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THE GAZETTE OF INDIA THE
GAZETTE OF INDIA [AS AMENDED UPTO
03/01/2000] |
THE GAZETTE OF INDIA
EXTRAORDINARY
PART II - SECTION 3 - SUB-SECTION
(i)
PUBLISHED BY AUTHORITY
NEW DELHI JULY 14, 1994
MINISTRY OF FINANCE
(DEPARTMENT OF ECONOMIC AFFAIRS)
NOTIFICATION
SECURITIES
AND EXCHANGE BOARD OF INDIA
(BANKERS TO AN ISSUE) RULES, 1994
G.S.R. 585 (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 rules, namely :-
Short title and commencement
1. (1) These rules may be called the Securities and Exchange Board of India (Bankers to an issue) Rules, 1994.
(2) They shall come into force on the date of their publication in the Official Gazette.
Definitions
2. In these rules, unless the context otherwise requires, -
(a) "Act" means the Securities and Exchange Board of India, Act 1992 (15 of 1992);
(b) "banker to an issue" means a scheduled bank carrying on all or any of the following issue related activities namely:-
(i) acceptance of application and application monies;
(ii) acceptance of allotment or call monies;
(iii) refund of application monies;
(iv) payment of dividend or interest warrants.
(c) "body corporate" means a body corporate as defined in clause (7) of section 2 of the Companies Act, 1956 (1 of 1956);
(d) "certificate" means a certificate of registration granted or renewed by the Board under the regulations;
(e) "issue" means issue defined in clause (d) of rule 2 of the Securities and Exchange Board of India (Merchant Bankers) Rules, 1992.
(f) "regulations" means the Securities and Exchange Board of India (Bankers to an issue) Regulations, 1994;
(g) "scheduled bank" means a bank included in the second schedule of the Reserve Bank of India Act, 1934 (2 of 1934).
No person can act as banker to an issue without registration
3. No person shall carry on any activity as a banker to an issue unless he holds a certificate granted by the Board under the regulations:
Provided that such person may continue to act as banker to an issue if he has made an application for such registration under the proviso to sub-section (1) of section 12 of the Act till the disposal of such application.
Conditions for grant or renewal of certificate
4. The Board may grant or renew a certificate to a banker to an issue subject to the following conditions, namely:-
(a) he shall enter into a legally binding agreement with the body corporate for or on whose behalf he is acting as banker to an issue stating therein the duties and responsibilities between himself and the body corporate for the issue for which he is acting as a banker to an issue;
(b) he shall pay the amount of fees for registration in the manner provided in the regulations;
(c) he shall take adequate steps for redressal of grievances of the investors within one month of the date of the receipt of the complaints and he shall keep the Board informed about the number, nature and other particulars of the complaints received and the manner in which such complaints have been redressed, and
(d) the certificate granted shall be valid for a period of three years from the date of the grant of the same.
Conditions for grant or renewal of certificate
5. The Board may grant the renewal of the certificate to a banker to an
issue subject to the conditions mentioned in sub rule (a) to (d) of rule 4.
F.No.20(10) SE/93
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THE GAZETTE OF INDIA
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THE GAZETTE OF INDIA
EXTRAORDINARY
PART III - SECTION 4
PUBLISHED BY AUTHORITY
BOMBAY JULY 14, 1994
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
BOMBAY JULY 14, 1994
SECURITIES AND EXCHANGE BOARD OF INDIA
(BANKERS TO AN ISSUE) REGULATIONS, 1994
No.LE/7/94 In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India, Act 1992 (15 of 1992), the Board with previous approval of 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 (Bankers to an Issue) Regulations, 1994.
(2) They shall come into force on the date of their publication in the Official Gazette.
Definitions
2. In these regulations, unless the context otherwise requires:
(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 authorised by the Board under Chapter V ;
(b) "form" means a form specified in SCHEDULE I ;
(c) "inspecting authority" means one or more persons appointed by the Reserve Bank of India to exercise powers conferred under Chapter IV ;
(d) "Reserve Bank" means the Reserve Bank of India established under Section 3 of the Reserve Bank of India Act, 1934;
(e) "rules" means Securities and Exchange Board of India (Bankers to an Issue) Rules, 1994;
(f) Words and expressions used and not defined in these regulations but defined in the Act and the rules shall have the meanings respectively assigned to them in the Act or the rules as the case may be.
