5.0 The pre-issue obligations are detailed below :

5.1 The lead merchant banker shall exercise due diligence.

5.1.1  The standard of due diligence shall be such that the merchant banker shall satisfy himself about all the aspects of offering, veracity and adequacy of disclosure in the offer documents.

5.1.2  The liability of the merchant banker as referred to clause 5.1.1 shall continue even after the completion of issue process.

5.2  The lead merchant banker, shall pay requisite fee in accordance with regulation 24A of Securities and Exchange Board of India (Merchant Bankers) Rules and Regulations, 1992 along with draft offer document filed with the Board.

5.3 Documents to be Submitted alongwith the Offer Document by the Lead Manager

5.3.1 Memorandum of Understanding (MOU)

5.3.1.1  No company shall make an issue of security through a public or rights issue unless a Memorandum of Understanding has been entered into between a lead merchant banker and the issuer company specifying their mutual rights, liabilities and obligations relating to the issue.

5.3.1.2  The MOU shall contain such clauses as are specified at Schedule I and such other clauses as considered necessary by the lead merchant banker and the issuer company.

Provided that the MOU shall not contain any clause whereby the liabilities and obligations of the lead merchant banker and issuer company under the Companies Act, 1956 and Securities and Exchange Board of India (Merchant Bankers) Rules and Regulations, 1992 are diminished in any way. .

5.3.1.3 The Lead Merchant Banker responsible for drafting of the offer documents shall ensure that a copy of the MOU entered into with the issuer company is submitted to the Board along with the draft offer document.

5. 3.2 Inter-se Allocation of Responsibilities

5.3.2.1  In case a public or rights issue is managed by more than one merchant bankers the rights, obligations and responsibilities of each merchant banker shall be demarcated as specified in Schedule II.

5.3.2.2  In case of under subscription at an issue, the Lead Merchant Banker responsible for underwriting arrangements shall invoke underwriting obligations and ensure that the underwriters pay the amount of devolvement and the same shall be incorporated in the inter-se allocation of responsibilities (Schedule II) accompanying the due diligence certificate submitted by the Lead Merchant Banker to the Board .

5.3.3 Due Diligence Certificate

5.3.3.1 The Lead Merchant Banker, shall furnish to the Board a due diligence certificate as specified in Schedule III along with the draft prospectus.

5.3.3.2 In addition to the due diligence certificate furnished alongwith the draft offer document, the Lead Merchant Banker shall also:

i) certify that all amendments suggestion or observations made by Board have been incorporated in the offer document;

ii) furnish a fresh "due diligence" certificate at the time of filing the prospectus with the Registrar of Companies as per the format specified at Schedule IV.

iii) furnish a fresh certificate immediately before the opening of the issue that no corrective action on its part is needed as per the format specified at Schedule V.

iv) furnish a fresh certificate after the issue has opened but before it closes for subscription as per the format specified at Schedule VI.

5.3.4 Certificates Signed by the Company Secretary or Chartered Accountant, in Case of Listed Companies Making Further Issue of Capital

5.3.4.1 The Lead Merchant Banker shall furnish the following certificates duly signed by Company Secretaries  or Chartered Accountants along with the draft offer documents:

1. all refund orders of the previous issues were despatched within the prescribed time and in the prescribed manner;

    c    the securities were listed on the Stock Exchanges as specified in the offer documents.

5.3.5 Undertaking

5.3.5.1 The issuer shall submit an undertaking to the Board to the effect that transactions in securities by the `promoter' the 'promoter group' and the immediate relatives of the `promoters during the period between the date of filing the offer documents with the Registrar of Companies or Stock Exchange as the case may be and the date of closure of the issue shall be reported to the Stock exchanges concerned within 24 hours of the transaction(s).

5.3.6 List of Promoters� Group

5.3.6.1 The issuer shall submit to the Board a list of persons who constitute the Promoters� Group and their individual shareholdings.

5.4 Appointment of Intermediaries

5.4.1 Appointment of Merchant Bankers

5.4.1.1 Merchant Banker who is associated with the issuer company as a promoter or a director shall not to lead manage the issue of the company.

Provide that the lead merchant banker holding the securities of the issuer company may lead manage the issue;

1. if the securities of the issuer company are listed or proposed to be listed on the Over the Counter Exchange of India (OTCEI) and;

5.4.2 Appointment of Co-managers

5.4.2.1 Lead Merchant Bankers shall ensure that the number of co-managers to an issue does not exceed the number of Lead Merchant Bankers to the said issue and there is only one advisor to the issue.

