The bankers to an issue engaged in activities such as acceptance of applications along with application money from the investor. In respect of an issue of capital and refund of application money.
The term issue means an offer of sales purchase of a security by and body corporate person/group of persons on his/its/their behalf to or form the public the holders of securities of the body corporate person group of persons.
Registration process of banker an issue
To carry on the activity as a banker to issue a person must obtain a certificate of registration from the SEBI
The SEBI grants registration on the basis of call the activities relating to bankers to an issue in particular with reference to the following requirements.
a)The application has the necessary infrastructure communication and data processing facilities and manpower to effectively discharge his activities.
b)The application any of the directors of the applicant not involved in any litigation connected with the securities market. It has not been convicted of any economic offense.
c)The applicant is a scheduled bank.
d)Grant of certificate is in the interest of the investors.
e)The applicant is a fit and proper person.
A banker to an issue can apply for the renewal of his registration three months before the expiry of the certificate.
Condition of registration
The registration of a banker to an issue would be subject to the same condition as are applicable to the merchant.
Obligation and Responsibilities
Furnish information -> When required a banker to an issue has to furnish to the SEBI the following information.
a) The number of issues for which he engaged as a banker to an issue.
b)The number of applications/details of the application money received.
c)The dates on which applications from investors forwarded to the issuing company 100 issues.
d)The dates amount of refund to the investor.
2)Books of account document->A banker to an issue is required to maintain books of accounts/records documents for a minimum period of three years in respect of interalia, the number of applications received, the names of the investor, the time within which the applications received were forwarded to the issuing of the investor to the issue and dates and amounts of refund money to investor.
3)Agreement with issuing companies:-Every banker to an issue enters into an agreement with the issuing company. The agreement provides for the number of collection centers at which applications received forwarded to the issuing company.
4)Discounting action by the RBI-If the RBI takes any disciplinary action against a banker to an issue in relation. To the issue payment, the latter should immediately inform the SEBI. If the bankers prohibited from carrying on his activities as a result of the disciplinary action.
Code of conduct
1)Make all efforts to protect the interest of investors.
2)In the conduct of its business, observe high standards of integrity and fairness in the conduct of its business.
3)Fulfill its obligation in a prompt, ethical, and professional manner.
4)At all times exercise due diligence ensures proper care and exercise independent professional judgment.
5)Endeavour to ensure that
(a)Inquires from an investor adequately dealt.
(b)Grievances of investors redressed in a timely and appropriate manner.
c)Where a complaint not remedied promptly, the investor advised of any further steps which may be available to the investor. It is under the regulatory.
6)Be prompt in disbursing dividends, interest, or any such accrual income received or collected by him on behalf of his clients.
7)Not make any exaggerated statement of whether oral written to the client, either about its qualification or capability to render certain services or its achievements in regard to service rendered to other clients.
8)Always endeavor to render the best possible advice to the clients having regard to the client’s needs and the environments and his own professional skill.
9)Avoid conflict of interest and make adequate disclosure of his interest.
10)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, should take reasonable steps to resolve the same in an equitable manner.
11)Make appropriate disclosure to the client of its possible source or potential areas of conflict of duties and interest. While it is acting as a banker which would impair its ability to render a fair, objective, and unbiased services.
12)Not discriminate amongst its clients, save and except on ethical and commercial considerations.
13)Ensure that the SEBI promptly informed about any action, legal proceedings,etc. Initiated against it in respect of any material breach of non-compliance by it, of any law, rules direction of the SEBI.
14)Not make any untrue statement or suppress any material fact in any document. Reports, papers, or information furnished to the SEBI.
15)Not neglect or fail or refuse to submit to the SEBI or other agencies with which it registered. It like document correspondence, and paper or any part thereof as demanded requested from time to time.
16)Provide adequate freedom and powers to its compliance officer for the effective discharge of its duties.
17)Ensure that any person it employs or appoints to conduct a business is fit and power and otherwise qualified to act. In the capacity so employed or appointed.
18)Ensure that the senior management, particular decision-makers have access to all relevant information about the business on a timely basis.
19)Not be a party to or instrumental for
(a) creation of a false market
(b)price rigging or manipulation or
(c)the passing of unpublished price sensitive information in respect of securities listed and proposed to be listed in stock exchange.To any person or intermediary.