(1) It shall be the duty of every director, proprietor, partner, officer and employee of the underwriter 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 an underwriter within such time as the inspecting authority may require.
(2) The underwriter shall allow the inspecting authority to have a reasonable access to the premises occupied by such underwriter 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 underwriter or any such other person on their behalf 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 shall in the course of inspection, be entitled to examine or record statements of any principal officer, director, partner, proprietor and employee.
(4) It shall be the duty of every director, proprietor, partner, officer or employee of the underwriter to give to the inspecting authority all assistance in connection with the inspection which the underwriter may reasonably be expected to give.
Submission of report to the Board.
22. The inspecting authority shall, as soon as may be possible, submit an inspection report to the Board.
Page 16 of 26 54[Action on inspection or investigation report.
23. 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 55[Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.]] Appointment of Auditor.
24. Notwithstanding anything contained above the Board may appoint a qualified auditor to investigate into the books of account or the affairs of the underwriter:
Provided that the auditor so appointed shall have the same powers of the inspecting authority as stated in regulation 19 and the obligation of the underwriter and his employees in regulation 21 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 to it in section 226 of the Companies Act, 1956 (1 of 1956).
CHAPTER V PROCEDURE FOR ACTION IN CASE OF DEFAULT 56[Liability for action in case of default.
25. An underwriter who contravenes any of the provisions of the Act, Rules or Regulations framed thereunder shall be liable for one or more actions specified therein including the action under Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.]
54 Substituted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, w.e.f. 27-9-2002. Prior to substitution, it read as under:
“Communication of findings etc. to underwriter.-(1) The Board shall after consideration of the inspection report communicate the findings to the underwriter 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 underwriter, the Board may call upon the underwriter to take such measures as the Board may deem fit in the interest of the securities market and for the due compliance with the provisions of the Act, rules and regulations.” 55 Substituted for the words “the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002” by the SEBI (Intermediaries) Regulations, 2008, w.e.f. 26-05-2008.
56 Substituted by the SEBI (Intermediaries) Regulations, 2008, w.e.f. 26-05-2008. Prior to substitution, regulation 25 as substituted by the SEBI((Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, w.e.f. 27-9-2002 and amended by SEBI(Underwrites) Amendment) Regulations, 1997, w.e.f.17-1-1997 read as under:
“Liability for action in case of default-An underwriter or a stock broker or a merchant banker entitled to carry on business of underwriting who-
(a) fails to comply with any conditions subject to which certificate has been granted;
(b) contravenes any of the provisions of the Act, rules or regulations, shall be dealt with in the manner provided under the Securities and Exchange Board of India(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, w.e.f. 27-9-2002.” Page 17 of 26
26. to 32. 57[***]
SCHEDULE I FORMS FORM A Securities and Exchange Board of India (Underwriters) Regulations, 1993 58[Regulation 3A] 59[ Application for Grant of Certificate of Registration] Name of Applicant and its Status :
(Whether proprietary concern/firm/association of persons/ body of persons/body corporate) :
Name and designation of Principal Officer :
Designation :
Telephone No. :
Instructions:
1. Applicants must submit a completed application form together with supporting documents to the Securities and Exchange Board of India.
2. All columns of the application should be filled in. In case a column is not relevant then ‘Not applicable’ should be specified.
3. Information which needs to be supplied in more details may be written on separate sheets which should be attached to the application form.
4. Original copy of form duly signed should be submitted for registration.
PART I GENERAL INFORMATION
1. Applicant’s details : :
1.1 Name of the Applicant :
1.2Address of the Applicant :
57 Omitted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, w.e.f. 27-9-2002. Prior to omission, regulations 29 and 32 were amended by the SEBI (Underwriters) (Amendment) Regulations, 1997, w.e.f.17-1-1997 and SEBI(Appeals to Securities Appellate Tribunal) Regulations, 2000, w.e.f.28-3-2000 respectively.
