THE GAZETTE OF INDIA
EXTRAORDINARY
PART II – SECTION 3 – SUB-SECTION (2)
PUBLISHED BY AUTHORITY
NEW DELHI 8th OCTOBER 1993
MINISTRY OF FINANCE
(DEPARTMENT OF ECONOMIC AFFAIRS)
NOTIFICATION
NEW DELHI 8TH OCTOBER 1993

SECURITIES AND EXCHANGE BOARD OF INDIA
(UNDERWRITERS) RULES, 1993

S O 766 (E) In exercise of the powers conferred by section 29 of the Securities and Exchange Board of India, Act 1992, (15 of 1992) the Central Government hereby makes the following regulations, namely: –

CHAPTER I
PRELIMINARY

Short title and commencement

1. (1) These regulations may be called the Securities and Exchange Board of India (Underwriters) Regulations, 1993.

(2) They shall come into force on the date of their publication in the Official Gazette.

Definitions

2. (1) In these regulations, unless the context otherwise requires: –

1*[******]

(b) “form” means a form specified in Schedule I;

(c) “inspecting authority” means one or more persons appointed by the Board to exercise powers conferred under Chapter IV;

(d) “principal officer” means, –

(i) in relation to a proprietary concern, the proprietor himself;

(ii) in relation to a firm or an association of persons or any body of individuals or a body corporate, a secretary, treasurer, partner, manager or director of the firm, association, or body corporate;

(iii) any person connected with the management or administration of the firm, association or the body corporate upon whom the Board has served a notice of its intention of treating him as the principal officer thereof;

(e) regulations” means Securities and Exchange Board of India (Underwriters) Regulations, 1993;

(f) rules” means Securities and Exchange Board of India (Underwriters) Rules 1993;

(2) All other words and expressions used in these regulations but not defined, and defined in the Act and the rules shall have the same meanings respectively assigned to them in the Act or the rules, as the case may be.

Foot notes

1. Following clause (a) to regulation 2 was omitted by SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 published in the Official Gazette of India dated 27.09.2002

(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 appointed by the Board under Chapter V;

CHAPTER II
REGISTRATION OF UNDERWRITERS

Application for grant of certificate

3. (1) An application by an underwriter for grant of a certificate shall be made to the Board in form A.

(2) Notwithstanding anything contained in sub-regulation (1), any application made by an underwriter 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.

Furnishing of further information, clarification, etc.

4. (1) The Board may require the applicant to furnish further information or clarification regarding matters relevant to underwriting to consider the application for grant of a certificate.

2*[(2) If the Board, on receipt of further information, is of the opinion that the information so furnished is not sufficient to decide on the application and seeking further information through correspondence is likely to delay the matter, it may require the applicant or its principal officer to appear before the Board in order to give an opportunity to the applicant to give further clarifications on the application made under Regulation 3].

Application to conform to the requirements –

5. 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 3*[one month] such objections as may be indicated by the Board.

4*[Provided further that the Board may, on sufficient reasons being shown extend the time by another one month in order to enable the applicant to comply with the requirements of the Board].

Consideration of application

6. The Board shall take into account for considering the grant of a certificate, all matters which are relevant to or relating to underwriting and in particular the following, namely, whether the applicant –

(a) has the necessary infrastructure like adequate office space, equipments, and manpower to effectively discharge his activities;

(b) has any past experience in underwriting or has in his employment minimum two persons who had the experience in underwriting;

(c) or any person, directly or indirectly connected with the applicant has not been granted registration by the Board under the Act;

5*[Explanation: – For the purposes of this clause the Board shall take into account whether a previous application for a certificate of any person directly or indirectly connected with the applicant has been rejected by the Board or any disciplinary action has been taken against such person under the Act or any of the Rules or any of the Regulations made under the Act]

(d) fulfills the capital adequacy requirements specified in regulation 7 ;

(e) or any of its director, partner or principal officer is or has at any time been convicted for any offence involving moral turpitude or has been found guilty of any economic offence.

6*[(f) is a fit and proper person.”]

Capital Adequacy Requirement

7. (1) The capital adequacy requirement referred to in sub- regulation (d) of regulation 6 shall not be less than the networth of rupees twenty lakhs;

7*[(2) Notwithstanding anything contained in sub-regulation (1), every stock-broker, who acts as an underwriter shall fulfill the capital adequacy requirements specified by the stock exchange of which he is a member.]

Procedure for registration

8. The Board on being satisfied that the applicant is eligible, shall send an intimation 8*[within one month of such satisfaction] of the applicant mentioning that he has been found eligible for the grant of certificate and grant a certificate in form B subject to payment of fees as specified in regulation 12.

Renewal of certificate

9. (1) An underwriter may, if he so desires, make an application in form A for renewal of certifcate before three months of the expiry of the period of certificate.

