(1) It shall be the duty of every director, proprietor, partner, officer and employee of the merchant banker, who is being inspected, to produce to the inspecting authority such books, accounts and other documents in his custody or control and furnish him with the statements and information relating to his activities as a merchant banker within such time as the inspecting authority may require.
(2) The merchant banker shall allow the inspecting authority to have reasonable access to the premises occupied by such merchant banker or by any other person on his behalf and also extend reasonable facility for examining any books, records, documents and computer data in the possession of the merchant banker or any such other person and also provide copies of documents or other materials which, in the opinion of the inspecting authority, are relevant for the purposes of the inspection.
(3) The inspecting authority, in the course of inspection, shall be entitled to examine or record statement of any principal officer, director, partner, proprietor and employee of the merchant banker.
(4) It shall be the duty of every director, proprietor, partner, officer or employee of the merchant banker to give to the inspecting authority all assistance in connection with inspection which the merchant banker may reasonably be expected to give.
Submission of report to the Board.
32. The inspecting authority shall, as soon as may be possible submit, an inspection report to the Board.
Page 19 of 31 60[Action on inspection or investigation report.
33. The Board or the Chairman shall after consideration of inspection or investigation report take such action as the Board or Chairman may deem fit and appropriate including action under 61[ Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008]].
Appointment of auditor.
34. The Board may appoint a qualified auditor to investigate into the books of account or the affairs of the merchant bankers:
Provided that the auditor so appointed shall have the same powers of the inspecting authority as are mentioned in regulation 29 and the obligations of the merchant banker in regulation 31 shall be applicable to the investigation under this regulation.
Explanation.—For the purposes of this regulation the expression ―qualified auditor‖ shall have the same meaning as given in section 226 of the Companies Act, 1956 (1 of 1956).
CHAPTER V PROCEDURE FOR ACTION IN CASE OF DEFAULT 62[Liability for action in case of default.
35. A merchant banker who contravenes any of the provisions of the Act, Rules or Regulations framed thereunder shall be liable for one or more actions specified 60 Substituted by the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 w.e.f.,27.09.2002. Prior to the substitution the regulation read as under:
―Communication of findings etc. to the merchant banker‖ 33. (1) The Board shall after consideration of the inspection report communicate the findings to the merchant banker to give him an opportunity of being heard before any action is taken by the Board on the findings of the inspecting authority.
(2) On receipt of the explanation if any, from the merchant banker, the Board may call upon the merchant banker to take such measures as the Board may deem fit in the interest of the securities market and for due compliance with the provisions of the Act, rules and regulations.‖ 61 Substituted for ―the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 by the Securities and Exchange Board of India (Intermediaries) Regulations, 2008, w.e.f, 26-5-2008.
62 Substituted by the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 w.e.f, 26-5-
2008. Prior to the substitution the regulation read as under:
33. Action on inspection or investigation report – The Board or the Chairman shall after consideration of inspection or investigation report take action as the Board or Chairman may deem fit and appropriate including action under the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002.‖ Prior to the above substitution the regulation read as under:
―33. Communication of findings etc. to the merchant banker etc.-
(1) The Board shall after consideration of the inspection report communicate the findings to the merchant banker to give him an opportunity of being heard before any action is taken by the Board on the findings of the inspecting authority.
(2) On receipt of the explanation if any, from the merchant banker, the Board may call upon the merchant banker to take such measures as the Board amy deem fit in the interest of the securities market and for due compliance with the provisions of the Act, rules and regulations.‖ Page 20 of 31 therein including the action under Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.]
36. to 43.63[***]
SCHEDULE I FORMS FORM A Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992 [64[Regulation 3]] 65[Application for Grant of Certificate of Registration] Name of Applicant 66[***] Category I Contact Name Telephone No.
Instructions for Filling up Form
1. Applicants must submit a completed application form together with appropriate supporting documents to the Board.
2. It is important that this application form should be filled in accordance with the regulations.
3. Application for registration will be considered provided it is complete in all respects.
4. Answers must be typed.
5. Information which needs to be supplied in more details may be given on separate sheets which should be attached to the application form.