58 Substituted for “Regulation 3A/Regulation 8A” by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-
2016. Prior to this the words “Regulation 3A/Regulation 8A” were substituted for the words “Regulation 3” by the SEBI (Underwriters) (Amendment) Regulations, 2011, w.e.f. 5-7-2011.
59 Substituted for the words “Application for Grant of Initial/ Permanent Registration” by the Securities and Exchange Board of India (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 Initial/ Permanent Registration” shall be substituted with the words” substituted the words “Application for registration as underwriter”, by the SEBI (Underwriters) (Amendment) Regulations, 2011, w.e.f. 5-7-2011.
Page 18 of 26 Pin Code: ................
Telephone No. : ...... :
Telex No. : .............. Fax No.
: ............
1.3 Address of the applicant for correspondence :
Pin Code: ................ Telephone No. : ...... :
Telex No. : .............. Fax No. :
............ :
1.4 Address of Branch Offices (in India) of the Applicant, if any :
1.5 Whether any other application under Securities and Exchange Board of India Act, 1992 has been made for grant of Certificate, if so, details thereof :
2. Organisation structure : :
2.1 Objects of the organisation of the applicant. :
(Attach extracts from relevant documents like, Partnership deed/Charter/Memorandum of Association/Articles of Association, etc.)
in support of objects of the organization :
2.2 Date and place of Incorporation/Establishment of the organization of the applicant Day Month Year Place
2.3 Status of the applicant (specify whether proprietary, partnership, association of persons, body of individuals, limited company - public/private, others. If listed, name the stock exchange and latest share price :
high and low) :
2.4 Organisation Chart stating the functional responsibility at various levels :
2.5 Particulars of all Proprietors/Partners/Managers/ Officers/Directors :
[Name, Qualification, Experience, Date of Appointment, Other directorship, (Name and Date of Appointment), Previous positions held]. :
2.6 Number of employees :
Page 19 of 26
2.7 Name and activities of associate companies/concerns :
Name, Address/Phone number/Type of activity/Ownership details/Nature and Quantum of Financial Trading. :
2.8 In case the applicant is a body corporate, please give list of major shareholders (holding 5% or more voting rights) :
3. Details of infrastructural facilities : :
3.1 Office space (mention the extent of area and ownership details available) :
3.2 Office equipment (mention the details of electronic office equipment, typewriters, telecommunication equipment, furniture and fixtures, other communication facilities, etc.) :
4. Business plan (for three years) : :
4.1 History, major achievements and present activity : :
5. Financial information : :
5.1 Capital structure (Rs. in lakh) :Current year Last year Previous year Second year Third year
(a) Paid-up capital
(b) Free reserves (excluding revaluation reserves)
(c) Total (a) + (b)
(d) Loans (details)
(e) Net profit:
(i) General
(ii) Specific Note : In case of partnership or proprietary concerns, please indicate capital minus drawings.
5.2 Deployment of resources : :
(a) Fixed assets :
(b) Plant and machinery and office equipment :
(c) Investments (details should be given separately) :
(d) Others :
5.3 Major source of estimated profit from :
Page 20 of 26 various sources (Rs. in lakhs) :
Current year Last year Previous year Second year Third year
5.4 Please enclose three years of audited annual accounts and where unaudited reports are submitted, give reasons :
5.5 Name and address of the principal bankers
5.6 Name and address of the auditors (internal, external and tax auditor, if any, as applicable) :
6. Other information : :
6.1 Indicate involvement in any offence relating to moral turpitude/economic offences in the last three years :
6.2 Any other information considered relevant to the nature of services rendered by the company :
PART II
7. Business information : :
7.1 Indicate marketing capability for capital issues : :
7.2 Indicate how decision on underwriting is usually taken : :
7.3 Indicate various research and database facilities available : :
7.4 Enclose a copy of typical contract entered into with the issuer for underwriting activity :
8. Experience : :
8.1 Experience in underwriting activities (Indicate name of the company, particulars of the issue, amount of underwriting done in the last three years) :
8.2 Experience in other financial services rendered (period area and date of commencement of activity)
8.3 Details of all unsettled and pending development/disputes regarding underwriting Nature of Name of the Pending/ settled Page 21 of 26 dispute party
8.4 Indicate underwriting defaulted with any company and reasons for the same Declaration THIS DECLARATION MUST BE SIGNED BY THE PRINCIPAL OFFICER/S:
I/We hereby apply for grant of certificate of registration by the Board. I/We warrant that I/we will carry out my/our duties in accordance with the Act, Rules and Regulations.
