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Regulatory framework of Merchant Banking

Made By: Charu Dharamwani Kirti Khattar

Bankers To An Issue
The bankers to an issue are engaged in activities such as acceptance of application alongwith application money from the investors in respect of issues of capital and refund of application money.

Person must obtain a certificate of registration from the SEBI. SEBI grants registration with reference to the following requirements:
The applicant has the necessary infrastructure, communication

and the data processing facilities and manpower; The applicant is not involved in any litigation connected with the securities market; The applicant is a scheduled bank; Grant of a certificate is in the interest of the investors; and The applicant is a fit and proper person.

He can apply for the renewal of his registration three months before the expiry of the certificate.

Code of Conduct

Inspection is done by RBI upon the request of SEBI. Purpose is to ensure that the books of accounts are maintained and to investigate into the complaints received from the investors against the bankers to an issue.

Liability for Action in Case of Default

A banker to an issue who controvenes any provision of the SEBI Act/Rules /Regulations would be liable for actions specified therein including the actions under the SEBI Intermediaries Regulation, 2008.

Portfolio Managers
Portfolio Managers are persons who advice/direct/undertake, on behalf of the client, whether discretionary portfolio manager or otherwise, the management/administration of portfolio of securities/funds of clients. Portfolio management can be Discretionary Non-discretionary

In order to act as a portfolio manager, a certificate of registration from the SEBI is mandatory. A certificate /renewal is valid for three years.

While considering the application for registration, the SEBI takes into account matters such as Necessary infrastructure like adequate office staff, equipment and

manpower; Employment of a minimum of two persons who between them have at least five years experience in related activities in portfolio management/stock broking/investment management; A person directly/indirectly connected with the applicant, that is, associate/subsidiary/inter-connected or group company that has been refused registration; Capital adequacy of not less than a net worth of Rs 2 crore, in terms of capital plus free reserves excluding revaluation reserves minus accumulated losses an deferred expenditure not written off