(2) The application for renewal of certificate under sub-regulation (1) shall be dealt with in the same manner as if it were an application for grant of a certificate made under regulation 3.

Procedure where registration is not granted

10. (1) Where an application for grant of a certificate under regulation 3 or of renewal under regulation 9 does not fulfil the requirements set out in regulation 6 the Board may reject the application, after giving an opportunity of being heard.

9*[(2) The decision shall be communicated by the Board within thirty days of such decision 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 (2), apply within a period of thirty days from the date of receipt of such intimation, to the Board for reconsideration of its decision.

(4) On receipt of the application made under sub-regulation (3), the Board shall reconsider its decision and communicate its findings thereon as soon as possible in writing to the applicant.

Effect of refusal to grant or renew certificate

11. Any underwriter whose application for grant or renewal of 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 10 cease to act as an underwriter.

10*[Provided that if the Board is satisfied that it is in the interest of the investors, it may permit the underwriter to undertake the underwriting commitments already entered into by him during the validity period of the certificate.]

Payment of fees and the consequences of failure to pay fees

12. (1) Every applicant eligible for grant or renewal of a certificate shall pay fees in such manner and within the period specified in Schedule II:

11*[******]

Provided 12*[******] that a stock broker 13*[******] who, has been granted a certificate under Section 12 of the Act and pays fees under the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 14*[******] shall not be required to pay fees under sub- regulation (1).

(2) Where an underwriter fails to pay the fees as provided in sub- regulation (1), the Board may suspend the certificate, whereupon the underwriter shall forthwith cease to act as an underwriter.

Foot notes

2. Following sub-regulation (2) of regulation 4 was substituted by SEBI (Underwriters) (Amendment) Regulations 1997 published in the Official Gazette of India dated 17.01.1997

“The applicant or, its principal officer shall, if so required, appear before the Board for personal representation. Application to conform to the requirements”

3. The words “the time specified” in proviso to regulation 5 were substituted by SEBI (Underwriters) (Amendment) Regulations 1997 published in the Official Gazette of India date 17.01.1997.

4. Second proviso to regulation 5 was inserted by SEBI (Underwriters) Amendment Regulations, 1997 published in the Official Gazette of India dated 17.01.1997.

5. Following paragraph in regulation 6 was substituted by SEBI (Underwriters) Amendment Regulations 1997 published in Official Gazette of India dated 17.01.1997

“The applicant or, its principal officer shall, if so required, appear before the Board for personal representation. Application to conform to the requirements”

6. Clause (f) in regulation 6 was inserted by SEBI (underwriters) Amendment Regulations, 1998 published in the Official Gazette of India dated 05.01.1998

7. Following sub-regulation (2) of regulation 7 was omitted by SEBI (underwriters) Amendment Regulations, 2002 published in the Official Gazette of India dated 10.12.2002

(2) Notwithstanding anything contained in sub-regulation (1),-

(a) every stock broker, who acts as an underwriter shall fulfil the capital adequacy requirements specified by the stock exchange of which he is a member;

(b) every merchant banker, who acts as an underwriter shall fulfil the capital adequacy requirements specified in regulation 7 of the Securities and Exchange Board of India (Merchant Banker) Regulations 1992.

Explanation: For the purposes of this regulation, “networth” means –

(a) in the case of an applicant being a proprietary concern or a firm or an association of persons or any body of individuals, the value of capital contributed to such business by the applicant and the free reserves of any kind belonging to the business of the applicant; and

(b) in the case of a body corporate, the value of the paid- up capital and the free reserves as disclosed in the books of accounts of the applicant at the time of making the application under sub-regulation (1) of regulation 3 .

8. The words “within one month of such satisfaction” in regulation 8 were inserted by SEBI (Underwriters) Amendment Regulations, 1997 published in the Official Gazette of India dated 17.01.1997.

9. Following sub-regulation (2) of regulation 10 was substituted by SEBI (Underwriters) (Amendment) Regulations 1997 published in the Official Gazette of India dated 17.01.1997

” The refusal to grant or renew the certificate 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”

10. Proviso to regulation 11 was inserted by SEBI (Underwriters) (Amendment) Regulations, 1997 published in the Official Gazette of India dated 17.01.1997.

11. Following first proviso to sub-regulation (1) of regulation 12 was omitted by SEBI (Underwriters) Amendment Regulations, 1997 published in the Official Gazette of India dated 17.01.1997.

“Provided that the Board may on sufficient cause being shown permit the underwriter to pay such fees at any time before the expiry of six months from the date on which such fees become due;”

12. The word “further” in second proviso to sub-regulation (1) of regulation 12 was omitted by SEBI (Underwriters) (Amendment) Regulations, 1997 published in the Official Gazette of India dated 17.011997.

