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Details to be furnished by Merchant Bankers for SEBI Registration

Merchant bankers need to furnish details of their financial accounts as well as infrastructure facilities for seeking a registration to operate in the Indian capital markets.

Apart from disclosing information on the applicant’s ‘Memorandum and Article of Association’, its promoter, director, and their shareholding in other companies, details about key personnel, it also has to provide the Unique Identification Number (UIN) allotted to market participant.

In case, any of the directors, employees, its group firm are members of exchanges then details of the membership like broker registration number, payment of fees to Sebi, whether the member is facing any disciplinary action and a conduct certificate from the stock exchange will have to be furnished to the regulator.
These details need to be provided on an ‘additional information sheet’ along with the application for registration as a merchant banker as per SEBI’s directions.

With regard to the financial accounts,  “copy of audited annual accounts (including auditor’s report, schedules and break-up of the investments, loans and advances)” would have to be submitted to the regulator and the detail should not be more than six months old at the time of furnishing the information.

Securities and Exchange Board of India (Sebi) said that whether the applicant is registered as non-banking finance company (NBFC) with Reserve Bank, details about any action or adverse comments of the apex bank in the last three financial years would have to be disclosed.

Quantitative details with regard to establishment available for carrying on merchant banking activities should be provided like office space, communication facilities and systems support (both hardware and software).

Under the norms, a merchant banker is required to have a minimum net-worth of at least Rs 5 crore.

A merchant banker seeking registration is required to pay Rs 25 lakh fees at the time of obtaining initial registration, which will be valid for five years.
In case it wishes to continue as merchant banker, the applicant has to apply with Sebi (with a fee of Rs 9 lakh) for permanent registration three months prior to the expiry of the initial approval.

In case of change in control, a merchant banker will have to obtain fresh registration within six months.

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