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| (BANKERS TO AN ISSUE) REGULATIONS, 1994
CONTENTS 1. Short title and commencementCHAPTER II: REGISTRATION OF BANKERS TO AN ISSUE 3. Application for grant of certificateCHAPTER III: GENERAL OBLIGATIONS AND RESPONSIBILITIES 12. Maintenance of books of accounts, records and the documentsCHAPTER IV: PROCEDURE FOR INSPECTION 17. Inspection of banker to an issueCHAPTER V: PROCEDURE FOR ACTION IN CASE OF DEFAULT 23. Liability for action in case of defaultSCHEDULE I - FORMS FORM A: APPLICATION FOR GRANT / RENEWAL OF CERTIFICATE OF REGISTRATION AS BANKER TO AN ISSUESCHEDULE II: FEES SCHEDULE III: CODE OF CONDUCT
THE GAZETTE OF INDIA SECURITIES AND EXCHANGE BOARD OF INDIA No.LE/7/94. In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India, Act 1992 (15 of 1992), the Board with previous approval of the Central Government hereby makes the following regulations, namely :- 1. (1) These regulations may be called the Securities and Exchange Board of India (Bankers to an Issue) Regulations, 1994. (2) They shall come into force on the date of their publication in the Official Gazette. 2. In these regulations, unless the context otherwise requires: (a) "enquiry officer" means any officer of the Board, or any other person, having experience in dealing with the problems relating to the securities market, who is authorised by the Board under Chapter V; Application for grant of certificate 3. (1) An application by a scheduled bank for grant of a certificate as a banker to an issue shall be made to the Board in Form A. (2) Notwithstanding anything contained in sub-regulation (1), any application made prior to coming into force of these regulations containing such particulars or as near thereto as mentioned in Form A shall be treated as an application made in pursuance of sub-regulation (1) and dealt with accordingly. Application to conform to the requirements 4. Subject to the provisions of sub-regulation (2) of regulation 3, any application, which is not complete in all respects and does not conform to the instructions specified in the form, shall be rejected; Provided that, before rejecting any such application, the applicant shall be given an opportunity to remove within the time specified such objections as may be indicated by the Board. Furnishing of information, clarification and personal representation 5. (1) The Board may require the applicant to furnish further information or clarification regarding matters relevant to the activity of a banker to an issue for the purposes of disposal of the application. (2) The applicant officer shall, if so required, appear before the Board for personal representation through an officer duly authorised in this regard by the applicant. 6. The Board shall take into account for considering the grant of a certificate, all matters which are relevant to the activities relating to banker to an issue and in particular whether the applicant fulfils the following requirements, namely:- (a) the applicant has the necessary infrastructure, communication and data processing facilities and manpower to effectively discharge his activities;Procedure for registration 7. (1) The Board on being satisfied that the applicant is eligible shall grant a certificate in Form B and send an intimation to the applicant. (2) On the grant of a certificate, the applicant shall be liable to pay the fees in accordance with Schedule II. 8. (1) Three months before the expiry of the period of certificate, the banker to an issue, may if he so desires, make an application for renewal in Form A. (2) The application for renewal, under sub-regulation (1) shall be dealt with in the same manner as if it were a application made under sub-regulation (1) of regulation 3 for grant of a certificate. (3) The Board on being satisfied that the applicant fulfils the requirements specified in regulation 6 for renewal of certificate shall grant a certificate in Form B and send an intimation to the applicant. (4) On the grant of a certificate, the applicant shall be liable to pay the fees in accordance with Schedule II. Procedure where registration is not granted 9. (1) Where an application for grant of a certificate under regulation 3 or of renewal under regulation 8, does not satisfy the requirements set out in regulation 6, the Board may reject the application after giving an opportunity of being heard. (2) The refusal to grant or renew registration shall be communicated by the Board within thirty days of such refusal to the applicant stating therein the grounds on which the application has been rejected. (3) Any applicant may, being aggrieved by the decision of the Board, under sub-regulation (1), apply within a period of thirty days from the date of receipt of such intimation to the Board for reconsideration of its decision. (4) The Board shall reconsider an application made under sub- regulation (3) and communicate its decision as soon as possible in writing to the applicant. Effect of refusal to grant certificate 10. Any scheduled bank whose application for a certificate has been refused by the Board shall on and from the date of the receipt of the communication under sub-regulation (2) of regulation 9 cease to carry on any activity as banker to an issue. Payment of fees and the consequences of failure to pay fees 11. (1) Every applicant eligible for grant of a certificate shall pay fees in such a manner and within the period specified in Schedule II. (2) Where the applicant fails to pay the fees as provided in sub- regulation (1), read with Schedule II the Board may suspend the registration certificate, whereupon the applicant shall cease to carry on any activity as a banker to an issue for the period during which the suspension subsists. 1. "Sub - regulation (cc)" inserted by SEBI (Bankers to an Issue) Amendment Regulations, 1998 published in the official Gazette of India dated 05.01.1998.