CHAPTER II
REGISTRATION OF BANKERS TO AN ISSUE
Application for grant of certificate
3. (1) An application by a scheduled bank for grant of a certificate as a banker to an issue shall be made to the Board in Form A .
(2) Notwithstanding anything contained in sub-regulation (1), any application made 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.
Application to conform to the requirements
4. 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 the time specified such objections as may be indicated by the Board.
Furnishing of information, clarification and personal representation
5. (1) The Board may require the applicant to furnish further information or clarification regarding matters relevant to the activity of a banker to an issue for the purposes of disposal of the application.
(2) The applicant officer shall, if so required, appear before the Board for personal representation through an officer duly authorised in this regard by the applicant.
Consideration of application
6. The Board shall take into account for considering the grant of a certificate, all matters which are relevant to the activities relating to banker to an issue and in particular whether the applicant fulfils the following requirements, namely:-
(a) the applicant has the necessary infrastructure, communication and data processing facilities and manpower to effectively discharge his activities;
(b) the applicant or any of its director is not involved in any litigation connected with the securities market and which has an adverse bearing on the business of the applicant or has not been convicted of any economic offence;
(c) the applicant is a scheduled bank;
1[(cc) the applicant is a fit and proper person.]
(d) grant of certificate to the applicant is in the interest of investors.
Procedure for registration
7. (1) The Board on being satisfied that the applicant is eligible shall grant a certificate in Form B and send an intimation to the applicant.
(2) On the grant of a certificate, the applicant shall be liable to pay the fees in accordance with Schedule II.
Renewal of certificate
8. (1) Three months before the expiry of the period of certificate, the banker to an issue, may if he so desires, make an application for renewal in Form A .
(2) The application for renewal, under sub-regulation (1) shall be dealt with in the same manner as if it were a application made under sub-regulation (1) of regulation 3 for grant of a certificate.
(3) The Board on being satisfied that the applicant fulfils the requirements specified in regulation 6 for renewal of certificate shall grant a certificate in Form B and send an intimation to the applicant.
(4) On the grant of a certificate, the applicant shall be liable to pay the fees in accordance with Schedule II.
Procedure where registration is not granted
9. (1) Where an application for grant of a certificate under regulation 3 or of renewal under regulation 8, does not satisfy the requirements set out in regulation 6, the Board may reject the application after giving an opportunity of being heard.
(2) The refusal to grant or renew registration 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.
(3) Any applicant may, being aggrieved by the decision of the Board, under sub-regulation (1), apply within a period of thirty days from the date of receipt of such intimation to the Board for reconsideration of its decision.
(4) The Board shall reconsider an application made under sub- regulation (3) and communicate its decision as soon as possible in writing to the applicant.
Effect of refusal to grant certificate
10. Any scheduled bank whose application for 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 9 cease to carry on any activity as banker to an issue.
Payment of fees and the consequences of failure to pay fees
11. (1) Every applicant eligible for grant of a certificate shall pay fees in such a manner and within the period specified in Schedule II.
(2) Where the applicant fails to pay the fees as provided in sub- regulation (1), read with Schedule II the Board may suspend the registration certificate, whereupon the applicant shall cease to carry on any activity as a banker to an issue for the period during which the suspension subsists.
1Inserted by Securities and Exchange Board of India (Bankers to an
Issue) Amendment Regulations, 1998 vide Notification No. S.O.15(E) dated
January 5, 1998.
CHAPTER III
GENERAL OBLIGATIONS AND RESPONSIBILITIES
Maintenance of books of accounts, records and the documents
12. (1) Every banker to an issue shall maintain the following records with respect to:-
(a) the number of applications received, the names of the investors, the dates on which the applications were received and the amounts so received from the investors;
(b) the time within which the applications received from the investors were forwarded to the body corporate or registrar to an issue as the case may be;
(c) the dates and amount of refund monies paid to the investors;
(d) dates, names and amount of dividend/interest warrant paid to the investors.