6. All signatures must be original.
1. Particulars of the applicant:
1.1 Name of Applicant :
1.2 (A) Address—Principal Place of business/Registered Office of the Company.
63 The regulations 36 to 43 were omitted by the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 w.e.f., 27.09.2002.
64 Substituted for ―Regulation 3/ Regulation 8A‖ by the the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to this, the words ―Regulation 3/ Regulation 8A‖ were substituted for the words ―Regulation 3‖ by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2011 w.e.f. 05-07-
2011.
65 Substituted for ―Application for Grant of Certificate of Initial/ Permanent Registration‖ by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to this, the words ―Application for Grant of Certificate of Initial/ Permanent Registration‖ were substituted for the words ―Application for Grant of Certificate / Renewal of Certificate‖ by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2011 w.e.f. 05-07-2011.
66 Words ―Applied for :II/III/IV‖ omitted by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 1997 w.e.f , 9-12-1997.
Page 21 of 31 Pin Code................................ Telephone No. .................................. Telex No.
.....................................
Fax No.................................
(B) Address for Correspondence :
Pin Code................................ Telephone No. ................................ Telex No.
................................
Fax No. ................................
(C) Address of Branch Offices :
2. Organisation structure (Organisation Chart separately showing functional responsibilities of Merchant Banking activities to be enclosed).
2.1 Objectives : (To be given in brief alongwith copy of Memorandum and Articles of Association).
2.2 Date and Place of Incorporation :
Day Month/Year Place
2.3 Status of the Applicant : (e.g., limited company—Private/Public, unlimited company, partnership, proprietary, others. If listed, names of Stock Exchanges and latest share price to be given).
2.4 Particulars of all Directors/Partners/Proprietors:
Name Qualification Experience in Merchant Banking & Financial Ser- vices related areas Share in applicants firm/company Directorship in other companies
2.5 Particulars of Key Management Personnel : (Particulars of merchant banking division) Name Qualification Experience with particular reference to merchant banking Date of appointm ent Function al areas
2.6 Name and activities of associate companies/concerns Name of Company/ Firm Address Types of activity handled Nature of interest of Promoter /Director Nature of interest of applicant company Page 22 of 31
3. Business information
3.1 History, major events and present activities :
3.2 Details of Experience in Merchant Banking activities:
3.3 Experience in other financial services rendered :
3.4 Business handled during the last three years :
(a) Issue Management Name of client Type of issue Size of Issue Year of Issue Times subscribe d Name of lead merchant banker Functional responsibili ties 1 2 3 4 5 6 7
(b) Investment Adviser Name of client Year for which services are rendered Nature of services rendered
(c) Underwriting Name of client Year of issue Type and Size of Issue Amount underwritten %age of Issue under written Whether there was any development
(d) Portfolio Management Name of Scheme Features of the Scheme Number of clients Total volume of funds managed Average returns
(e) Consultants/Advisors to the Issue Name of the client Year of Issue Type and size of Issue Nature of services rendered Name of lead Merchant Banker(s)
4. Client information
4.1 List of major clients with address Name Services rendered ......................................................................................................................................
.................................................
Page 23 of 31 ......................................................................................................................................
.................................................
......................................................................................................................................
.................................................
4.2 If the applicant is proposing to engage in Merchant Banking activities for the first time, the experience of key management personnel to be indicated.
Name of Key Management Personnel Qualification Previous positions held Experience particularly in respect of merchant banking activities
4.2aIf the applicant is proposing to engage in Merchant Banking activities for the first time, business plan of the company with projected volume of activities and income for which registration is sought to be specifically given.
4.3 Details of infrastructure including computing facilities, equity research and data base available with the applicant.
4.4 Any other information considered relevant to the nature of services rendered by the applicant.
5. Financial information.
(Rs. in lakhs)
5.1 Capital structure Year prior to the preceding year or current year Preceding year Current year
(a) Paid-up capital
(b) Free reserves (excluding revaluation reserves)
(c) Total (a) +
(b) Notes: 1.In case of partnership or proprietary concerns, please indicate capital minus drawings.