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/our grant of certificate for registration and I/we will promptly notify the Board of any changes in the information during the period that my/our registration is being considered and if my/our registration is accepted, thereafter.
I/We understand that misleading or attempting to mislead the Board shall render the applicant liable to disciplinary proceedings.
I/We certify that the above information and information supplied in the application form is true, complete and correct.
For and on behalf of ............................................................ ........................................................
(Name of the Applicant) (Name of the Applicant) Place : Place :
Date : Date :
FORM B Securities and Exchange Board of India (Underwriters) Regulations, 1993 60[Regulation 8 61[***]] 62[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 for the underwriters, the Board hereby grant a certificate of registration to..................................as an underwriter subject to the conditions in the rules and in accordance with the regulations.
60 Substituted for “Regulation 8” by the SEBI (Underwriters) (Amendment) Regulations, 2011, w.e.f. 5-7-
2011.
61 The words “/Regulation 8A” omitted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016.
62 Substituted for the words “Certificate of Initial/ Permanent Registration” by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016. Prior this the words “Certificate of Initial/ Permanent Registration” were substituted for the words “Certificate of Registration”, by the SEBI (Underwriters) (Amendment) Regulations, 2011, w.e.f. 5-7-2011.
Page 22 of 26 II. Registration Code for the underwriter is...................
63[III. This certificate of registration shall be valid unless it is suspended or cancelled by the Board.]
Place :
Date : By Order For and on behalf of the Securities and Exchange Board of India Authorised signatory
SCHEDULE II Securities and Exchange Board of India (Underwriters) Regulations, 1993 [Regulation 12] FEES 64[1. Every underwriter shall pay fee of thirteen lakh thirty three thousand and three hundred rupees at the time of grant of certificate of 65[***] registration.
1A. 66[***]
2. 67[An underwriter who has been granted a certificate of registration, to keep its registration in force, shall pay fee of five lakh rupees every three years from the 63 Substituted by the Securities and Exchange Board of India (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 SEBI (Underwriters) (Amendment) Regulations, 2011, w.e.f. 5-7-2011 read as under:
“III. This certificate shall be valid from ….. to …. / for permanent, unless suspended or cancelled by the Board.” Prior substitution by the SEBI (Underwriters) (Amendment) Regulations, 2011, w.e.f. 5-7-2011 paragraph III read as under:
“III. Unless renewed, the certificate of registration is valid from........to...........”, ibid.
64 Substituted by the SEBI (Underwriters) (Amendment) Regulations, 2011, w.e.f. 5-7-2011. Prior to substitution, paragraph 1 and 2 amended by SEBI (Underwriters) (Amendment) Regulations, 1999, w.e.f.
30-09-1999 and by SEBI(Payment of Fees) (Amendment) Regulations, 1995, w.e.f. 28-11-1995 respectively, read as under:
“1. Every underwriter shall pay a sum of ten lakh rupees as registration fees at the time of the grant of certificate by the Board.
2. Every underwriter 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.” 65 The word “initial” omitted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016.
66 Omitted by the Securities and Exchange Board of India (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. An underwriter 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.” Page 23 of 26 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.]
68[2A. The fee specified in paragraph 2, shall be paid three months prior to the expiry of the period for which the fees has been paid.]
