The Securities and Exchange Board of India (SEBI) has notified amendments to the SEBI (Merchant Bankers) Regulations, 1992, through the SEBI (Merchant Bankers) (Amendment) Regulations, 2024. Key revisions include modifications to eligibility and operational requirements. The updated regulations require merchant bankers to employ at least two professionally qualified individuals in finance, law, accountancy, or business management. Market-making responsibilities have been aligned with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. Enhanced clarity has been introduced regarding lead managers’ roles, including mandatory disclosures in offer documents about responsibilities for disclosures, allotment, and refunds. Additionally, merchant bankers must now report changes in registration details within seven days and streamline the handling of grievances. Terminology updates have been made for gender-neutral references and alignment with the Companies Act, 2013. Furthermore, merchant bankers involved in securities acquisitions must submit transaction particulars to SEBI within specified timelines. The amendments aim to strengthen transparency, ensure accountability, and improve compliance mechanisms within the merchant banking sector. These regulations came into effect upon their publication in the Official Gazette on November 29, 2024.
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 29th November, 2024
SECURITIES AND EXCHANGE BOARD OF INDIA
(MERCHANT BANKERS) (AMENDMENT) REGULATIONS, 2024
F. No. SEBI/LAD-NRO/GN/2024/214.—In exercise of the powers conferred by section 30 read with clause (b) of sub-section (2) of section 11 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992, namely, –
1. These regulations may be called the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2024.
2. They shall come into force on the date of their publication in the Official Gazette.
3. In the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992, –
I. In regulation 6, –
(i) the words “for considering the grant of a certificate” appearing after the words “into account” shall be omitted;
(ii) the word “relating” appearing after the words “relevant to the activities” shall be substituted with the words “of a”;
(iii) after the word “particular”, the symbol and word “, whether” shall be inserted;
(iv) the existing clause (b) shall be substituted with the following, namely,-
“(b) the applicant has in its employment, a minimum of two persons who are professionally qualified in finance or law or accountancy or business management from a Government recognised university or institution or who have a recognised degree in finance or law or accountancy or business management from a foreign university or institution;”
(v) clause (g) shall stand omitted;
(vi) the word “his” appearing in clauses (aa), (b), (e) and (f) shall be substituted with the word “its”.
II. In regulation 9A, in sub-regulation (1), –
(i) in clause (c), –
a. the word “adequate” appearing after the words “shall take” shall be substituted with the word “all”;
b. the word “the” shall be inserted after the words “redressal of” and before the word “grievances”;
c. the words and symbol “and keep the Board informed about the number, nature and other particulars of the complaints received” shall stand omitted;
(ii) clause (f) shall be substituted with the following clause, namely,-
“(f) it shall intimate the Board of the details of any change in information submitted while seeking registration within seven working days of such change.”
III. In regulation 13A, –
(i) the words “he” and “his” appearing in non-obstante clause shall be substituted with the words “it” and “its” respectively;
(ii) the second proviso shall be substituted with the following proviso, namely,-
“Provided further that a merchant banker, that has been granted a certificate of registration under these regulations, shall ensure market making in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.”;
(iii) in clause (ii) of the Explanation, the words, symbols and figures “section 4A of the Companies Act, 1956 (1 of 1956)” shall be substituted with the words, symbols and figures “sub-section (72) of section 2 of the Companies Act, 2013”.
IV. The existing regulation 20 shall be substituted with the following regulation, namely,-
“Responsibility of the lead manager.
20. No lead manager shall agree to manage or be associated with any issue unless its responsibilities relating to the issue particularly, those of disclosures, allotment and refund are clearly defined, allocated and determined and a statement specifying such responsibilities is disclosed in the draft offer document and offer document:
Provided that, where there is more than one lead merchant banker to the issue, the responsibilities of each of the lead merchant banker shall clearly be demarcated and a statement specifying such responsibilities shall be disclosed in the draft offer document and offer document.”