13. The words “or merchant banker” in sub-regulation (1) of regulation 12 were omitted by SEBI (Underwriters) (Amendment) Regulations, 2002 published in the Official Gazette of India dated 10.12.2002.

14. The words “or the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992” were omitted by SEBI (Underwriters) (Amendment) Regulations, 2002 published in the Official Gazette of India dated 10.12.2002.

CHAPTER III
GENERAL OBLIGATIONS AND RESPONSIBILITIES

To abide by the Code of Conduct

13. Every underwriter shall at all times abide by the Code of Conduct as specified in Schedule III.

Agreement with clients

14. Every underwriter shall enter into an agreement referred to in clause (b) of rule 4 with each body corporate on whose behalf he is acting as underwriter and the said agreement shall, amongst other things, provide for the following, namely: –

(i) the period for which the agreement shall be in force;

(ii) the amount of underwriting obligations;

(iii) the period, within which the underwriter has to subscribe to the issue after being intimated by or on behalf of such body corporate;

(iv) the amount of commission or brokerage payable to the underwriter;

(v) details of arrangements, if any, made by the underwriter for fulfilling the underwriting obligations.

General responsibilities of an underwriter

15. (1) The underwriter shall not derive any direct or indirect benefit from underwriting the issue other than the commission or brokerage payable under an agreement for underwriting.

(2) The total underwriting obligations under all the agreements referred to in clause (b) of rule 4 shall not exceed twenty times the networth referred to in regulation 7.

(3) Every underwriter, in the event of being called upon to subscribe for securities of a body corporate pursuant to an agreement referred to in clause (b) of rule 4 shall subscribe to such securities within 45 days of the receipt of such intimation from such body corporate.

To maintain proper books of accounts and records, etc.

16. (1) Subject to the provisions of any other law, every underwriter shall keep and maintain the following books of accounts and documents, namely : –

(a) in relation to underwriter being a body corporate –

(i) a copy of the balance sheet and profit and loss account as specified in sections 211 and 212 of the Companies Act, 1956 (1 of 1956);

(ii) a copy of the auditor’s report referred to in section 227 of the Companies Act, 1956 (1 of 1956).

(b) in relation to an underwriter not being a body corporate –

(i) records in respect of all sums of money received and expended by them and the matters in respect of which the receipt and expenditure take place; and

(ii) their assets and liabilities.

(2) Without prejudice to sub-regulation (1), every underwriter shall, after the close of each financial year as soon as possible but not later than six months from the close of the said period furnish to the Board if so required copies of the balance sheet, profit and loss account, statement of capital adequacy requirement and such other documents as may be required by the Board under regulation 16.

(3) Every underwriter shall also maintain the following records with respect to –

(i) details of all agreements referred to in clause (b) of rule 4;

(ii) total amount of securities of each body corporate subscribed to in pursuance of an agreement referred to in clause (b) of rule 4;

(iii) statement of capital adequacy requirements as specified in regulation 7 ;

(iv) such other records as may be specified by the Board for underwriting.

(4) Every underwriter shall intimate to the Board the place where the books of accounts, records and documents are maintained.

Period of maintenance of books of accounts, records and other documents

17. Every underwriter shall preserve the books of account and other records and documents mentioned under this chapter for a minimum period of five years.

15*[Appointment of Compliance Officer

17 A (1) Every underwriter 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 investors’ grievances.

(2) The compliance officer shall immediately and independently report to the Board any non-compliance observed by him]

Power to call for information

18. (1) The Board may at any time call for any information from an underwriter with respect to any matter relating to underwriting business.

(2) Where any information is called for under sub-regulation (1) it shall be the duty of the underwriter to furnish such information.

Foot notes

15. Regulation 17A was inserted by SEBI (Investment Advice by Intermediaries) (Amendment) Regulations, 2002, published in the Official Gazette of India dated 29.05.2001.

 CHAPTER IV
INSPECTION AND DISCIPLINARY PROCEEDINGS

Board’s right to inspect

19. (1) Where it appears to the Board so to do, it may appoint one or more persons as inspecting authority to undertake the inspection of the books of accounts, other records and documents of the underwriter for any of the purposes specified in sub-regulation (2).

(2) The purposes referred to in sub-regulation (1) shall be as follows, namely: –

(a) to ensure that the books of accounts and other records and documents are being maintained in the manner required;

(b) that the provisions of the Act, rules and regulations are being complied with;

(c) to investigate into the complaints received from investors, other underwriters or any other person on any matter having a bearing on the activities of the underwriter; and

(d) to investigate suo-moto in the interest of securities business or investors’ interest into the affairs of the underwriter.

Procedure for inspection

20. (1) Before undertaking an inspection under regulation 19 the Board shall give a reasonable notice to the underwriter, for that purpose.

