(1) A merchant banker shall not lead manage any issue or be associated with any activity undertaken under any regulations made by the Board, if he is a promoter or a director or an associate of the issuer of securities or of any person making an offer to sell or purchase securities in terms of any regulations made by the Board:
Provided that a merchant banker who is an associate of such issuer or person may be appointed, if he is involved only in the marketing of the issue or offer.
Explanation: For the purposes of this regulation, a merchant banker shall be deemed to be an ―associate of the issuer or person‖ if:
(i) either of them controls, directly or indirectly through its subsidiary or holding company, not less than fifteen per cent. of the voting rights in the other; or
(ii) either of them, directly or indirectly, by itself or in combination with other persons, exercises control over the other; or
(iii) there is a common director, excluding nominee director, amongst the issuer, its subsidiary or holding company and the merchant banker.‖] Underwriting obligations.
22. In respect of every issue to be managed, the lead merchant banker holding a certificate under Category I shall accept a minimum underwriting obligation of five per cent of the total underwriting commitment or rupees twenty-five lacs, whichever is less :
Provided that, if the lead merchant banker is unable to accept the minimum underwriting obligation, that lead merchant banker shall make arrangement for having the issue underwritten to that extent by a merchant banker associated with the issue and shall keep the Board informed of such arrangement.
49 Omitted by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, w. e. f., 26-08-2009.
50 Inserted by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, w. e. f., 26-08-2009.
Page 16 of 31 51[Provided further that in any issue made in accordance with Chapter XA of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 the merchant banker shall, itself or jointly with other merchant bankers associated with the issue, underwrite at least fifteen per cent of the issue size.]
Submission of due diligence certificate.
23.52[****] Document to be furnished to the Board.
24.53[****] Payment of fees to the Board.
24A.54[****] Continuance of association of lead manager with an issue.
25.55[****] Acquisition of shares prohibited.
26. No merchant banker or any of its directors, partner or manager or principal officer shall either on their respective accounts or through their associates or relatives, enter into any transaction in securities of bodies corporate on the basis of unpublished price sensitive information obtained by them during the course of any professional assignment either from the clients or otherwise.
Information to the Board.
27. Every merchant banker shall submit to the Board complete particulars of any transaction for acquisition of securities of any body corporate whose issue is being managed by that merchant banker within fifteen days from the date of entering into such transaction.
56[Provided that complete particulars of any transaction for acquisition of securities made in pursuance of underwriting or market making obligations in accordance with Chapter XA of the Securities and Exchange Board of India (Issue of Capital and 51 Proviso to regulation 22 was inserted by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2010 w.e.f, 13.04.2010 52 Omitted by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, w. e. f., 26-08-2009.
53 Omitted by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, w. e. f., 26-08-2009.
54 Omitted by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, w. e. f., 26-08-2009.
55 Omitted by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, w. e. f., 26-08-2009.
56 Proviso to regulation 27 was inserted by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2010 w.e.f, 13.04.2010.
Page 17 of 31 Disclosure Requirements) Regulations, 2009 shall be submitted to the Board on quarterly basis.]
Disclosures to the Board.
2857[(1)] A merchant banker shall disclose to the Board, as and when required, the following information, namely:—
(i) his responsibilities with regard to the management of the issue;
(ii) any change in the information or particulars previously furnished, which have a bearing on the certificate granted to it;
(iii) the names of the body corporate whose issues he has managed or has been associated with;
(iv) the particulars relating to the breach of the capital adequacy requirement as specified in regulation 7;
(v) relating to his activities as a manager, underwriter, consultant or adviser to an issue, as the case may be.
58[{(2) The merchant banker shall submit a periodic report in such manner as may be specified by the Board from time to time}] 59[Appointment of compliance officer.