V. In regulation 21A, –
(i) in the marginal heading, the words “as such for an” shall be substituted with the words “for its”;
(ii) the existing sub-regulation (1), without the proviso and Explanation therein, shall be substituted by the following, namely, –
“A merchant banker, being a promoter or an associate of either the issuer of the securities or of a person making an offer to sell or purchase securities in terms of any of the regulations made by the Board, shall not lead manage any issue or be associated with any activity undertaken under any of the regulations made by the Board by such issuer or person:”;
(iii) in the proviso to sub-regulation (1), the word “he” shall be substituted with the word “it”;
(iv) in the Explanation under sub-regulation (1), –
a. the word “purposes” appearing after the words “For the” and before the words “of this regulation” shall be substituted with the word “purpose”;
b. clause (iii) shall be substituted by the following clause, namely,
“(iii) there is a common director –
(a) in the issuer and the merchant banker; or
(b) in the issuer’s subsidiary or holding company and the merchant banker: Provided that this clause shall not be applicable where the director concerned is a nominee director:
Provided further that this clause shall not be applicable where the director concerned is an independent director subject to recusal by the said independent director in respect of the issue from the boards of both issuer and merchant banker.”
VI. In regulation 22B, the existing sub-regulation (3) shall be substituted with the following sub-regulation, namely,-
“(3) A merchant banker, if called upon, pursuant to an agreement for underwriting to subscribe to the securities of a body corporate, shall subscribe to the said securities prior to the finalisation of the basis of allotment.”
VII. The existing regulation 27 shall be substituted with the following regulation, namely, –
“27. A merchant banker shall submit to the Board complete particulars of the transaction for acquisition of securities of a body corporate whose issue is managed by that merchant banker, within fifteen days from the date of entering into such a transaction:
Provided that complete particulars of a transaction for acquisition of securities pursuant to underwriting or market making obligations in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 shall be submitted to the Board on a quarterly basis.”
VIII. In regulation 28, in sub-regulation (1),
(i) in clauses (i) and (v), the word “his” shall be substituted with the word “its”.
(ii) in clause (iii), the word “he” shall be substituted with the word “it”.
IX. In regulation 30, in sub-regulation (3), the word “his” shall be substituted with the word “its”.
X. In regulation 31,
(i) in sub-regulations (1), the word “his” appearing after the words “information relating to” and before the words “activities as a merchant banker”, shall be substituted with the word “its”.
(ii) in sub-regulation (2), the word “his” shall be substituted with the word “its”.
XI. In regulation 34, –
a. in the marginal heading, the word “the” shall be inserted after the word “of” and before the word “auditor”;
b. in the Explanation thereto, the words, symbols and figures “given in section 226 of the Companies Act, 1956 (1 of 1956)” shall be substituted with the words, symbols and figures “provided in section 141 of the Companies Act, 2013”.
XII. In Schedule III,
(i) in clause (23), in sub-clause (a), the word “his” shall be substituted with the word “their”.
(ii) in clause (34), in sub-clause (b), the word “his” shall be substituted with the word “its”.
BABITHA RAYUDU, Executive Director
[ADVT.-III/4/Exty./727/2024-25]
Footnotes:
1. The Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992 was published in the Gazette of India on December 22, 1992 vide No. LE/11112/92.