Maintenance of books of accounts, records and the documents 12. (1) Every banker to an issue shall maintain the following records with respect to:- (a) the number of applications received, the names of the investors, the dates on which the applications were received and the amounts so received from the investors;(2) Every banker to an issue shall intimate to the Board the place where the books of records and documents mentioned in sub- regulation (1) are kept. (3) The banker to an issue shall preserve the records and documents specified in sub- regulation (1) for a minimum period of three years. Furnishing of information to the Board 13. Every banker to an issue shall furnish to the Board when required the following information, namely:- (a) the number of issues for which he was engaged as banker to an issue;Agreement with bodies corporate 14. (1) Every banker to an issue shall enter into an agreement with the body corporate for whom it is acting as banker to an issue. (2) The agreement referred to in sub-regulation (1) shall contain the following clauses namely:- (a) the number of centres at which the application and the application monies of an issue of a body corporate will be collected from the investors;Board to be informed of any disciplinary action taken by the Reserve Bank 15. Every banker to an issue shall inform the Board forthwith, if any disciplinary action is taken by the Reserve Bank against the banker to the issue only in relation to issue payment work; Provided that if as a result of any such action, the banker to an issue is prohibited from carrying on the activities, the certificate shall be deemed to have been suspended or cancelled as the case may be. 16. Every banker to an issue shall abide by the code of conduct as specified in SCHEDULE III. 2*[Appointment of compliance officer 16A. (1) Every banker to an issuer shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions,etc., issued by the Board or the Central Government and for redressal of investor's grievances. (2) The compliance officer shall immediately and independently report to the Board any non-compliance observed by him.] Foot notes 2. "Regulation 16A" inserted by the SEBI (Investment Advice by Intermediaries) (Amendment) Regulations, 2001 published in the official Gazette of India dated 29.05.2001.
Inspection of banker to an issue 17. The Board may request the Reserve Bank of India to undertake inspection of the books of accounts, records and documents of the banker to an issue for any of the purposes specified in regulation 18. 18. The purposes referred to in regulation 17 may be as follows namely :- (a) to ensure that the books of account are being maintained in the manner required;Procedure for inspection 19. The Reserve Bank shall on a receipt of a request from the Board as soon as possible take steps to undertake inspection of the banker to an issue for such purposes as may be required by the Board in such manner as it may deem fit. Obligations of banker to an issue on inspection 20. (1) It shall be the duty of every director, proprietor, partner, officer and employee of the banker to an issue, 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 his activities as a banker to an issue within such time as the Reserve Bank may require. (2) The banker to an issue shall allow the inspecting authority to have reasonable access to the premises occupied by such banker to an issue 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 banker to an issue or any such other person and also provide copies of documents or other materials which, in the opinion of the Reserve Bank of India are relevant for the purposes of the inspection. (3) The inspecting authority, in the course of inspection, shall be entitled to examine or record statements of any principal officer, member, director, partner, proprietor and employee of the banker to an issue. Submisson of report to the Board 21. The Reserve Bank of India shall, as soon as may be possible furnish to the Board a copy of the inspection report together with the copies of relevant documents in support of the observations made by the inspecting authority. Communication of findings, etc., to the banker to an issue 22. (1) The Board shall after consideration of the inspection report communicate the findings to the banker to an issue 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 banker to an issue, the Board may call upon the banker to issue to take such measures as the Board may deem fit in the interest of the securities market and for due compliance with the provisions of the Act, rules and regulations. Liability for action in case of default 23. (1) A banker to an issue who- (a) fails to comply with any conditions subject to which certificate has been granted;(2) The penalties referred