(2) Every banker to an issue shall intimate to the Board the place where the books of records and documents mentioned in sub- regulation (1) are kept.
(3) The banker to an issue shall preserve the records and documents specified in sub- regulation (1) for a minimum period of three years.
Furnishing of information to the Board
13. Every banker to an issue shall furnish to the Board when required the following information, namely:-
(a) the number of issues for which he was engaged as banker to an issue;
(b) the number of applications and the details of the application monies received by the banker to an issue;
(c) the dates on which applications received from the investors were forwarded to the body corporate or registered to an issue;
(d) the dates on which and the amount refunded to the investors;
(e) the payment of dividend or interest warrants to the investors.
Agreement with bodies corporate
14. (1) Every banker to an issue shall enter into an agreement with the body corporate for whom it is acting as banker to an issue.
(2) The agreement referred to in sub-regulation (1) shall contain the following clauses namely:-
(a) the number of centres at which the application and the application monies of an issue of a body corporate will be collected from the investors;
(b) the time within which the statements regarding the applications and the application monies received from the investors investing in an issue of a body corporate will be forwarded to the registrar to an issue or the body corporate, as the case may be;
(c) that a daily statement will be sent by the designated controlling branch of the bankers to the issue to the registrar to an issue indicating the number of applications received on that date from the investors investing in the issue of a body corporate and the amount of application money received.
Board to be informed of any disciplinary action taken by the Reserve Bank
15. Every banker to an issue shall inform the Board forthwith, if any disciplinary action is taken by the Reserve Bank against the banker to the issue only in relation to issue payment work;
Provided that if as a result of any such action, the banker to an issue is prohibited from carrying on the activities, the certificate shall be deemed to have been suspended or cancelled as the case may be.
Code of Conduct
16. Every banker to an issue shall abide by the code of conduct as specified in SCHEDULE III .
CHAPTER IV
PROCEDURE FOR INSPECTION
Inspection of Banker to an Issue
17. The Board may request the Reserve Bank of India to undertake inspection of the books of accounts, records and documents of the banker to an issue for any of the purposes specified in regulation 18.
Purpose of Inspection
18. The purposes referred to in regulation 17 may be as follows namely :-
(a) to ensure that the books of account are being maintained in the manner required;
(b) that the provisions of the Act, rules, regulations are being complied with;
(c) to investigate into the complaints received from investors, body corporate or any other person on any matter having a bearing on the activities of the banker to an issue; and
(d) to investigate into such matters as required by the Board.
Procedure for inspection
19. The Reserve Bank shall on a receipt of a request from the Board as soon as possible take steps to undertake inspection of the banker to an issue for such purposes as may be required by the Board in such manner as it may deem fit.
Obligations of banker to an issue on inspection
20. (1) It shall be the duty of every director, proprietor, partner, officer and employee of the banker to an issue, 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 his activities as a banker to an issue within such time as the Reserve Bank may require.
(2) The banker to an issue shall allow the inspecting authority to have reasonable access to the premises occupied by such banker to an issue 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 banker to an issue or any such other person and also provide copies of documents or other materials which, in the opinion of the Reserve Bank of India are relevant for the purposes of the inspection.
(3) The inspecting authority, in the course of inspection, shall be entitled to examine or record statements of any principal officer, member, director, partner, proprietor and employee of the banker to an issue.
(4) It shall be the duty of every director, proprietor, partner, officer or employee of the banker to an issue to give to the inspecting authority all assistance in connection with the inspection which the banker to an issue may reasonably be expected to give.
Submission of Report to the Board
21. The Reserve Bank of India shall, as soon as may be possible furnish to the Board a copy of the inspection report together with the copies of relevant documents in support of the observations made by the inspecting authority.