2. The Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992 was amended-
i. on September 7, 1995 by the Securities and Exchange Board of India (Merchant Bankers) Amendment Regulations, 1995 vide No. SEBI/LE/1/9/95;
ii. on November 28, 1995 by the Securities and Exchange Board of India (Payment of Fees) Amendment Regulations, 1995 vide No. S.O. 939 (E);
iii. on June 6, 1996 by the Securities and Exchange Board of India (Merchant Bankers)Amendment Regulations, 1996 vide SEBI/LE/III/5/96;
iv. on December 9, 1997 by the Securities and Exchange Board of India (Merchant Bankers)Amendment Regulations, 1997 vide No. S.O. 837 (E);
v. on December 15, 1997 by the Securities and Exchange Board of India (Merchant Bankers) Amendment Regulations, 1997 vide No. S. O. 869(E);
vi. on January 21, 1998 by the Securities and Exchange Board of India (Merchant Bankers) Amendment Regulations, 1998 vide No. S.O. 74 (E);
vii. on September 30, 1999 by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 1999 vide No. S.O. 799 (E);
viii. on November 17, 1999 by the Securities and Exchange Board of India (Merchant Bankers) (Second Amendment) Regulations, 1999 vide No. S.O. 1119 (E);
ix. on March 28, 2000 by the Securities and Exchange Board of India (Appeal to the Securities Appellate Tribunal) (Amendment) Regulations, 2000 vide No. S.O. 278 (E);
x. on May 29, 2001 by the Securities and Exchange Board of India (Investment Advice by Intermediaries) (Amendment) Regulations, 2001 vide No. S.O. 476 (E);
xi. on September 27, 2002 by the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 vide No. S.O. 1045 (E);
xii. on October 1, 2003 by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2003 vide No. S.O. 1154(E);
xiii. on March 10, 2004 by the Securities and Exchange Board of India (Criteria for Fit and Proper Person) Regulations, 2004 vide S.O. No. 398(E);
xiv. on April 18, 2006 by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2006 vide No. S.O. 560(E);
xv. on May 3,2006 by the Securities and Exchange Board of India (Merchant Bankers) (Second Amendment) Regulations, 2006 vide No. S.O. 640 (E);
xvi. on September 7, 2006 by the Securities and Exchange Board of India (Merchant Bankers) (Third Amendment) Regulations, 2006 vide No. S.O. 1448 (E);
xvii. on May 28, 2007 by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2007 vide Notification No.11/LC/GN/2007/2517;
xviii. on March 31, 2008 by the Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2008 vide F.No. 11/LC/GN/2008/21669;
xix. on May 26, 2008 by the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 vide Notification No. LAD-NRO/GN/2008/11/126538;
xx. on August 26, 2009 by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 vide Notification No. LAD/ NRO/GN/2009-10/15/174471;
xxi. on April 13, 2010 by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2010 vide Notification No. LAD-NRO/GN/2010-11/04/1109;
xxii. on April 19, 2011 by the Securities and Exchange Board of India (Change in Conditions of Registration of Certain Intermediaries)(Amendment) Regulations, 2011vide Notification No. LAD/ NRO/GN/ 2011-12/03/12650;
xxiii. on July 5, 2011 by the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2011 vide Notification No. LAD-NRO/GN/2011-12/09/21233;
xxiv. on August 16, 2011 by the Securities and Exchange Board of India (Merchant Bankers) (Second Amendment) Regulations, 2011 vide Notification No. LAD-NRO/GN/2011-12/17/26149;
xxv. on March 29, 2012 by the Securities and Exchange Board of India (Merchant Bankers)(Amendment) Regulations, 2012vide Notification No. LAD-NRO/GN/2011-12/40/7335;
xxvi. on May 23, 2014 by the Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2014 vide Notification No. LAD-NRO/GN/2014-15/03/1089;
xxvii. on December 8, 2016 by the Securities and Exchange Board of India (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2016 vide Notification No. SEBI/LAD/NRO/GN/ 2016-17/023;
xxviii. on March 29, 2017 by the Securities and Exchange Board of India (Payment of Fees and Mode of Payment) (Amendment) Regulations,2017vide Notification No. SEBI/LAD-NRO/GN/2016-17/38;
xxix. on April 17, 2020 by the Securities and Exchange Board of India(Regulatory Sandbox) (Amendment) Regulations, 2020 vide Notification No. SEBI/LAD-NRO/GN/2020/10;
xxx. On March 30, 2021 by the Securities and Exchange Board of India (Merchant Banker) (Amendment) Regulations, 2021;
xxxi. on May 5, 2021 by the Securities and Exchange Board of India (Payment of Fees and Mode of Payment) (Amendment) (Regulations) 2021;
xxxii. on August 3, 2021 by the Securities and Exchange Board of India (Regulatory Sandbox) (Amendment) Regulations, 2021;
xxxiii. on January 17, 2023 by the Securities and Exchange Board of India (Change in Control in Intermediaries) (Amendment) Regulations, 2023;
xxxiv. on July 4, 2023 by the Securities and Exchange Board of India (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023;
xxxv. on August 18, 2023 by the Securities and Exchange Board of India (Facilitation of Grievance Redressal Mechanism) (Amendment) Regulations, 2023.