(2) Notwithstanding anything contained in sub-regulation (1), where the Board is satisfied that in the interest of the investors or in the public interest no such notice should be given, it may by an order in writing direct that the inspection of the affairs of the underwriter be taken up without such notice.

(3) On being empowered by the Board, the inspecting authority shall undertake the inspection and the underwriter against whom an inspection is being carried out shall be bound to discharge his obligations as provided under regulation 21.

Obligations of underwriter on inspection by the Board

21. (1) It shall be the duty of every director, proprietor, partner, officer and employee of the underwriter 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 an underwriter within such time as the inspecting authority may require.

(2) The underwriter shall allow the inspecting authority to have a reasonable access to the premises occupied by such underwriter 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 underwriter or any such other person on their behalf and also provide copies of documents or other material which in the opinion of the inspecting authority are relevant for the purposes of the inspection.

(3) The inspecting authority shall in the course of inspection, be entitled to examine or record statements of any principal officer, director, partner, proprietor and employee.

(4) It shall be the duty of every director, proprietor, partner, officer or employee of the underwriter to give to the inspecting authority all assistance in connection with the inspection which the underwriter may reasonably be expected to give.

Submission of report to the Board

22. The inspecting authority shall, as soon as may be possible, submit an inspection report to the Board.

16*[Action on inspection or investigation report

23. The Board or the Chairman shall after consideration of inspection or investigation report take such action as the Board or chairman may deem fit and appropriate including action under the Securities and Exchange Board of India (Procedure for Holding Enquriy by Enquiry Officer and Imposing Penalty) Regulations, 2002.]

Appointment of Auditor

24. Notwithstanding anything contained above the Board may appoint a qualified auditor to investigate into the books of account of the affairs of the underwriter:

Provided that the auditor so appointed shall have the same powers of the inspecting authority as stated in regulation 19 and the obligation of the underwriter and his employees in regulation 21 shall be applicable to the investigation under this regulation.

Explanation: For the purposes of this regulation, the expression “qualified auditor” shall have the same meaning as given to it in section 226 of the Companies Act, 1956 (1 of 1956).

Foot notes

16. Following regulation 23 was substituted by SEBI (Procedure for Holding Enquriy by Enquiry Officer and Imposing Penalty) Regulations, 2002 published the Official Gazette of India dated 27.09.2002

Communication of findings, etc. to the underwriter

23. (1) The Board shall after consideration of the inspection report communicate the findings to the underwriter 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 the underwriter the Board may call upon the underwriter 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.

CHAPTER V
PROCEDURE FOR ACTION IN CASE OF DEFAULT

17*[Liability for action in case of default

25. A debenture trustee who –

fails to comply with any conditions subject to which certificates has been granted;

contravenes any of the provisions of the Act, rules or regulaitons;

contravenes the provisions of the Companies

shall be dealt with in the manner provided under the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002]

18*[******]

Foot notes

17. Following regulation 25 was substituted by SEBI (Procedure for Holding Enquriy by Enquiry Officer and Imposing Penalty) Regulations, 2002 published the Official Gazette of India dated 27.09.2002

Liability for action in case of default
25. (1) An underwriter or a stock broker or a merchant banker entitled to carry on business of underwriting without obtaining a separate certificate under rule 3 who, –

(a) fails to comply with any conditions subject to which certificate has been granted;

(b) contravenes any of the provisions of the Act, rules or regulations; shall be liable to any of the penalties specified in sub- regulation (2).

(2) The penalties referred to in sub-regulation (1) may be either:

(a) suspension of registration a*[under the grounds specified in sub-regulation (1) of Regulation 26] after enquiry for a specified period; or

(b) cancellation of registration b*[under the grounds specified in sub-regulation (2) of Regulation 26.]

a. The words “under the grounds specified in sub-regulation (1) of regulation 26” in clause (a) of sub-regulation (2) of regulation 25 were inserted by SEBI (Underwriters) (Amendment) Regulations, 1997 published in the Official Gazette of India dated 17.01.1997.

b. The words “under the grounds specified in sub-regulation (1) of regulation 26” in clause (b) of sub-regulation (2) of regulation 25 were inserted by SEBI (Underwriters) (Amendment) Regulations, 1997 published in the Official Gazette of India dated 17.01.1997.

18. Following regulations 26 to 32 were omitted by SEBI (Procedure for Holding Enquriy by Enquiry Officer and Imposing Penalty) Regulations, 2002 published the Official Gazette of India dated 27.09.2002

Suspension, cancellation of certificate

26. (1) A penalty of suspension of certificate granted to an underwriter or a certificate of registration granted under section 12 of the Act to a stock broker or a merchant banker entitled to carry on business of underwriting without obtaining a certificate under rule 3, may be imposed where an underwriter or such stock broker or merchant banker –

(i) violates the provisions of the Act, rules or regulations;

(ii) does not follow the code of conduct specified at Schedule III;

(iii) (a) fails to furnish any information relating to his business as underwriter as required by the Board;

(b) furnishes wrong or false information,

(c) does not submit periodical returns as required by the Board;

(d) does not co-operate in any enquiry conducted by the Board;
(iv) indulges in manipulating or price rigging or cornering activities;

(v) is guilty of misconduct or improper or un-business like or unprofessional conduct;

(vi) fails to maintain the capital adequacy requirement in accordance with the provisions of regulation 7.