Communication of findings etc. to the banker to an issue
22. (1) The Board shall after consideration of the inspection report communicate the findings to the banker to an issue 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 banker to an issue, the Board may call upon the banker to an issue 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 IV
PROCEDURE FOR INSPECTION
Inspection of Banker to an Issue
17. The Board may request the Reserve Bank of India to undertake inspection of the books of accounts, records and documents of the banker to an issue for any of the purposes specified in regulation 18.
Purpose of Inspection
18. The purposes referred to in regulation 17 may be as follows namely :-
(a) to ensure that the books of account are being maintained in the manner required;
(b) that the provisions of the Act, rules, regulations are being complied with;
(c) to investigate into the complaints received from investors, body corporate or any other person on any matter having a bearing on the activities of the banker to an issue; and
(d) to investigate into such matters as required by the Board.
Procedure for inspection
19. The Reserve Bank shall on a receipt of a request from the Board as soon as possible take steps to undertake inspection of the banker to an issue for such purposes as may be required by the Board in such manner as it may deem fit.
Obligations of banker to an issue on inspection
20. (1) It shall be the duty of every director, proprietor, partner, officer and employee of the banker to an issue, 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 his activities as a banker to an issue within such time as the Reserve Bank may require.
(2) The banker to an issue shall allow the inspecting authority to have reasonable access to the premises occupied by such banker to an issue 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 banker to an issue or any such other person and also provide copies of documents or other materials which, in the opinion of the Reserve Bank of India are relevant for the purposes of the inspection.
(3) The inspecting authority, in the course of inspection, shall be entitled to examine or record statements of any principal officer, member, director, partner, proprietor and employee of the banker to an issue.
(4) It shall be the duty of every director, proprietor, partner, officer or employee of the banker to an issue to give to the inspecting authority all assistance in connection with the inspection which the banker to an issue may reasonably be expected to give.
Submission of Report to the Board
21. The Reserve Bank of India shall, as soon as may be possible furnish to the Board a copy of the inspection report together with the copies of relevant documents in support of the observations made by the inspecting authority.
Communication of findings etc. to the banker to an issue
22. (1) The Board shall after consideration of the inspection report communicate the findings to the banker to an issue 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 banker to an issue, the Board may call upon the banker to an issue 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
Liability for action in case of default
23.(1) A banker to an issue 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; or
(b) cancellation of registration.
Suspension of registration
24. (1) A penalty of suspension of registration of a banker to an issue may be imposed where:-
(i) the banker to an issue violates the provisions of the Act, rules and regulations;
(ii) the banker to an issue -
(a) fails to furnish any information relating to his activity as banker to an issue as required by the Board;
(b) furnishes wrong or false information;
(c) does not furnish information as required by the Board under regulation 13;
(iii) the banker to an issue fails to resolve the complaints of the investors or fails to give a satisfactory reply to the Board in this behalf;
(iv) the banker to an issue is guilty of misconduct or improper or unbusinesslike or unprofessional conduct which is not in accordance with the Code of Conduct specified in SCHEDULE III ;
(v) the banker to an issue fails to pay the fees;
(vi) the banker to an issue does not carry out his obligations as specified in the regulations.
Cancellation of registration
25. A penalty of cancellation of registration of a banker to an issue may be imposed where:-
(i) the financial position of the banker to an issue deteriorates to such an extent that the Board is of the opinion that his continuance as banker to an issue is not in the interest of investors;
(ii) the banker to an issue is guilty of fraud, or is convicted of a criminal offence; and
(iii) in case of repeated defaults of the nature mentioned in regulation 24 provided that the Board furnishes the reasons for cancellation in writing.
Manner of making order of suspension and cancellation
26. No order of penalty of suspension or cancellation, as the case may be, shall be imposed except after holding an enquiry in accordance with the procedure specified in regulation27.
Manner of holding enquiry before suspension or cancellation
27. (1) For the purpose of holding an enquiry under regulation 26, the Board may appoint an enquiry officer.
(2) The enquiry officer shall issue to the banker to an issue a notice at the registered office or the principal place of business of the banker to an issue.
