action incase of Default Appointment of Compliance Officers
  • 27. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Obligations & Responsibilities Code of conduct Introduction  Every merchant banker shall abide by the Code of Conduct as specified in Schedule III. Registration  No merchant banker, other than a bank or a public Obligations & financial institution, who has been granted a certificate of Responsibilities registration under these regulations shall after June 30th, 1998 carry on any business other than that in the Procedure for securities market. Inspection Procedure for Action  A merchant banker who has been granted certificate of incase of Default registration to act as primary dealer by Reserve Bank of India, may carry on such business as may be permitted by Reserve Bank of India.
  • 28. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Obligations & Responsibilities Code of Conduct Introduction Maintenance of Books of Accounts, Records, etc. Registration Submission of Half Yearly Results Obligations & Responsibilities Appointment of Lead Merchant Bankers & Restrictions Procedure for Responsibilities of Lead Managers Inspection Underwriting Obligations Procedure for Action incase of Default Appointment of Compliance Officers
  • 29. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Obligations & Responsibilities Maintenance of Books of Accounts, Records, etc. Introduction  Every merchant banker shall keep and maintain the Registration following books of accounts, records and documents namely:- Obligations & (a) a copy of balance sheet and P&L account as at the end Responsibilities of each accounting period; (b) a copy of the auditor's report on the accounts for that Procedure for period; and Inspection (c) a statement of financial position. Procedure for Action  Every merchant banker shall intimate to the SEBI the place incase of Default where the books of accounts, records and documents are maintained.  Every merchant banker shall, after the end of each accounting period furnish to the SEBI copies of the balance sheet, profit and loss account and such other documents for any other preceding five accounting years when required by the SEBI.
  • 30. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Obligations & Responsibilities Code of Conduct Introduction Maintenance of Books of Accounts, Records, etc. Registration Submission of Half Yearly Results Obligations & Responsibilities Appointment of Lead Merchant Bankers & Restrictions Procedure for Responsibilities of Lead Managers Inspection Underwriting Obligations Procedure for Action incase of Default Appointment of Compliance Officers
  • 31. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Obligations & Responsibilities Submission of Half Yearly Results Introduction  Every merchant banker shall furnish to the SEBI half- Registration yearly unaudited financial results when required by the SEBI with a view to monitor the capital adequacy of the merchant banker. Obligations & Responsibilities Procedure for Inspection Procedure for Action incase of Default
  • 32. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Obligations & Responsibilities Code of Conduct Introduction Maintenance of Books of Accounts, Records, etc. Registration Submission of Half Yearly Results Obligations & Responsibilities Appointment of Lead Merchant Bankers & Restrictions Procedure for Responsibilities of Lead Managers Inspection Underwriting Obligations Procedure for Action incase of Default Appointment of Compliance Officers
  • 33. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Obligations & Responsibilities Appointment of Lead merchant Bankers Introduction  All issues should be managed by at least one merchant banker functioning as the lead merchant banker. Registration  Every lead merchant banker shall before taking up the assignment relating to an issue, enter into an agreement Obligations & with such body corporate setting out their mutual rights, Responsibilities liabilities and obligations relating to such issue and in particular to disclosures, allotment and refund. Procedure for Inspection Restriction on appointment of lead managers  The number of lead merchant bankers may not, exceed in Procedure for Action case of any issue of Size of issue No. of Merchant Bankers incase of Default (a) Less than rupees fifty crore - Two (2) (b) Rupees fifty crore but less than rupees one hundred crore - Three(3) (c) Rupees one hundred crore but less than rupees two hundred crore - Four (4) (d) Rupees two hundred crore but less than rupees four hundred crore - Five (5) (e) Above Rupees four hundred crore five or more as may be agreed by the SEBI
  • 34. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Obligations & Responsibilities Code of Conduct Introduction Maintenance of Books of Accounts, Records, etc. Registration Submission of Half Yearly Results Obligations & Responsibilities Appointment of Lead Merchant Bankers & Restrictions Procedure for Responsibilities of Lead Managers Inspection Underwriting Obligations Procedure for Action incase of Default Appointment of Compliance Officers
  • 35. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Obligations & Responsibilities Responsibilities of Lead Managers Introduction  No lead manager shall agree to manage or be associated with any issue unless his responsibilities relating to the Registration issue mainly, those of disclosures, allotment and refund are clearly defined, allocated and determined and a Obligations & statement specifying such responsibilities is furnished to Responsibilities the SEBI at least one month before the opening of the issue for subscription: Procedure for Inspection  Incase there are more than one lead merchant bankers, the responsibilities should be clearly demarcated . Procedure for Action incase of Default  No lead merchant banker shall, agree to manage the issue made by any body corporate, if such body corporate is an associate of the lead merchant banker.