(vii) fails to pay the fees as specified in regulation 12;

(viii) violates the conditions of registration;

(ix) fails to fulfil his underwriting obligations.

Provided that the Board for reasons to be recorded in writing may in case of repeated defaults of the type mentioned above impose a penalty of cancellation of certificate on the underwriter or cancellation of certificate of registration granted under section 12 of the Act on a stock broker or a merchant banker.

(2) A penalty of cancellation of certificate granted to an underwriter or a certificate of registration granted under section 12 of the Act to a stock broker or a merchant banker entitled to carry on the business of underwriting under rule 3, may be imposed where they.

(i) indulge in deliberate manipulation or price rigging or cornering activities affecting the securities market and the investors interest;

(ii) fail to fulfil the capital adequacy referred to in regulation 7;

(iii) are guilty of fraud, or is convicted of a criminal offence;

(iv) violate any provision of Securities and Exchange Board of India (Insider Trading) Regulations, 1992; or

(v) violate the provisions of the Act, rules and regulations;

(vi) fails to fulfil more than once their underwriting obligations.

Manner of making order of suspension and cancellation of certificate

27. No order of penalty of suspension or cancellation shall be imposed except after holding an inquiry in accordance with the procedure specified in regulation 28 .

Manner of holding enquiry before suspension or cancellation

28. (1) For the purpose of holding an enquiry under regulation 27, the Board may appoint an enquiry officer.

(2) The enquiry officer shall issue to the underwriter a notice at the registered office or the principal place of business of the underwriter.

(3) The underwriter 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 him or sought by the Board from the underwriter.

(4) The enquiry officer shall, give a reasonable opportunity of hearing to the underwriter to enable him to make submissions in support of his reply made under sub-regulation (3).

(5) Before the enquiry officer, the underwriter may either appear in person or through any person duly authorised by the underwriter:

Provided that no lawyer or advocate shall be permitted to represent the underwriter 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 underwriter 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 underwriter, submit a report to the Board and recommend the penalty to be awarded as also the justification of the penalty proposed.

Show-cause notice and order

29. (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 it considers appropriate should not be imposed.

(2) The underwriter shall within a*[thirty days] of the date of the receipt of the show-cause notice 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 underwriter.

a. The word “twenty one days” in sub-regulation (2) of regulation 29 were substituted by SEBI (underwriters) (Amendment) Regulations 1997 published in the Official Gazette of India dated 17.01.1997.

Effect of suspension and cancellation of certificate granted to underwriter

30. (1) On and from the date of the suspension of the certificate or certificate of registration granted to a stock broker or a merchant banker under section 12 of the Act, the underwriter shall cease to act as an underwriter during the period of suspension:

Provided that the Board may in the interest of the investors and securities market, permit the underwriter to complete his underwriting obligations specified in the agreement referred to in clause (b) of rule 4.

(2) On and from the date of cancellation of certificate or certificate of registration granted to a stock broker or a merchant banker under section 12 of the Act, the underwriter shall with immediate effect cease to act as an underwriter.

Publication of order of suspension

31. The order of the Board passed under sub-regulation (3) of regulation 29, shall be published in at least two daily newspapers by the Board.

Appeal to the Securities Appellate Tribunal

32. a*[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 Appellate Tribunal having jurisdiction in the matter

Foot notes

a. Following regulation 32 was substituted SEBI (Appeal to the Securities Appellate Tribunal) (Amendment) Regulations, 2000 published in the Official Gazette of India dated March 28, 2000

“Any person aggrieved by an order of the Board, may prefer an appeal to a Securities Appellate Tribunal”

SCHEDULE I

FORM A
SECURITIES AND EXCHANGE BOARD OF INDIA
(UNDERWRITERS) REGULATIONS 1993
(REGULATION 3)

APPLICATION FOR REGISTRATION AS UNDERWRITER

NAME OF APPLICANT AND ITS STATUS
(Whether proprietary concern/ firm/ association of persons / body of persons/ body corporate)

NAME AND DESIGNATION OF PRINCIPAL

OFFICER

DESIGNATION:

TELEPHONE NO.

INSTRUCTIONS: –

1. Applicants must submit a completed application form together with supporting documents to the Securities and Exchange Board of India.

2. All columns of the application should be filled in. In case a column is not relevant then `NOT APPLICABLE’ should be specified.

