Merchant Banker refers to entity registered with SEBI with specific purpose and guidelines of activities to pursue in financial market per se securities market.

It means any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to securities issued by corporate who is in process of or already listed in securities market or acting as manager, consulting, adviser or rendering corporate advisory service in relation to such issue either fresh or post fresh issue management.

Issue means an offer of sale or purchase of securities by anybody corporate, or by any other person or group of person on its or his or their behalf, as the case may be, to or from the public, or the holders of securities of such body corporate or person or group of persons through merchant banker.

Principal Officer means:- 

2. Partner, in the case of a partnership firm

3. Director, in the case of body corporate who is responsible for the activities of the merchant banker

Application to be placed in Form A accompanied by non-refundable application fees INR 50,000/-

Category I

Category II

Category III

To act as underwriter, adviser, consultant to an issue                                                                                                      

Category IV

Considerations of Applications:-

• Applicant shall be body corporate other than non-banking financial company
• Applicant has necessary infrastructure like adequate office space, equipment’s and manpower to effectively discharge the activities
• Applicant has employment minimum of two person who have experience to conduct the business of merchant banker
• Applicant fulfill the capital adequacy as required by regulation
• Person directly or indirectly connected with applicant has not been granted registration by the Board.
• Applicant, his partner, director or principal officer has not involved in any litigation connected with securities market or has not at any time been convicted for any offence involving moral turpitude or has been found guilty of any economic offence
• Applicant has professional qualification from an institution recognized by Government in finance, law or business management.

Capital Adequacy:-

• The bare minimum capital adequacy requirements shall be a net worth of not less than INR 5 Crore.
• Net worth means sum of paid-up capital and free reserves of the applicant at the time of making application under this regulation.
• The minimum requirement of capital earlier used to have different limit subject to category but by amendment now the every category available need to have minimum capital adequacy of INR 5 Crore.   

Process:-

Applicant should filled the Form A and provide the documentary evidence in support of information provided in application form. It should be filled and numbered accordingly. All pages of submission need to be signed by Authorized signatory, originally and stamped thereon.

It need to be properly bind and placed in from of SEBI, Mumbai. Before that online application need to be submitted with non-refundable application fees thereon to place physical file at Mumbai.

Checklist:-

• Name of Applicant, contact no, mail id, principal place of business
• Organization structure and chart showing functional responsibilities
• Certificate of Incorporation, Memorandum and Article of Association
• Partnership Deed/LLP Incorporation Certificate
• PAN Card of Applicant
• Academic qualification, experience certificate and profile of Director/Partner of Applicant
• Shareholding Pattern of Applicant
• Board Resolution
• Details of Directors/Partners in other company, their activity and interest holding, if any
• Particulars of Key Managerial Personnel, qualification, experience certificate and responsibilities assigned
• Experience in terms of issue management, investment adviser, underwriting, portfolio management and consultant/advisor to issue to be provided
• Business Plan
• Details of infrastructure including computing facilities, equity research and data base available with applicant
• Audited/Un-audited financial statement of applicant
• Net worth certificate from Statutory Auditor
• Details of principal bankers and statutory auditor
• Declaration and undertaking.

Registration Fees:-

INR 50,000 is initial cost as non-refundable application fees. Thereafter INR 20,00,000 is to be paid to Board as Registration Fees as Merchant Banker. It has to be paid within 15 days from the communication receipt by applicant from Board.

Further to keep registration certificate in force, shall pay fee of INR 9,00,000/- every three years from the sixth year from the date of grant of certificate of registration. The stated fees shall be paid by the merchant banker 3 months before expiry of the block for which fees has been paid.

The fees mentioned above shall be payable by the merchant banker by a Demand Draft in favour of “Securities and Exchange Board of India” payable at Mumbai.

Disclaimer:- The entire contents of this article are solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation by the Author. Author of this Article do not constitute any sort of professional advice or a formal recommendation. The author has undertaken utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify and confirm the updates from the genuine sources before acting on any of the information’s provided hereinabove.