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MERCHANT BANKER

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Merchant Banker means: A person who manages the business of issue of securities by making arrangements for selling, buying or subscribing to securities.  

ROLE & FUNCTIONS (IN A PUBLIC ISSUE)

It is obligatory on the part of Issuer Company to appoint a merchant banker in relation to any public issue like IPO, Right Issue, Buy Back & Delisting. A person who undertakes any assignment of merchant bankers shall first get it registered with SEBI under the provisions of SEBI (Merchant Banker) Regulations, 1992. 

Under clause 2 (cb) of SEBI (Merchant Banker) Regulations, 1992, Merchant Banker means any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to securities or acting as manager, consultant, adviser or rendering corporate advisory service in relation to such issue management. 

Example: SBI Capital Markets Ltd., ICICI Securities Ltd., Reliance Securities Ltd. and Karvy Investor Services Limited 

The Merchant banker undertakes the following activities including preparation of prospectus, advisory on projects, determining financial structure, due diligence, tie – up with financiers, allotment of shares and refunds:-

(a) Managing of public issue of securities;

(b) Preparation of prospectus/letter of offer;

(c) Final allotment of shares and refund of application money;

(d) Underwriting connected with the aforesaid public issue management business;

(e) Managing/Advising on international offerings of debt/equity i. e. GDR, ADR, EDBs, FCCBs, FCEBs and bonds;

(f) Private placement of securities;

(g) Primary or satellite dealership of government securities;

(h) Corporate advisory services with regard to takeovers, acquisition and disinvestment.

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