3. Information which needs to be supplied in more details may be written on separate sheets which should be attached to the application form.

4. Original copy of form duly signed should be submitted for registration.

PART – I

GENERAL INFORMATION

1. APPLICANTS DETAILS

1.1 Name of the Applicant:

1.2 Address of Applicant:

Pin code: _____________________ Telephone No:_____________

Telex No: _____________________ Fax No: _________________

1.3 Address of the applicant for Correspondence:
Pin code: _____________________ Telephone No:_____________

Telex No: _____________________ Fax No: _________________

1.4 Address of Branch Offices (in India) of the applicant, if any:

1.5 Whether any other application under Securities and Exchange Board of India Act, 1992 has been made for grant of Certificate, if so, details thereof

2. ORGANISATION STRUCTURE:

2.1 Objects of the organisation of the applicant. (Attach extracts from relevant documents like, Partnership deed/Charter/Memorandum of Association/Articles of Association etc) in support of objects of the organisation.

2.2 Date and Place of Incorporation/Establishment of the organisation of the applicant.

Day Month Year Place

2.3 Status of the applicant (specify whether proprietary, partnership, association of persons, body of individuals, limited company – public/private, others. If listed, name the stock exchange and latest share price:-high and low.)

2.4 Organisation Chart stating the functional responsibility at various levels

2.5 Particulars of all Proprietors/ Partners/ Managers/ Officers/ Directors.
[Name, Qualification, Experience, Date of Appointment, Other directorship, (Name and ate of Appointment), Previous positions held.]

2.6 Number of employees

2.7 Name and activities of associate companies/ concerns.
Name Address/Phone number/ Type of activity/ Ownership details /Nature and Quantum of financial trading.

2.8 In case the applicant is a body corporate, please give list of major share holders (holding 5% or more voting rights)

3.0 DETAILS OF INFRASTRUCTURAL FACILITIES

3.1 Office Space (mention the extent of area and ownership details available).

3.2 Office Equipment (mention the details of electronic office equipment, typewriters, telecommunication equipment, Furniture & Fixtures, other communication facilities etc.)

4.0 BUSINESS PLAN (FOR THREE YEARS)

4.1 History, Major achievements and present activity

5.0 FINANCIAL INFORMATION

5.1 Capital Structure (Rs. in lakhs)

Current Year Last Year Previous Year Second Year Third Year
a) Paid-up capital
b) Free reserves (excluding revaluation reserves)
c) Total (a) + (b)
d) Loans (Details)
e) Net profit (i) General
(ii)Specific

Note:- In case of partnership or proprietary concerns, please indicate capital minus drawings.

5.2 Deployment of Resources

a) Fixed Assets

b) Plant & Machinery and office equipment

c) Investments (Details should be given separately)

d) Others

5.3 Major Source of Estimated Profit from various sources (Rs. in lakhs)

Current Year Last Year Previous Year Second Year Third Year

5.4 Please enclose three years of audited annual accounts and where unaudited reports are submitted, give reasons.

5.5 Name and Address of the Principal Bankers

5.6 Name and Address of the Auditors (Internal, External & Tax auditor, if any, as applicable)

6.0 OTHER INFORMATION

6.1 Indicate involvement in any offence relating to moral turpitude/economic offenses in the last three years.

6.2 Any other information considered relevant to the nature of services rendered by the company.

PART-II

7.0 BUSINESS INFORMATION
7.1 Indicate marketing capability for Capital Issues.

7.2 Indicate how decision on Underwriting is usually taken.

7.3 Indicate various research & database facilities available.

7.4 Enclose a copy of typical contract entered with the issuer for Underwriting activity.

8.0 EXPERIENCE:

8.1 Experience in underwriting activities. (Indicate Name of the company, Particulars of the issue, Amount of underwriting done in last three years)

8.2 Experience in other financial services rendered: – (Period, Area and Date of Commencement of Activity).

8.3 Details of all Un-settled and pending devolvement/disputes regarding Underwriting:
Nature of dispute Name of the party Pending/settled.

8.4 Indicate underwriting defaulted with any company and reasons for the same.
DECLARATION

THIS DECLARATION MUST BE SIGNED BY PRINCIPAL OFFICER/S.

I/We hereby apply for GRANT OF CERTIFICATE OF ____________________________________ REGISTRATION by the Board. I/We warrant that I/We will carry out my/our duties in accordance with the Act, Rules and Regulations. I/We warrant that I/We have truthfully and fully answered the questions above and provided all the information which might reasonably be considered relevant for the purposes of my/our grant of certificate for registration and I/We will promptly notify the Board of any changes in the information during the period that my/our registration is being considered and if my/our registration is accepted, thereafter.

I/We understand that misleading or attempting to mislead the Board shall render the applicant liable to disciplinary proceedings.