5.4.3 Appointment of Other Intermediaries

5.4.3.1 Lead Merchant Banker shall ensure that the other intermediaries being appointed are duly registered with the Board, wherever applicable.

5.4.3.1.1 Before advising the issuer on the appointment of other intermediaries, the Lead Merchant Banker shall independently assess the capability and the capacity of the various intermediaries to carry out assignment.

5.4.3.1.2  The Lead Merchant Banker shall ensure that issuer companies enters into a Memorandum of Understanding with the intermediary(ies) concerned whenever required.

5.4.3.2  The Lead Merchant Banker shall ensure that Bankers to the Issue are appointed in all the mandatory collection centres as specified in clause 5.9.

5.4.3.3  The Lead Merchant Banker shall not act as a Registrar to an issue in which it is also handling the post issue responsibilities.

5.43.4  The Lead Merchant Bankers shall ensure that;

a    the Registrars to Issue registered with the Board are appointed in all public issues and rights issues;
b    in case where the issuer company is a registered Registrar to an Issue, the issuer shall appoint an independent outside Registrar to process its issue.

    The lead merchant banker shall ensure that Registrar to an issue which is associated with the     issuer company as a promoter or a director shall not act as Registrar for the issuer company.

    Where the number of applications in a public issue is expected to be large, the issuer company in consultation with the lead merchant banker may associate one or more Registrars registered with the Board for the limited purpose of collecting the application forms at different centres and forward the same to the designated Registrar to the Issue as mentioned the offer document.

    The designated Registrar to the Issue shall, be primarily and solely responsible for all the activities as assigned to them for the issue management.

5.5    Underwriting

5.5.1 The Lead merchant banker shall satisfy themselves about the ability of the underwriters to discharge their underwriting obligations.

5.5.2 The lead merchant banker shall;

a    incorporate a statement in the offer document to the effect that in the opinion of the lead merchant banker, the underwriters' assets are adequate to meet their underwriting obligations;

 b    obtain Underwriters� written consent before including their names as underwriters in the  final offer document.

5.5.3 In respect of every underwritten issue, the lead merchant banker(s) shall undertake a minimum underwriting obligation of 5% of the total underwriting commitment or Rs.25 lacs whichever is less.

5.5.4  The outstanding underwriting commitments of a merchant banker shall not exceed 20 times its networth at any point of time.

5.5.5 In respect of an underwritten issue, the lead merchant banker shall ensure that the relevant details of underwriters are included in the offer document.

5.6 Offer Document to be Made Public

5.6.1 The draft offer document filed with the Board shall be made public for a period of 21 days from the date of filing the offer document with the Board.

5.6.2  The Lead Merchant Banker shall;

1. simultaneously file copies of the draft offer document with the stock exchanges where the securities offered through the issue are proposed to be listed.

5.6.3  Lead merchant banker or stock exchanges may charge an appropriate sum to the person requesting for the copy of offer document.

5.7 Despatch of Issue Material

5.7.1 The lead merchant banker shall ensure that for public issues offer documents and other issue materials are dispatched to the various stock exchanges, brokers, underwriters, bankers to the issue, investors associations, etc. in advance as agreed upon.

5.7.2 In the case of rights issues, lead merchant banker shall ensure that the letters of offer are dispatched to all shareholders at least one week before the date of opening of the issue.

5.7.3⁴  [Deleted]
5.8 No Complaints Certificate

5.8.1  After a period of 21 days from the date the draft offer document was made public, the Lead Merchant Banker shall file a statement with the Board :

i)    giving a list of complaints received by it,
ii)    a statement by it whether it is proposed to amend the draft offer document or not, and;
iii)    highlight those amendments.

5.9    Mandatory Collection Centres

5.9.1    The minimum number of collection centres for an issue of capital shall be-

a)    the four metropolitan centres situated at Mumbai, Delhi, Calcutta and Chennai

b)    all such centres where the stock exchanges are located in the region in which the registered office of the company is situated.

c)    the regional division of collection centres is indicated in Schedule VII.

5.9.2  The issuer company shall be free to appoint as many collection centres as it may deem fit in addition to the above minimum requirement.
 

5.10 Authorised Collection Agents

5.10.1 The issuer company can also appoint authorised collection agents in consultation with the Lead Merchant Banker subject to necessary disclosures including the names and addresses of such agents made in the offer document.