69[3. (a) The fee referred to in paragraph 1 shall be paid by the underwriter within fifteen days from the date of receipt of intimation from the Board under regulation 8.
70[(aa) The fee referred to in paragraph 1A shall be paid by the underwriter within a period of three months before completion of the period of three years from the date of grant of certificate of 71[***] registration, or within a period of three months from the date of notification of these regulations, as the case may be.]
72[(b)***] 73[3A. The non-refundable fee payable along with an application for registration under sub-regulation (1A) of regulation 3A shall be a sum of twenty-five thousand rupees.]
67 Substituted by the Securities and Exchange Board of India (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. An underwriter who has been granted a certificate of registration, to keep its registration in force, shall pay fee of five 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.” 68 Inserted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016.
69 Substituted by the SEBI (Underwriters) (Amendment) Regulations, 1999, w.e.f. 30-9-1999.
70 Inserted by the SEBI (Underwriters) (Amendment) Regulations, 2011, w.e.f. 5-7-2011.
71 The words “initial” omitted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016.
72 Omitted bye the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016. Prior to omission paragraph (b) as substituted by the SEBI (Underwriters) (Amendment) Regulations, 2011, w.e.f. 5-7-2011 read as under:
“(b) The fee referred to in paragraph 2 shall be paid by the underwriter, 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 substitution by the SEBI (Underwriters) (Amendment) Regulations, 2011, w.e.f. 5-7-2011., it read as under:
“(b) The fee referred to in paragraph 2 shall be paid by the underwriter within fifteen days of receipt of intimation from the Board disposing of the application for renewal made under sub-regulation (1) of regulation 9.” 73 Substituted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016. Prior to substitution, paragraph 3A as inserted by the SEBI (Underwriters) (Amendment) Regulations, 2006, w.e.f. 7-9-2006.
“3A. The non-refundable fee payable along with an application for registration under sub-regulation (1A) of regulation 3A or an application for 73[permanent registration under sub-regulation (1) or sub-regulation
(2) of regulation 8A] shall be a sum of twenty-five thousand rupees.” Page 24 of 26 74[4. The fees specified in 75[paragraphs 76[1, 77[***] 2 and 3A]] shall be payable by the Underwriter 78[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.]
79[SCHEDULE III Securities and Exchange Board of India (Underwriters) Regulations, 1993 [Regulation 13] CODE OF CONDUCT FOR UNDERWRITERS
1. An underwriter shall make all efforts to protect the interests of its clients.
2. An underwriter shall maintain high standards of integrity, dignity and fairness in the conduct of its business.
3. An underwriter shall ensure that it and its personnel will act in an ethical manner in all its dealings with a body corporate making an issue of securities (hereinafter referred to in the Schedule as “the issuer”).
4. An underwriter shall endeavour to ensure all professional dealings are effected in a prompt, efficient and effective manner.
5. An underwriter shall, at all times, render high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgment.
6. An underwriter shall not make any statement, either oral or written, which would misrepresent—
(a) the services that the underwriter is capable of performing for its client, or has rendered to any other issuer company;
(b) his underwriting commitment.
7. An underwriter shall avoid conflict of interest and make adequate disclosure of his interest.
Also, the words “permanent registration under sub-regulation (1) or sub-regulation (2) of regulation 8A” were substituted for the words and figures “renewal of registration under subregulation (1A) of regulation 9” by the SEBI (Underwriters) (Amendment) Regulations, 2011, w.e.f. 5-7-2011.
74 Substituted by the SEBI (Underwriters) (Amendment) Regulations, 1999, w.e.f. 30-9-1999. Earlier paragraph 4 was substituted by SEBI(Payment of Fess)(Amendment Regulations, 1995, w.e.f.28-11-1995.
75 Substituted for “paragraphs 1 and 2” by the SEBI(Underwriters) (Amendment) Regulations, 2006, w.e.f.
7-9-2006.