I/We certify that the above information and information supplied in the application form is true, complete and correct.

For and on behalf of

(Name of Applicant)

(Name of Applicant)

PLACE:

Date:

FORM B

SECURITIES AND EXCHANGE BOARD OF INDIA
(UNDERWRITERS) REGULATIONS, 1993
(Regulation 8)

CERTIFICATE OF REGISTRATION

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 for the underwriters, the Board hereby grants a certificate of registration to ________________________ as an underwriter subject to the conditions in the rules and in accordance with the regulations.

II. Registration Code for the underwriter is __________

III. Unless renewed, the certificate of registration is valid from ________ to _________.

Place:

Date:

By Order

For and on behalf of

Security Exchange Board of India

 

SCHEDULE II
SECURITIES AND EXCHANGE BOARD OF INDIA
(UNDERWRITERS) REGULATIONS, 1993
(REGULATION 12)
FEES

1*[1. Every underwriter shall pay a sum of Rs.5 lakhs as registration fees at the time of grant of certificate by the Board:

2. Every underwriter to keep registration in force shall pay renewal fee of Rs.2 lakhs every three years from the fourth year from the date of initial registration.

3. (a) The fee referred to in paragraph 1 shall be paid by the underwriter within fifteen days from the date of receipt of intimation from the Board under regulation 8.

(b) The fee referred to in paragraph 2 shall be paid by the underwriter within fifteen days of receipt of intimation from the Board disposing of the application for renewal made under sub-regulation (1) of regulation 9.

a*[4. The fees specified in paragraphs 1 and 2 shall be payable by the underwriter by a demand draft in favour of “Securities and Exchange Board Of India” payable at Mumbai or at the respective regional office.]

a. Following paragraph was substituted by SEBI (Underwriters) Amendment Regulations, 1995 published in the Official Gazette of India dated 28.11.1995

‘The fees specified in paragraphs 1 and 2 shall be payable by the underwriter by a draft in favour of “Securities and Exchange Board Of India” payable at Mumbai or at the respective regional office.”

This paragraph read as follows in original Regulations

‘The fees specified in paragraphs 1 and 2 shall be payable by the underwriter by a cheque or draft in favour of “Securities and Exchange Board Of India” payable at Mumbai.”

Foot notes

Paragraphs 1, 2, 3 and 4 were substituted by SEBI (Underwriters) (Amendment) Regulations, 1999 published in the Official Gazette of India dated 30.09.1999.

Schedule III

Securities and Exchange Board of India

(Underwriters) Regulations, 1993

[Regulation 13]

CODE OF CONDUCT FOR UNDERWRITERS

 

1. An underwriter shall make all efforts to protect the interests of its clients.

2. An Underwriter shall maintain high standards of integrity, dignity and fairness in the conduct of its business.

3. An underwriter shall ensure that it and its personnel will act in an ethical manner in all its dealings with a body corporate making an issue of securities (hereinafter referred to in the schedule as “the issuer”).

4. An Underwriter shall endeavor to ensure all professional dealings are effected in a prompt, efficient and effective manner.

5. An Underwriter shall, at all times, render high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgement.

6. An underwriter shall not make any statement, either oral or written, which would misrepresent –

(a) the services that the underwriter is capable of performing for its client, or has rendered to any other Issuer Company;

(b) his underwriting commitment.

7. An Underwriter shall avoid conflict of interest and make adequate disclosure of his interest.

8. An Underwriter shall put in place a mechanism to resolve any conflict of interest situation that may arise in the conduct of its business or where any conflict of interest arises, shall take reasonable steps to resolve the same in an equitable manner.

9. An Underwriter shall make appropriate disclosure to the client of its possible source or potential areas of conflict of duties and interest while acting as Underwriter which would impair its ability to render fair, objective and unbiased services.

10. An underwriter shall not divulge to other Issuer, Press or any party any confidential information about its Issuer Company, which has come to its knowledge and deal in securities of any Issuer Company without making disclosure to the Board as required under the regulations and also to the Board of Directors of the Issuer Company.

11. An Underwriter shall not discriminate amongst its clients, save and except on ethical and commercial considerations.

12. An Underwriter shall ensure that any change in registration status / any penal action taken by board or any material change in financials which may adversely affect the interests of clients / investors is promptly informed to the clients and any business remaining outstanding is transferred to another registered person in accordance with any instructions of the affected clients/investors.

13. An Underwriter shall maintain an appropriate level of knowledge and competency and abide by the provisions of the Act, regulations and circulars and Guidelines issued by the Board. The underwriter shall also comply with the award of the Ombudsman passed under Securities and Exchange Board of India (Ombudsman) Regulations, 2003.

14. An Underwriter shall ensure that the board is promptly informed about any action, legal proceedings etc. initiated against it in respect of any material breach or non compliance by it, of any law, rules, regulations, directions of the board or of any other regulatory body.