to in sub-regulation (1) may be either:- (a) suspension of registration; orSuspension of registration 24. (1) A penalty of suspension of registration of a banker to an issue may be imposed where:- (i) the banker to an issue violates the provisions of the Act, rules and regulations;Cancellation of registration 25. A penalty of cancellation of registration of a banker to an issue may be imposed where:- (i) the financial position of the banker to an issue deteriorates to such an extent that the Board is of the opinion that his continuance as banker to an issue is not in the interest of investors;Manner of making order of suspension and cancellation 26. No order of penalty of suspension or cancellation, as the case may be, shall be imposed except after holding an enquiry in accordance with the procedure specified in regulation 27. Manner of holding enquiry before suspension or cancellation 27. (1) For the purpose of holding an enquiry under regulation 26, the Board may appoint an enquiry officer. (2) The enquiry officer shall issue to the banker to an issue a notice at the registered office or the principal place of business of the banker to an issue. (3) The banker to an issue may, within thirty days from the date of receipt of such notice, furnish to the enquiry officer a reply together with copies of documentary or other evidence relied on by it. (4) The enquiry officer shall, give a reasonable opportunity of hearing to the banker to an issue to enable it to make submissions in support of his reply made under sub-regulation. (5) Before the enquiry officer, the banker to an issue may appear through any person duly authorised by the banker to an issue: Provided that no lawyer or advocate shall be permitted to represent the banker to an issue at the enquiry: Provided further that where a lawyer or an advocate has been appointed by the Board as a presenting officer under sub- regulation (6), it shall be lawful for the banker to an issue to present its case through a lawyer or advocate. (6) If it is considered necessary, the enquiry officer may ask the Board to appoint a presenting officer to present its case. (7) The enquiry officer shall, after taking into account all relevant facts and submissions made by the banker to an issue, submit a report to the Board and recommend the penalty to be imposed as also the grounds on the basis of which the proposed penalty is justified. 28. (1) On receipt of the report from the enquiry officer, the Board shall consider the same and issue a show-cause notice as to why the penalty as proposed by the enquiry officer should not be imposed. (2) The banker to an issue shall within twenty-one days of the date of the receipt of the show- cause send a reply to the Board. (3) The Board after considering the reply to the show-cause notice, if received, shall as soon as possible but not later than thirty days from the receipt of the reply, if any, pass such order as it deems fit. (4) Every order passed under sub- regulation (3) shall be self- contained and give reasons for the conclusions stated therein including justification of the penalty imposed by that order. (5) The Board shall send a copy of the order under sub - regulation (3) to the banker to an issue. Effect of suspension and cancellation of registration of banker to an issue 29. (1) On and from the date of the suspension, the banker to an issue shall cease to carry on any activity as a banker to an issue during the period of suspension. (2) On and from the date of cancellation the banker to an issue shall with immediate effect cease to carry on any activity as a banker to an issue. Publication of order of suspension 30. The order of suspension or cancellation of certificate passed under sub-regulation (3) of regulation 28, shall be published in at least two daily newspapers by the Board. Appeal to the Securities Appellate Tribunal 31.3*[Any person aggrieved by an order of the Board made, on and after the commencement of the Securities Laws (Second Amendment) Act, 1999 (ie., after 16th December 1999), under these regulations may prefer an appeal to a Securities Appelate Tribunal having jurisdiction in the matter] Foot notes3. Substituted for the following provision by SEBI (Appeal to the Securities Appellate Tribunal) (Amendment) Regulations, 2000 published in the official Gazette of India dated 28.03.2000 "Any person aggrieved by an order of the Board may prefer an appeal to the Central Government" SCHEDULE I - FORMS NAME____________________________________________________________ NAME OF PERSON TO CONTACT:______________________________________ DESIGNATION:____________________________________________________ TELEPHONE NO:___________________________________________________ 1. APPLICANT MUST SUBMIT A COMPLETED APPLICATION FORM TOGETHER WITH APPROPRIATE SUPPORTING DOCUMENTS TO THE SECURITIES AND EXCHANGE BOARD OF INDIA. 