2. In case of partnership or proprietary concerns, please indicate the financial position, means and net worth of the partners.
5.2 Deployment of Resources (Rs. in lakhs) Year prior to the preceding year or current Prec edin g year Current year Page 24 of 31 year
(a) Fixed Assets
(b) Plant & Machinery and office equipment
(c) Quoted Investments
(d) Unquoted Investments
(e) Details of Liquid Assets
(f) Others (Details of investments, Loans & Advances made to Associate Companies/Firms where Promoters/Directors have an interest be separately given).
5.3 Major Sources of Income:
(Rs. in lakhs) Year prior to the preceding year or current year Preceding year *Fees charg ed as % of issue
(a) Issue Management
(b) Underwriting
(c) Portfolio Management
(d) Consultant/Adviser to issue
(e) Investment Adviser
(f) Others *As fees charged by the Merchant Banker may vary from issue to issue, please indicate range within which fees have been charged.
5.4 Net Profit Year prior to the preceding year or current year Preceding year Current year
5.5 5.5 Dividend Year prior to the preceding year or current year Preceding year Current year
5.6 5.6 Amount Percentage Note: Please enclose three years of Audited Annual Accounts. Where Unaudited Reports are submitted, give reasons. If Minimum net worth requirement has Page 25 of 31 been met after last Audited Annual Accounts. Audited Statement of Accounts of a later date also be submitted.
5.6 List of major shareholders (holding 5% and above of applicant directly or along with associates—applicable only to limited companies).
Shareholding as on : ...............................................................................................
Name of Shareholder No. of shares held %age of total paid up capital of the company
5.7 Name and address of the principal bankers of the applicant.
5.8 Name and address of the auditors.
6. Other information
6.1 Details of all settled and pending disputes:
Nature of dispute Name of the party Pending/settled
6.2 Indictment or involvement in any economic offences by the applicant or any of the Directors, or key Managerial Personnel in the last three years.
DECLARATION This Declaration must be signed by Two Directors, Two Partners or the Sole Proprietor, as the case may be.
I/We hereby apply for registration.
I/We warrant that I/we have truthfully and fully answered the questions above and provided all the information which might reasonably be considered relevant for the purposes of my registration.
I/We declare that the information supplied in the application form is complete and correct.
For and on behalf of ......................................................................................................................................
...........
(Name of Applicant) Director/Partner or sole Proprietor Director/Partner Name in Block Letters Name in Block Letters Date FORM B Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992 [67[Regulation 8 / Regulation 8A]] 67 Substituted for ―Regulation 8‖ by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2011 w.e.f. 05-07-2011.
Page 26 of 31 68[Certificate of Registration] I. In exercise of the powers conferred by sub-section (1) of section 12 of the Securities and Exchange Board of India Act, 1992, read with the rules and regulations made thereunder the Board hereby grants a certificate of registration to......as a merchant banker in Category I 69[***] subject to the conditions in the rules and in accordance with the regulations to carry out the following activities:
*1. Management of any issue, including preparation of prospectus, gathering information relating to the Issue, determining financing structure, tie up of financiers, final allotment and refund of excess application money.
*2. Investment Adviser 70[***] *5. Manager, consultant or Adviser to any issue including corporate advisory services.
*6. Consultant or Adviser.
(*Delete whichever are not applicable) II. Registration Code for the merchant banker is MB.
III. 71[This certificate of registration shall be valid unless it is suspended or cancelled by the Board.]
By Order Sd/- For and on behalf of Securities and Exchange Board of India Place :
Date :
72[FORM C ***] 68 Substituted for ―Certificate of Initial / Permanent Registration‖ by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-
2016. Prior to this, the words ―Certificate of Initial / Permanent Registration‖ were substituted for the words ―Certificate of Registration‖ by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2011 w.e.f. 05-07-2011.
