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Merchant banker is a company and is a combination of consultancy and banking services. Activities of merchant bankers in India are regulated by SEBI (merchant banker) rule 1992.
As per SEBI rule:
Any person who is engaged in the business of issue management either by making arrangements regarding buying, selling or subscribing to securities or acting as manager, consultant or rendering corporate advisory services in relation to such issue management.
It may perform some of its services like investment banks but can’t as regular banks. These are specialized banker accept and underwrite or syndicate equity or bond issues.
Issue Management
Initially, merchant bankers mostly performed the function of handling new public issues of corporate securities of newly established companies or existing companies and foreign companies in the FERA equity dilution process. Here, they served as issue sponsors. They get permission from the Capital Issues Controller (which is now the SEBI). They also have many other services to ensure success in the securities marketing process. These services include prospectus preparation, underwriting arrangements, the appointment of registrars, banks, issue brokers, advertisement and advertisement arrangements, and compliance with the listing standards of the applicable stock exchanges, etc. A merchant banker serves as experts on the terms, type, and timing of the corporate securities issues and makes them appropriate for investors and gives the issuing companies independence and flexibility.
Credit Syndication
A merchant banker offers specialized services in the project planning phases, the loan applications required to collect short-term and long-term loans from various banks and financial institutions, etc. They help handle Euro-issues and collect funds overseas.
Handles government consent for industrial projects
A merchant banker completes all formalities regarding government approval to grow and modernize business (necessary for businesses) and launch new businesses (necessary for businesses).
Capital Structuring
Such merchant bankers 'activities include mergers, acquisitions (over existing units), unit sales, and disinvestment. Such procedures include careful discussions, an extensive review of various documents and lengthy legal formalities to be completed. On behalf of the clients, merchant bankers meet all of these formalities.
|
Category |
Role |
Fees charged |
|
Category I Minimum net worth required 5 crore |
issue management Advisor Consultant Manager Underwriter Portfolio manager |
2.5 lakh for first 2years
1.5 lakh for 3rd year |
|
Category II Minimum net worth required 50 lakhs |
Advisor Portfolio manager Consultant Underwriter Co-manger
|
1.5 years for the first 2 years
50000 for 3rd year |
|
Category III Minimum net worth required 20 lakh |
Underwriter Advisor Consultant |
Minimum 50000 |
|
Category IV No minimum net worth required |
Advisor Consultant |
Minimum 20000 |
a. No person shall carry on the activity as a merchant banker unless he holds a certificate granted by SEBI
b. A merchant banker is required to have a minimum net worth of not less than 5 crore
c. An applicant required to send application form A along with additional information along with a non-refundable fee of 50000 by way of demand draft.
d. Every merchant banker is required to pay 20 lakh as registration fee (as per SEBI regulation, 2014) at the time of grant of certificate of initial registration by SEBI. And this certificate of initial registration remains for 5 years. The merchant banker must apply to SEBI for a permanent certificate, 3 months before the expiry of the validity of the initial registration certificate, if he wishes to continue as a merchant banker.
e. For permanent registration, the merchant banker is required to pay 9 lakh for the first block of 3 years towards permanent registration payable in term of schedule iii of SEBI regulation 1992.
f. Merchant banker is required to take SEBI’s prior approval for change in control.
ADDITIONAL INFORMATION SHEET
In addition to the information furnished in form A, the applicant is also required to furnish the detailed information on the following areas, as per the instructions contained therein.
a. MOA & AOA of company (Memorandum and Article of Association of the applicant company)
b. Provide the UIN obtained under MAPIN for the applicant.
c. Details of Directors/ Promoters & shareholding pattern
d. Details of Key personnel
e. Details of infrastructure facilities
f. Details regarding registration as NBFC
g. Financial Accounts of the applicant
h. Report from principal bankers
i. Details of associated registered intermediaries
j. Undertakings
k. Enclosures
l. Declaration by at least two directors
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We share the detailed and reasonable estimated costs, documents and prerequisites for the complete process before starting the process to ensure transparency.
Our team warrants hassle free documentation. We collect the necessary documents and share the relevant drafts to ensure a timely filing and delivery.
Upon collecting the necessary documents and information, we waste no time in preparation and filing of your application. development on your application is brought to your attention.
On successful completion of the case we share all the relevant documents electronically and physically along with an assurance to pay you back if something is wrong.
The Payment Card Industry Data Security Standard (PCI DSS) is a set of security standards designed to ensure that all businesses accepting, processing, storing or transmitting credit card information maintain a safe environment.
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