Merchant Banker Registration

[Under Securities and Exchange Board of India (Merchant Bankers) Regulation, 1992]

Statistically, around 215 entities are available in India doing business of merchant bankers as per data published by the Securities and Exchange Board of India [SEBI]. Maximum registered entities are in the form of Public Limited followed by Private Limited Company incorporated as per Companies Act, 2013. Few of the entity is in the form of Limited Liability Partnership registered under the Limited Liability Partnership Act, 2008.

Merchant Banker refers to an entity registered with SEBI with a specific purpose and guidelines of activities to pursue in the 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 a corporate who is in process of or already listed in the 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 any body corporate, or by any other person or group of the 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.

• Proprietor, in the case of proprietary concern
• Partner, in the case of a partnership firm
• 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/- 

Considerations of Applications:

• The applicant shall be a body corporate other than the non-banking financial company
• The applicant has the necessary infrastructure like adequate office space, equipment and manpower to effectively discharge the activities
• The applicant has employment minimum of two people who have experience conducting the business of merchant banker
• Applicant fulfil the capital adequacy as required by regulation
• Perso directly or indirectly connected with the applicant have not been granted registration by the Board.
• Applicant, his partner, director or principal officer has not been involved in any litigation connected with the 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
• The applicant has a professional qualification from an institution recognized by the Government in finance, law or business management.

Capital Adequacy:

• The bare minimum capital adequacy requirement 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 the category but by amendment now every category available need to have minimum capital adequacy of INR 5 Crore.

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.

• 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 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 favor of “Securities and Exchange Board of India” payable at Mumbai.