15. An underwriter shall not make any untrue statement or suppress any material fact in any documents, reports, papers or information furnished to the Board.

16. (a) An underwriter or any of his employees shall not render, directly or indirectly any investment advice about any security in the publicly accessible media, whether real-time or non-real-time, unless a disclosure of his interest including its long or short position in the said security has been made, while rendering such advice.

(b) In case, an employee of an underwriter is rendering such advice, the underwriter shall ensure that he shall disclose his interest, the interest of his dependent family members and that of the employer including their long or short position in the said security, while rendering such advice.

17. An Underwriter or any of its directors, partners or manager having the management of the whole or substantially the whole of affairs of the business, shall not either through its account or their respective accounts or through their associates or family members, relatives or friends indulge in any insider trading.

18. An Underwriter shall not indulge in any unfair competition, which is likely to be harmful to the interest of other underwriters carrying on the business of underwriting or likely to place such other underwriters in a disadvantageous position in relation to the underwriter while competing for, or carrying out any assignment.

19. An Underwriter shall have internal control procedures and financial and operational capabilities which can be reasonably expected to protect its operations, its clients and other registered entities from financial loss arising from theft, fraud, and other dishonest acts, professional misconduct or omissions.

20. An Underwriter shall provide adequate freedom and powers to its compliance officer for the effective discharge of his duties.

21. An Underwriter shall develop its own internal code of conduct for governing its internal operations and laying down its standards of appropriate conduct for its employees and officers in the carrying out of their duties . Such a code may extend to the maintenance of professional excellence and standards, integrity, confidentiality, objectivity, avoidance of conflict of interests, disclosure of shareholdings and interests etc.

22. An Underwriter shall ensure that good corporate policies and corporate governance is in place.

23. An Underwriter shall ensure that any person it employs or appoints to conduct business is fit and proper and otherwise qualified to act in the capacity so employed or appointed (including having relevant professional training or experience)

24. An Underwriter shall ensure that it has adequate resources to supervise diligently and does supervise diligently persons employed or appointed by it to conduct business on its behalf.

25. An Underwriter shall be responsible for the acts or omissions of its employees and agents in respect to the conduct of its business.

26. An Underwriter shall ensure that the senior management, particularly decision makers have access to all relevant information about the business on a timely basis.

27. An Underwriter shall not be party to or instrumental for –

(a) Creation of false market;

(b) Price rigging or manipulation, or;

(c) Passing of unpublished price sensitive information in respect of securities, which are listed and proposed to be listed in any stock exchange to any person or intermediary.

Foot notes

Following Schedule III was substituted by SEBI (Underwriters) (Amendment) Regulations, 2003 published in the Official Gazette of India dated 01.10.03

SCHEDULE III
SECURITIES AND EXCHANGE BOARD OF INDIA
(UNDERWRITERS) REGULATIONS, 1993
CODE OF CONDUCT
[REGULATION 13]

1. Every underwriter shall maintain high standards of integrity, dignity and fairness in all his dealings with his clients and other Underwriters in the conduct of his business.

2. An underwriter shall ensure that he and his personnel will act in an ethical manner in all his dealings with a body corporate making an issue of securities (hereinafter referred to in the schedule as “the issuer”).

3. Every underwriter shall, at all times, render high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgement.

4. Every underwriter shall disclose to the Issuer Company his possible source or potential areas of conflict of duties and interest while providing underwriting services.

5. Underwriter shall not indulge in any unfair competition, which is likely to be harmful to the interest of other underwriters carrying on the business of underwriting or likely to place such other underwriters in a disadvantageous position in relation to the underwriter while competing for, or carrying out any assignment.

6. No underwriter shall make any statement, either oral or written, which would misrepresent –

(a) the services that the underwriter is capable of performing for the, or has rendered to other Issuer Company;

(b) his underwriting commitment.

7. No underwriter shall divulge to other Issuer, Press or any party any confidential information about his Issuer Company, which has come to his knowledge and deal in securities of any Issuer Company without making disclosure to the Board as required under the regulations and also to the Board of Directors of the Issuer Company.

8. No underwriter shall willfully make untrue statement or suppress any material fact in any documents, reports, papers or information furnished to the Board.

a*[9 (a) [An underwriter or any of his employees shall not render, directly or indirectly any investment advice about any security in the publicly accessible media, whether real-time or non-real-time, unless a disclosure of his interest including his long or short position in the said security has been made, while rendering such advice.

(b) In case, an employee of the underwriter is rendering such advice, he shall also disclose the interest of his dependent family members and the employer including their long or short position in the said security, while rendering such advice].
a. Paragraph 9 was inserted by SEBI (Investment Advice by Intermediaries) (Amendment) Regulations, 2002 published in the Official Gazette o India dated 29.05.2001.

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