  • 36. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Obligations & Responsibilities Code of Conduct Introduction Maintenance of Books of Accounts, Records, etc. Registration Submission of Half Yearly Results Obligations & Responsibilities Appointment of Lead Merchant Bankers & Restrictions Procedure for Responsibilities of Lead Managers Inspection Underwriting Obligations Procedure for Action incase of Default Appointment of Compliance Officers
  • 37. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Obligations & Responsibilities Underwriting Obligations Introduction  In respect of every issue to be managed, the lead merchant banker holding a certificate under Category I shall accept a Registration minimum Underwriting obligation of five percent of the total underwriting commitment or rupees twenty-five lakh, whichever Obligations & is less. Responsibilities  Incase the lead merchant banker is unable to accept the Procedure for minimum underwriting obligation, that lead merchant banker shall make arrangement for having the issue underwritten to that Inspection extent by a merchant banker associated with the issue and shall keep the SEBI informed of such arrangement. Procedure for Action incase of Default
  • 38. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Obligations & Responsibilities Code of Conduct Introduction Maintenance of Books of Accounts, Records, etc. Registration Submission of Half Yearly Results Obligations & Responsibilities Appointment of Lead Merchant Bankers & Restrictions Procedure for Responsibilities of Lead Managers Inspection Underwriting Obligations Procedure for Action incase of Default Appointment of Compliance Officers
  • 39. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Obligations & Responsibilities Appointment of Compliance Officers Introduction  Every merchant banker shall appoint a compliance officer who shall be responsible for monitoring the compliance of Registration the Act, rules and regulations, notifications, guidelines, instructions etc., issued by the SEBI or the Central Obligations & Government and for redressal of investors’ grievances. Responsibilities  The compliance officer shall immediately and independently Procedure for report to the SEBI any non-compliance observed by him and Inspection ensure that the observations made or deficiencies pointed Procedure for Action out by the SEBI in the draft prospectus or the Letter of offer incase of Default as the case may be, do not recur.
  • 40. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Procedure for Inspection SEBI’s right to inspect Introduction Notice before inspection Registration Submission of Reports to the SEBI Obligations & Responsibilities Appointment of Auditors Procedure for Inspection Procedure for Action incase of Default
  • 41. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Procedure for Inspection SEBI’s right to inspect Introduction Notice before inspection Registration Submission of Reports to the SEBI Obligations & Responsibilities Appointment of Auditors Procedure for Inspection Procedure for Action incase of Default
  • 42. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Procedure for Inspection SEBIs right to Inspect Introduction  The SEBI may appoint one or more persons as inspecting authority to undertake inspection of Registration  the books of accounts,  records and Obligations &  documents of the merchant banker. Responsibilities  Purpose of Inspection . . . Procedure for Inspection  to ensure that the books of account are being maintained in the manner required; Procedure for Action incase of Default  to ensure the provisions of the Act, rules, regulations are being complied with;  to investigate into the complaints received from investors, other merchant bankers or any other person on any matter having a bearing on the activities of the merchant banker; and  to investigate suo-moto in the interest of securities business or investors interest into the affairs of the merchant banker.
  • 43. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Procedure for Inspection SEBI’s right to inspect Introduction Notice before inspection Registration Submission of Reports to the SEBI Obligations & Responsibilities Appointment of Auditors Procedure for Inspection Procedure for Action incase of Default
  • 44. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Procedure for Inspection Notice before Inspection Introduction  Before undertaking an inspection under regulation 29 the SEBI shall give a reasonable notice to the merchant banker for that Registration purpose.  During the course of inspection, the merchant banker against Obligations & whom an inspection is being carried out shall be bound to Responsibilities discharge his obligations. Procedure for Inspection Procedure for Action incase of Default
  • 45. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Procedure for Inspection SEBI’s right to inspect Introduction Notice before inspection Registration Submission of Reports to the SEBI Obligations & Responsibilities Appointment of Auditors Procedure for Inspection Procedure for Action incase of Default
  • 46. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Procedure for Inspection Submission of Reports to the SEBI Introduction  The inspecting authority shall, as soon as may be possible submit an inspection report to the SEBI. Registration Obligations & Action on inspection or investigation report Responsibilities  The SEBI or the Chairman shall after consideration of Procedure for inspection or investigation report take such action as the Inspection SEBI or Chairman may deem fit and appropriate including action under the Securities and Exchange Board of India. Procedure for Action incase of Default
  • 47. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Procedure for Inspection SEBI’s right to inspect Introduction Notice before inspection Registration Submission of Reports to the SEBI Obligations & Responsibilities Appointment of Auditors Procedure for Inspection Procedure for Action incase of Default
  • 48. Securities Exchange Board of India (Merchant Bankers) Regulations, 1992 Procedure for Inspection Appointment of Auditors Introduction  The SEBI may appoint a qualified auditor to investigate Registration into the books of account or the affairs of the merchant banker provided that the auditor so appointed shall have the same powers of the inspecting authority Obligations & Responsibilities Procedure for Inspection Procedure for Action incase of Default
  • 49. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Procedure for Action in case of Default Suspension of Registration Introduction Cancellation of Registration Registration Show-cause notice and order Obligations & Responsibilities Effect of Suspension & cancellation of Registration of Merchant Bankers Procedure for Inspection Publication of Order of Suspension Procedure for Action incase of Default
  • 50. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Procedure for Action in case of Default Suspension of Registration Introduction Cancellation of Registration Registration Show-cause notice and order Obligations & Responsibilities Effect of Suspension & cancellation of Registration of Merchant Bankers Procedure for Inspection Publication of Order of Suspension Procedure for Action incase of Default
  • 51. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Procedure for Action in case of Default Suspension of Registration Introduction A penalty of suspension of registration of a merchant banker may be imposed where –  The merchant banker violates the provisions of the Act, rules or Registration regulations;  The merchant banker – Obligations & (a) fails to furnish any information relating to his activity as Responsibilities merchant banker as required by the SEBI; Procedure for (b) furnishes wrong or false information; Inspection (c) does not submit periodical returns as required by the SEBI. (d) does not co-operate in any enquiry conducted by the SEBI. Procedure for Action incase of Default  The merchant banker fails to resolve the complaints of the investors or fails to give a satisfactory reply to the SEBI in this behalf;  The merchant banker indulges in manipulating or price rigging or cornering activities;  The merchant banker fails to maintain the capital adequacy requirement;  The merchant banker fails to pay the fees;  The merchant banker violates the conditions of registration;  The merchant banker does not carry out his obligations as specified in the regulation.