69 Figures ―II/III/IV‖ omitted by the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1997 w.e.f , 9-12-1997.
70 The words ―3.Underwriting of Issue‖ and ―4. Portfolio Management Service‖ shall be omitted by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 1997 w.e.f , 9-12-1997.
71 Substituted by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to substitution, paragraph III as substituted by the Securities and Exchange Board of India (Merchant Bankers) Regulations, 2011 w.e.f. 05-07- 2011 read as under:
―This certificate of registration shall be valid from ….. to …. / for permanent, unless suspended or cancelled by the Board.‖ Prior to substitution by the Securities and Exchange Board of India (Merchant Bankers) Regulations, 2011 w.e.f. 05-07-2011, the paragraph read as under:
―This certificate shall be valid from..........to........and may be renewed as specified in regulation 9 of the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992.‖ 72 Omitted by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, w. e. f., 26-08-2009.
Page 27 of 31
SCHEDULE II Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992 [Regulation 12] FEES 73[1. Every merchant banker shall pay a sum of 74[twenty lakh] rupees as registration fee at the time of grant of certificate of 75[***] registration.
1A. 76[***]
2. 77[A merchant banker who has been granted a certificate of registration, to keep its registration in force, shall pay a fee of nine lakh rupees every three years from the sixth year, from the date of grant of certificate of registration or from the date of grant of certificate of initial registration granted prior to the commencement of the Securities and Exchange Board of India (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2016, as the case may be.]
3.(a) The fee referred to in paragraph 1 shall be paid by the merchant banker within fifteen days from the date of receipt of intimation from the Board under sub-regulation (1) of regulation 8.
78[(aa) ***] 73 Substituted by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2011 w.e.f. 05-07-2011. Prior to the substitution the paragraphs as amended by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 1996 and Securities and Exchange Board of India (Merchant Bankers) (Third Amendment) Regulations, 2006 read as under:
―1. Every merchant banker shall pay a sum of [ten lakh rupees] as registration fees at the time of the grant of certificate by the Board.
2. A merchant banker to keep registration in force shall pay renewal fee of [five lakh rupees] every three years from the fourth year from the date of initial registration.‖ 74 Substituted by the SEBI (Payment of Fees) (Amendment) Regulations, 2014, w.e.f.23-5-2014 for the words "thirteen lakh thirty three thousand and three hundred".
75 The words ―initial‖ was omitted by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016.
76 Omitted by the by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to omission, paragraph 1A read as under:
―1A. A merchant banker referred to under sub-regulation (3) of regulation 8 shall pay fee for the remaining period of two years on pro rata basis to the fee prescribed under paragraph 2. ‖ 77 Substituted by the by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to substitution, paragraph 2 read as under:
―2. A merchant banker who has been granted a certificate of permanent registration, to keep its registration in force, shall pay a fee of 77 [nine] lakh rupees every three years from the sixth year from the date of grant of certificate of initial registration, or from completion of the period of renewed certificate of registration, as the case may be.‖ Prior to above, the word ―nine‖ was substituted by the SEBI (Payment of Fees) (Amendment) Regulations, 2014, w.e.f. 23-5-2014 for the word "five".
78 Omitted by the by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to omission, clause (aa), as inserted by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2011 w.e.f. 05-07-2011 read as under:
Page 28 of 31 79[b)The fee referred to in paragraph 2 shall be paid by the merchant banker three months before expiry of the block for which fee has been paid.]
80[3A. The non-refundable fee payable along with an application for registration under sub-regulation (1A) of regulation 3 81[***] shall be a sum of 82[fifty thousand] rupees.]
4. The fees specified in paragraphs 83[1, 84[***] ,2, and 3A] shall be payable by the merchant banker 85[by way of direct credit in the bank account through NEFT/RTGS/IMPS or any other mode allowed by RBI or]by a demand draft in favour of ‗Securities and Exchange Board of India‘ payable at Mumbai or at the respective regional office.]