76 Substituted for word and figures “1, 2 and 3A” by the SEBI (Underwriters) (Amendment) Regulations, 2011, w.e.f. 5-7-2011.
77 The words “1A,” were omitted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016.
78 Inserted by the SEBI (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017, w.e.f. 6- 3-2017 79 Substituted by SEBI (Underwriters) (Amendment) Regulations, 2003, w.e.f. 01-10-2003. Earlier it was amended by the SEBI(Investment Advice by Intermediaries)(Amendment)Regulations, 2001, w.e.f. 29-5-
2001.
Page 25 of 26
8. An underwriter 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.
9. An underwriter shall make appropriate disclosure to the client of its possible source or potential areas of conflict of duties and interest while acting as underwriter which would impair its ability to render fair, objective and unbiased services.
10. An underwriter shall not divulge to other issuer, press or any party any confidential information about its issuer company, which has come to its knowledge and deal in securities of any issuer company without making disclosure to the Board as required under the Regulations and also to the Board of directors of the issuer company.
11. An underwriter shall not discriminate amongst its clients, save and except on ethical and commercial considerations.
12. An underwriter shall ensure that any change in registration status/any penal action taken by board or any material change in financials which may adversely affect the interests of clients/investors is promptly informed to the clients and any business remaining outstanding is transferred to another registered person in accordance with any instructions of the affected clients/investors.
13. An underwriter shall maintain an appropriate level of knowledge and competency and abide by the provisions of the Act, regulations and circulars and guidelines issued by the Board. The underwriter shall also comply with the award of the Ombudsman passed under the Securities and Exchange Board of India (Ombudsman) Regulations, 2003.
14. An underwriter shall ensure that the board is promptly informed about any action, legal proceedings, etc. initiated against it in respect of any material breach or non-compliance by it, of any law, rules, regulations, directions of the board or of any other regulatory body.
15. An underwriter shall not make any untrue statement or suppress any material fact in any documents, reports, papers or information furnished to the Board.
16. (a) An underwriter or any of his employees shall not render, directly or indirectly any investment advice about any security in the publicly accessible media, whether real-time or non-real-time, unless a disclosure of his interest including its long or short position in the said security has been made, while rendering such advice.
(b) In case, an employee of an underwriter is rendering such advice, the underwriter shall ensure that he shall disclose his interest, the interest of his dependent family members and that of the employer including their long or short position in the said security, while rendering such advice.
17. An underwriter or any of its directors, partners or manager having the management of the whole or substantially the whole of affairs of the business, shall not either through its account or their respective accounts or through their associates or family members, relatives or friends indulge in any insider trading.
Page 26 of 26
18. An underwriter shall not indulge in any unfair competition, which is likely to be harmful to the interest of other underwriters carrying on the business of underwriting or likely to place such other underwriters in a dis-advantageous position in relation to the underwriter while competing for, or carrying out any assignment.
19. An underwriter shall have internal control procedures and financial and operational capabilities which can be reasonably expected to protect its operations, its clients and other registered entities from financial loss arising from theft, fraud, and other dishonest acts, professional misconduct or omissions.
20. An underwriter shall provide adequate freedom and powers to its compliance officer for the effective discharge of his duties.
21. An underwriter 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 the carrying out of their duties. Such a code may extend to the maintenance of professional excellence and standards, integrity, confidentiality, objectivity, avoidance of conflict of interests, disclosure of shareholdings and interests, etc.
22. An underwriter shall ensure that good corporate policies and corporate governance is in place.
23. An underwriter 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).
24. An underwriter shall ensure that it has adequate resources to supervise diligently and does supervise diligently persons employed or appointed by it to conduct business on its behalf.
25. An underwriter shall be responsible for the acts or omissions of its employees and agents in respect to the conduct of its business.
26. An underwriter shall ensure that the senior management, particularly decision makers have access to all relevant information about the business on a timely basis.
27. An underwriter shall not be party to or instrumental 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.]