January 02, 2024
Merchant Banker Registration
Merchant Bankers play a crucial role in the securities market by acting as financial intermediaries for capital raising, corporate restructuring, and investment advisory. They manage public issues, provide underwriting services, facilitate takeovers, and offer corporate finance solutions.
To operate in India, Merchant Bankers must register with the Securities and Exchange Board of India (SEBI) under the SEBI (Merchant Bankers) Regulations, 1992. This guide [Merchant Banker Registration with SEBI: A Complete Guide] outlines the eligibility criteria, registration process, permitted activities, and compliance requirements.
Eligibility and Prerequisites
Criteria | Details |
Infrastructure | Adequate office space, IT infrastructure, and resources to conduct merchant banking activities. |
Net Worth Requirement | A Merchant Banker must maintain a minimum net worth of ₹5 crores at all times. |
Key Managerial Personnel (KMP) | The applicant must have at least two key managerial personnel (KMP) with relevant experience in investment banking, financial advisory, capital markets, or merchant banking. |
Managerial Personnel Qualifications | KMP must hold professional qualifications such as MBA (Finance), CFA, CA, CS, or equivalent, with experience in capital markets, financial management, or advisory services. |
Independence of Group Entity | If an entity within the same group is already registered as a Merchant Banker, operational independence must be maintained. |
Financial Soundness | The applicant must demonstrate financial stability and provide audited financial statements as proof of sound financial health. |
Track Record and Compliance History | The applicant and its directors/promoters should have a clean compliance record with no history of violations or financial misconduct. |
Application Submission Process
Step | Details |
Online Application | Submit the application via the SEBI Intermediary Portal. |
Physical Documentation | Send supporting documents to SEBI for verification after online submission. |
Approval Timeline | SEBI reviews the application within 30 working days. Additional queries or document requests, if any, will be communicated through the SEBI Intermediary Portal. |
Permitted Activities
Activity | Details |
Managing Public Issues | Acting as Lead Managers for IPOs, Rights Issues, and other public offerings. |
Underwriting Services | Providing underwriting support to ensure successful capital raising. |
Advisory Services | Assisting in mergers, acquisitions, takeovers, corporate restructuring, and financial strategy. |
Loan Syndication | Arranging debt financing and facilitating loan syndication for corporate clients. |
Portfolio Management Services (PMS) | If registered separately, Merchant Bankers can offer Portfolio Management Services (PMS). |
Prohibited Activities:
Borrowing funds for securities trading or investment purposes.
Engaging in any activity that leads to a conflict of interest with client transactions.
Fees and Charges
Merchant Bankers must pay the following fees as prescribed by SEBI:
Fee Type | Amount (INR) | Frequency |
Application Fee | ₹50,000 | One-time |
Registration Fee | ₹20,00,000 | For a block of 5 years from the date of registration |
Renewal Fee | ₹9,00,000 | For each subsequent block of 3 years |
Disclaimer: This guide is for informational purposes only and does not constitute legal, financial, or professional advice. Readers are advised to refer to official SEBI regulations for specific guidance tailored to their circumstances. The information provided herein is based on the regulations and practices as of the date of publication and may be subject to change.
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