86[SCHEDULE III Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992 [Regulation 13] CODE OF CONDUCT FOR MERCHANT BANKERS
1. A merchant banker shall make all efforts to protect the interests of investors.
2. A merchant banker shall maintain high standards of integrity, dignity and fairness in the conduct of its business.
―(aa) The fee referred to in paragraph 1A shall be paid by the merchant banker three months before completion of the period of three years from the date of grant of certificate of initial registration, or within a period of three months from the date of notification of these regulations, as the case may be.‖ 79 Substituted by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to substitution clause (b) read as under:
―(b) The fee referred to in paragraph 2 shall be paid by the merchant banker, at the time of grant of permanent registration, within fifteen days from the date of receipt of intimation from the Board under sub-regulation (6) of regulation 8A and thereafter the fee shall be paid three months before expiry of the block for which fee has been paid.‖ Prior to above, clause (b) was substituted by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2011 w.e.f. 05-07-2011. Prior to the substitution the clause read as under:
―(b) The fee referred to in paragraph 2 shall be paid by the merchant banker within fifteen days from the date of receipt of intimation from the Board under sub regulation (3) of regulation 9.‖ 80 Inserted by the Securities and Exchange Board of India (Merchant Bankers) (Third Amendment) Regulations,
2006. w.e.f. 7-9-2006.
81 The words ―or an application for 81 [permanent registration under sub-regulation (1) or sub-regulation (2) of regulation 8A‖ omitted by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016.
Prior to this, the words ―permanent registration under sub-regulation (1) or sub-regulation (2) of regulation 8A‖ were substituted for the words ―renewal of registration under sub-regulation (1A) of regulation 9‖ by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2011 w.e.f. 05-07-
2011.
82 Substituted by the SEBI (Payment of Fees) (Amendment) Regulations, 2014, w.e.f. 23-5-2014 for the words "twenty five" 83 The word and figures ―1,2 and 3A‖ shall be substituted by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2011 w.e.f. 05-07-2011.
84 The words ―1A‖ were omitted by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016.
85 Inserted by the SEBI (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017, w.e.f. 6-3- 2017 86 Substituted by the Securities and Exchange Board of India (Merchant Banker) (Amendment) Regulations, 2003 w.e.f, 01.10.2003.
Page 29 of 31
3. A merchant banker shall fulfil its obligations in a prompt, ethical, and professional manner.
4. A merchant banker shall at all times exercise due diligence, ensure proper care and exercise independent professional judgment.
5. A merchant banker shall endeavour to ensure that—
(a) inquiries from investors are adequately dealt with;
(b) grievances of investors are redressed in a timely and appropriate manner;
(c) where a complaint is not remedied promptly, the investor is advised of any further steps which may be available to the investor under the regulatory system.
6. A merchant banker shall ensure that adequate disclosures are made to the investors in a timely manner in accordance with the applicable regulations and guidelines so as to enable them to make a balanced and informed decision.
7. A merchant banker shall endeavour to ensure that the investors are provided with true and adequate information without making any misleading or exaggerated claims or any misrepresentation and are made aware of the attendant risks before taking any investment decision.
8. A merchant banker shall endeavour to ensure that copies of the prospectus, offer document, letter of offer or any other related literature is made available to the investors at the time of issue or the offer.
9. A merchant banker shall not discriminate amongst its clients, save and except on ethical and commercial considerations.
10. A merchant banker shall not make any statement, either oral or written, which would misrepresent the services that the merchant banker is capable of performing for any client or has rendered to any client.
11. A merchant banker shall avoid conflict of interest and make adequate disclosure of its interest.
12. A merchant banker shall put in place a mechanism to resolve any conflict of interest situation that may arise in the conduct of its business or where any conflict of interest arises, shall take reasonable steps to resolve the same in an equitable manner.
13. A merchant banker shall make appropriate disclosure to the client of its possible source or potential areas of conflict of duties and interest while acting as merchant banker which would impair its ability to render fair, objective and unbiased services.
14. A merchant banker shall always endeavour to render the best possible advice to the clients having regard to their needs.