  • 52. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Procedure for Action in case of Default Suspension of Registration Introduction Cancellation of Registration Registration Show-cause notice and order Obligations & Responsibilities Effect of Suspension & cancellation of Registration of Merchant Bankers Procedure for Inspection Publication of Order of Suspension Procedure for Action incase of Default
  • 53. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Procedure for Action in case of Default Cancellation of Registration Introduction A penalty of cancellation of registration of a merchant banker may be imposed if Registration The merchant banker indulges in deliberate manipulation or price rigging or cornering activities affecting the securities Obligations & market and the investors interest; Responsibilities Procedure for The financial position of the merchant banker deteriorates to Inspection such an extent that the SEBI is of the opinion that his continuance as merchant banker is not in the interest of Procedure for Action investors; incase of Default The merchant banker is guilty of fraud, or is convicted of a criminal offence;
  • 54. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Procedure for Action in case of Default Suspension of Registration Introduction Cancellation of Registration Registration Show-cause notice and order Obligations & Responsibilities Effect of Suspension & cancellation of Registration of Merchant Bankers Procedure for Inspection Publication of Order of Suspension Procedure for Action incase of Default
  • 55. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Procedure for Action in case of Default Show-cause notice and order Introduction  On receipt of the report from the enquiry officer, the SEBI shall consider the same and issue a show-cause notice as to Registration why the penalty as proposed by the enquiry officer should not be imposed. Obligations &  The merchant banker shall within twenty-one days of the Responsibilities date of the receipt of the show- cause send a reply to the Procedure for SEBI. Inspection  The SEBI after considering the reply to the show-cause notice, if received, shall as soon as possible but not later Procedure for Action than thirty days from the receipt of the reply, if any, pass incase of Default such order as it deems fit.  Every order passed shall be self- contained and give reasons for the conclusions stated therein including justification of the penalty imposed by that order.  The SEBI shall send a copy of the order to the merchant banker.
  • 56. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Procedure for Action in case of Default Suspension of Registration Introduction Cancellation of Registration Registration Show-cause notice and order Obligations & Responsibilities Effect of Suspension & Cancellation of Registration of Merchant Bankers Procedure for Inspection Publication of Order of Suspension Procedure for Action incase of Default
  • 57. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Procedure for Action in case of Default Effect of Suspension & cancellation of Registration of Introduction Merchant Bankers Registration  On and from the date of the suspension of the merchant banker, he shall cease to carry on any activity as a Obligations & merchant banker during the period of suspension. Responsibilities  On and from the date of cancellation the merchant banker Procedure for shall with immediate effect cease to carry on any activity Inspection as a merchant banker. Procedure for Action incase of Default
  • 58. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Procedure for Action in case of Default Suspension of Registration Introduction Cancellation of Registration Registration Show-cause notice and order Obligations & Responsibilities Effect of Suspension & cancellation of Registration of Merchant Bankers Procedure for Inspection Publication of Order of Suspension Procedure for Action incase of Default
  • 59. Securities Exchange Board of india (Merchant Bankers) Regulations, 1992 Procedure for Action in case of Default Publication of Order of Suspension Introduction  The order of suspension or cancellation of certificate Registration passed shall be published in at least two daily newspapers by the SEBI. Obligations & Responsibilities  Any person aggrieved by an order of the SEBI made, on Procedure for and after the commencement of the Securities Laws Inspection (Second amendment) Act, 1999, (i.e., after 16th December 1999), under these regulations may prefer an appeal to a Procedure for Action Securities Appellate Tribunal having jurisdiction in the incase of Default matter.
  • 60. Thank You