5.10.2 The modalities of selection and appointment of collection agents can be made at the discretion of the Lead Merchant Banker.

5.10.3 The lead merchant banker shall ensure that the collection agents so selected are properly equipped for the purpose, both in terms of infrastructure and manpower requirements.

5.10.4 The collection agents may collect such applications as are accompanied by payment of application moneys paid by cheques, drafts and stock invests.

5.10.5 The authorised collection agent shall not collect application moneys in cash.

5.10.6 The applications collected by the collection agents shall be deposited in the special share application account with designated scheduled bank either on the same date or latest by the next working day.

5.10.7 The application forms along with duly reconciled schedules shall be forwarded by the collection agent to the Registrars to the Issue after realisation of cheques and after weeding out the applications in respect of cheques return cases, within a period of 2 weeks from the date of closure of the public issue.

5.10.8 The applications accompanied by stockinvests shall be sent directly by the collection agent to the Registrars to the Issue along with the schedules within one week from the date of closure of the issue.

5.10.9 The offer documents and application forms shall specifically indicate that the acknowledgement of receipt of application moneys given by the collection agents shall be valid and binding on the issuer company and other persons connected with the issue.

5.10.10  The investors from the places other than from the places where the mandatory collection centres and authorised collection agents are located, can forward their applications along with stockinvests to the Registrars to the Issue directly by Registered Post with Acknowledgement Due.

5.10.11 The applications received through the registered post shall be dealt with by the Registrars to the Issue in the normal course.

5.11 Advertisement for Rights Post Issues

5.11.1 The Lead Merchant Banker shall ensure that in case of a rights issue, an advertisement giving the date of completion of despatch of letters of offer, shall be released in at least in an English National Daily with wide circulation, one Hindi National Paper and a Regional language daily circulated at the place where registered office of the issuer company is situated at least 7 days before the date of opening of the issue.

5.11.2 The advertisement referred to in clause 5.11.1 shall indicate the centres other than registered office of the company where the shareholders or the persons entitled to rights may obtain duplicate copies of composite application forms in case they do not receive the original application form within a reasonable time even after opening of the rights issue.

5.11.3 Where the shareholders have neither received the original composite application forms nor are they in a position to obtain the duplicate forms, they may make applications to subscribe to the rights on a plain paper.

5.11.4 The advertisement shall also contain a format to enable the shareholders to make the application on a plain paper containing necessary particulars like name, address, ratio of right issue, issue price, number of shares held, ledger folio numbers, number of shares entitled and applied for, additional shares if any, amount to be paid along with application, particulars of cheque, etc. to be drawn in favour of the company Account - Rights issues.

5.11.5 The advertisement shall further mention that applications can be directly sent by the shareholder through Registered Post together with the application moneys to the company's designated official at the address given in the advertisement.

5.11.6 The advertisement may also invite attention of the shareholders to the fact that the shareholders making the applications otherwise than on the standard form shall not be entitled to renounce their rights and shall not utilise the standard form for any purpose including renunciation even if it is received subsequently.

5.11.7 If the shareholder makes an application on plain paper and also in standard form, he may face the risk of rejection of both the applications.

5.12 Appointment of Compliance Officer

5.12.1 An issuer company shall appoint a compliance officer who shall directly liaise with the Board with regard to compliance with various laws, rules, regulations and other directives issued by the Board and investors complaints related matter.

5.12.2 The name of the compliance officer so appointed shall be intimated to the Board.

5.13 Abridged Prospectus

5.13.1 The Lead Merchant Banker shall ensure the following:

i)    Every application form distributed by the issuer Company or anyone else is accompanied by a copy of the Abridged Prospectus.

ii)    The application form may be stapled to form part of the Abridged Prospectus. Alternatively, it may be a perforated part of the Abridged Prospectus.

iii)    The Abridged Prospectus shall not contain matters which are extraneous to the contents of the prospectus.

iv)    The Abridged Prospectus shall be printed at least in point 7 size with proper spacing.

v)    Enough space shall be provided in the application form to enable the investors to file in various details like name, address, etc.

⁵5.14 Agreements with depositories

5.14.1 The lead manager shall ensure that the issuer company has entered into agreements with all the depositories for dematerialisation of securities. He shall also ensure that an option be given to the investors to receive allotment of securities in dematerialised form through any of the depositories."