15. A merchant banker shall not divulge to anybody either orally or in writing, directly or indirectly, any confidential information about its clients which has come to its knowledge, without taking prior permission of its clients, except where such disclosures are required to be made in compliance with any law for the time being in force.
16. A merchant banker shall ensure that any change in registration status/any penal action taken by the Board or any material change in the merchant banker‘s financial status, which may adversely affect the interests of clients/investors is promptly informed to the clients and any business remaining outstanding is transferred to Page 30 of 31 another registered intermediary in accordance with any instructions of the affected clients.
17. A merchant banker shall not indulge in any unfair competition, such as weaning away the clients on assurance of higher premium or advantageous offer price or which is likely to harm the interests of other merchant bankers or investors or is likely to place such other merchant bankers in a disadvantageous position while competing for or executing any assignment.
18. A merchant banker shall maintain arms length relationship between its merchant banking activity and any other activity.
19. A merchant banker shall have internal control procedures and financial and operational capabilities which can be reasonably expected to protect its operations, its clients, investors and other registered entities from financial loss arising from theft, fraud, and other dishonest acts, professional misconduct or omissions.
20. A merchant banker shall not make untrue statement or suppress any material fact in any documents, reports or information furnished to the Board.
21. A merchant banker shall maintain an appropriate level of knowledge and competence and abide by the provisions of the Act, regulations made thereunder, circulars and guidelines, which may be applicable and relevant to the activities carried on by it. The merchant banker shall also comply with the award of the Ombudsman passed under the Securities and Exchange Board of India (Ombudsman) Regulations, 2003.
22. A merchant banker shall ensure that the Board is promptly informed about any action, legal proceedings, etc., initiated against it in respect of material breach or non-compliance by it, of any law, rules, regulations, directions of the Board or of any other regulatory body.
23. (a) A merchant banker or any of its employees shall not render, directly or indirectly, any investment advice about any security in any publicly accessible media, whether real-time or non-real-time, unless a disclosure of his interest including a long or short position, in the said security has been made, while rendering such advice.
(b) In the event of an employee of the merchant banker rendering such advice, the merchant banker shall ensure that such employee shall also disclose the interests, if any, of himself, his dependent family members and the employer merchant banker, including their long or short position in the said security, while rendering such advice.
24. A merchant banker shall demarcate the responsibilities of the various intermediaries appointed by it clearly so as to avoid any conflict or confusion in their job description.
25. A merchant banker shall provide adequate freedom and powers to its compliance officer for the effective discharge of the compliance officer‘s duties.
26. A merchant banker shall develop its own internal code of conduct for governing its internal operations and laying down its standards of appropriate conduct for its employees and officers in carrying out their duties. Such a code may extend to the maintenance of professional excellence and standards, integrity, confidentiality, objectivity, avoidance or resolution of conflict of interests, disclosure of shareholdings and interests, etc.
Page 31 of 31
27. A merchant banker shall ensure that good corporate policies and corporate governance are in place.
28. A merchant banker shall ensure that any person it employs or appoints to conduct business is fit and proper and otherwise qualified to act in the capacity so employed or appointed (including having relevant professional training or experience).
29. A merchant banker shall ensure that it has adequate resources to supervise diligently and does supervise diligently persons employed or appointed by it in the conduct of its business, in respect of dealings in securities market.
30. A merchant banker shall be responsible for the Acts or omissions of its employees and agents in respect of the conduct of its business.
31. A merchant banker shall ensure that the senior management, particularly decision makers have access to all relevant information about the business on a timely basis.
32.A merchant banker shall not be a party to or instrument for—
(a) creation of false market;
(b) price rigging or manipulation; or
(c) passing of unpublished price sensitive information in respect of securities which are listed and proposed to be listed in any stock exchange to any person or intermediary in the securities market.]
87[****] 87 Omitted by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2012 w.e.f. 29.03.2012. Prior to the omission, the schedule was substituted by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, w.e.f., 26-08-2009.