2. IT IS IMPORTANT THAT THIS APPLICATION FORM SHOULD BE READ IN CONJUNCTION WITH RULES AND REGULATIONS AND THE CODE OF CONDUCT FOR THE BANKER TO AN ISSUE. 3. APPLICATION FOR REGISTRATION WILL ONLY BE CONSIDERED PROVIDED ALL QUESTIONS ARE ANSWERED. 4. ANSWERS MUST BE TYPED / PRINTED. 5. INFORMATION WHICH NEEDS TO BE SUPPLIED IN MORE DETAILS MAY BE WRITTEN ON SEPARATE SHEETS WHICH SHOULD BE ATTACHED TO THE APPLICATION FORM. 6. ALL SIGNATURES MUST BE ORIGINAL. Part: I GENERAL INFORMATION 1. APPLICANTS DETAILS 1.1 Name 1.2 Address of registered office of the Bank: Pin Code: ________________ Telephone No.:_______________ Telex No.:________________ Fax No.:____________________ Address for Correspondence:- Pin Code: ________________ Telephone No.:________________ Telex No.:________________ Fax No.:______________________ 1.3 Application to Securities and Exchange Board of India for other intermediary activity: 2. ORGANISATION STRUCTURE: 2.1 Date and Place of Incorporation Day Month Year Place 2.2 Organisation Chart: General Organisation & specific Activity (i.e. Applied for registration) Also state the functional responsibility. 2.3 Particulars of all Directors and key management personnel:- (For other than public sector banks only Name; Qualification; Experience; Ownership details; (date of Appointment) Other directorship; (Name & Date of Appointment); Previous positions held.) 2.4 Number of employees. 2.5 List of major shareholders (holding 5% or more voting shares) Name, Shareholding pattern i.e. no. of shares and its % to total capital. 3.0 DETAILS OF INFRASTRUCTURAL FACILITIES (To be used for specific activity) 3.1 DATA PROCESSING CAPACITY (a) Inhouse: (b) Others: 3.2 COMPUTER FACILITY (a) Hardware configuration (b) Software Used 3.3 Communication and Man-power Facilities available at Controlling Branch/Head Office and at various branches. 4.0 FINANCIAL INFORMATION 4.1 Capital Structure (Rs. in lakhs)
4.2 Net Profit First Year Second Year Third Year 4.3 Income (From specific activity of Banker to an Issue) 5.0 OTHER INFORMATION (For specific activity of Banker to an Issue) 5.1 Details of all settled and pending disputes: Nature of dispute Name of the party Pending/settled 5.2 Indicate involvement in any economic and criminal offences in the last three years (For directors). 5.3 Any other information considered relevant to the nature of services rendered by the company. 5.4 Name and Address of the Auditors. PART-II SPECIFIC INFORMATION AS TO BANKER TO AN ISSUE 6.0 BUSINESS INFORMATION 6.1 Indicate type of Activities carried on/proposed to be carried on. (Collection Bankers for: Application money and/or Allotment Money, Refund Bankers, Paying Bankers for payment of dividend/interest warrant. 6.2 Describe modus operandi for handling applications, processing them and for co-ordination between branches, remittance of money, collection & accounting for funds, function of refund bankers. 6.3 Enclose a copy of typical contract entered with the client for the services rendered. 6.4 Enclose list of centres at which the bank has branches out of centres notified by the Ministry of Finance. 7.0 EXPERIENCE 7.1 Experience as bankers to the issue (period to be indicated (Services provided during last year) 7.2 List of clients. (Corporate clients only) (For specific activity) Name Services Rendered DECLARATION THIS DECLARATION MUST BE SIGNED BY TWO AUTHORISED OFFICIALS OF THE APPLICANT We hereby apply for Registration. We warrant that we have truthfully and fully answered the questions above and provided all the information which might reasonably be considered relevant for the purposes of our registration. We hereby declare that the information furnished is true and correct and neither the applicant nor any of its Directors and Key-executive personnel have been involved in or convicted of economic offences during the last three years or by the Reserve Bank for violation of the provisions of the Reserve Bank of India Act, 1934 and Banking Regulation Act, 1949. For and on behalf of ________________________________ ___________________________ __________________________ ___________________________ __________________________ ___________________________ __________________________ FORM B 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 the Board hereby grants a certificate of registration to___________________________________________________ as a banker to an issue subject to the conditions in the rules and in accordance with the regulations. II. Registration Code for the banker to an issue is BI / / / III. Unless renewed, the certificate of registration is valid from _______ to _______. Date: By Order For and on behalf of Securities and Exchange Board of India Authorised Signatory SCHEDULE II SECURITIES AND EXCHANGE BOARD OF INDIA 4*[(1) Every banker to an issue shall subject to clauses 3 and 4 of this Schedule pay registration fees as set out below: A sum of Rs.2.5 lakhs to be paid annually for the first two years commencing from the date of initial registration and thereafter for the third year a sum of Rs. 1 lakh to keep his registration in force. (2) Renewal fees to be paid by the banker to an issue. A sum of Rs.1 lakh to be paid annually for the first two years from the date of such renewal and thereafter a sum of Rs. 20, 000 per annum for the third year to keep his registration in force; (3) Fees referred to in clause (1) above shall be paid in the following manner - (a) First installment to be paid within 15 days from the date of intimation from the Board under regulation 7.(4) The fees indicated above shall be payable by 5*[***]draft in favour of "The Securities and Exchange Board of India" at Bombay 6*[or at the respective regional office]. Foot notes 4. Substituted for the following paragraphs 1, 2, 3 and 4 by the SEBI (Banker to an Issue) (Amendment) Regulations, 1999, published in the Official Gazette dated 30.09.1999. "(1) Every banker to an issue shall subject to clauses 3 and 4 of this Schedule pay registration fees as set out below: A sum of Rs.2.5 lakhs to be paid annually for the first two years commencing fro the date of initial registration and thereafter for the third year a sum of Rs.1 lakh to keep his registration in force.Following earlier paragraph was substituted by the SEBI (Payment of Fees) (Amendment) Regulations, 1995 published in the Official Gazette of India dated 28.11.1995. "The fees specified in paragraphs 1 and 2 above shall be payable by draft in favour of "The Securities and Exchange Board of India" at Bomaby or at the respective regional office."5. "a cheque or" omitted by the SEBI (Payment of Fees) Amendment Regulations, 1995 published in the official Gazette of India dated 28.11.1995. 6. "or at the respective regional office" inserted by the SEBI (Payment of Fees) Amendment Regulations, 1995 published in the official Gazette of India dated 28.11.1995. SCHEDULE III 1. A banker to an issue shall in the conduct of his business, observe high standards of integrity and fairness in all his dealings with his clients, the investors and/or other members of his profession. 2. A banker to an issue shall exercise due diligence, ensure proper care. A banker to an issue shall not make any statement or become privy to any act, practice or unfair competition, which is likely to be harmful to the interests of other bankers to an issue or is likely to place such other bankers to an issue in a disadvantageous position in relation to the banker to the issue, while competing for or executing any assignment. 3. A banker to an issue shall not make any exaggerated statement, whether oral or written to the client, either about the qualification or the capability to render certain services or his achievements in regard to services rendered to other clients. 4. A banker to an issue shall always endeavour to- (a) render the best possible advice to the clients having regard to the clients' needs and the environments and his own professional skill; and5. A banker to an issue shall not divulge to other clients, the press or any other party any confidential information about his client, which has come to his knowledge. 6. A banker to an issue shall not - (a) allow blank application forms bearing brokers stamp to be kept at the bank premises or peddled anywhere near the entrance of the premises.7. A banker to an issue shall not at any time act in collusion with other agents in a manner that is detrimental to the smaller investor. A banker to an Issue shall abide by the provisions of such Acts, Rules, Regulations, Guidelines, resolutions, Notifications, directions, circulars and instructions as may be issued from time to time by the Central Government, the Reserve Bank of India, the Indian Banks Association or teh Board and as may be applicable and relevant to the activities carried on by the Banker to the Issue. 7*[8 (a) A banker to an issue shall abide by the provisions of such Acts and rules, regulations, guidelines, resolutions, notifications, directions, circulars and instructions as may be issued from time to time by the Central Government, the Reserve Bank of India, the Indian Banks Association or the Board and as may be applicable and relevant to the activities carried on by the banker to the issue.] Foot notes 7. "Clause 8" inserted by the SEBI (Investment Advice by Intermediaries) (Amendment) Regulations, 2001 published in the Official Gazette of India dated 29.05.2001 | |||||||||||||||||||||||||||||
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