(3) The banker to an issue 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 it.
(4) The enquiry officer shall, give a reasonable opportunity of hearing to the banker to an issue to enable it to make submissions in support of his reply made under sub-regulation .
(5) Before the enquiry officer, the banker to an issue may appear through any person duly authorised by the banker to an issue: Provided that no lawyer or advocate shall be permitted to represent the banker to an issue 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 banker to an issue 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 banker to an issue, submit a report to the Board and recommend the penalty to be imposed as also the grounds on the basis of which the proposed penalty is justified.
Show-cause notice and order
28. (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 proposed by the enquiry officer should not be imposed.
(2) The banker to an issue shall within twenty-one days of the date of the receipt of the show- cause 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 banker to an issue.
Effect of suspension and cancellation of registration of banker to an issue
29. (1) On and from the date of the suspension, the banker to an issue shall cease to carry on any activity as a banker to an issue during the period of suspension.
(2) On and from the date of cancellation the banker to an issue shall with immediate effect cease to carry on any activity as a banker to an issue.
Publication of order of suspension
30. The order of suspension or cancellation of certificate passed under sub-regulation (3) of regulation 28, shall be published in at least two daily newspapers by the Board.
Appeal to the Securities Appellate Tribunal
31.[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 Appelate Tribunal having jurisdiction in the matter]2
F. No. LE/7/94
2Substituted for the earlier provision by SEBI(Appeal
to the Securities Appellate Tribunal)(Amendment) Regulations, 2000 vide
S.O.278(E) dated 28.3.2000
SCHEDULE II
( Regulation 11)
SECURITIES AND EXCHANGE BOARD OF INDIA
(BANKERS TO AN ISSUE) REGULATIONS 1994
FEES
(1) Every banker to an issue shall subject to clauses 3 and 4 of this Schedule pay registration fees as set out below:
A sum of Rs.2.5 lakhs to be paid annually for the first two years commencing from the date of initial registration and thereafter for the third year a sum of Rs. 1 lakh to keep his registration in force.
(2) Renewal fees to be paid by the banker to an issue.
A sum of Rs.1 lakh to be paid annually for the first two years from the date of such renewal and thereafter a sum of Rs.20,000 per annum for the third year to keep his registration in force;
(3) Fees referred to in clause (1) above shall be paid in the following manner -
(a) First installment to be paid within 15 days from the date of intimation from the Board under regulation 7.
(b) Subsequent installments including the renewal fee to be paid on or before expiry of 12 months of each year.
(4) The fees indicated above shall be payable by 2[***]draft in favour of "The Securities and Exchange Board of India" at Bombay 3[or at the respective regional office].
2 The words 'a cheque or' omitted by
the Securities and Exchange Board of India (Payment of Fees) Amendment
Regulations, 1995 vide notification no.S.O.939(E) dated 28.11.95.
3 Inserted by the Securities and
Exchange Board of India (Payment of Fees) Amendment Regulations, 1995 vide
notification no.S.O.939(E) dated 28.11.95.
SCHEDULE III
( Regulation 16)
SECURITIES AND EXCHANGE BOARD OF INDIA
(BANKERS TO AN ISSUE) REGULATIONS, 1994
CODE OF CONDUCT
1. A banker to an issue shall in the conduct of his business, observe high standards of integrity and fairness in all his dealings with his clients, the investors and/or other members of his profession.
2. A banker to an issue shall exercise due diligence, ensure proper care. A banker to an issue shall not make any statement or become privy to any act, practice or unfair competition, which is likely to be harmful to the interests of other bankers to an issue or is likely to place such other bankers to an issue in a disadvantageous position in relation to the banker to the issue, while competing for or executing any assignment.
3. A banker to an issue shall not make any exaggerated statement, whether oral or written to the client, either about the qualification or the capability to render certain services or his achievements in regard to services rendered to other clients.
4. A banker to an issue shall always endeavour to-
(a) render the best possible advice to the clients having regard to the clients' needs and the environments and his own professional skill; and
(b) ensure that all professional dealings are effected in a prompt, efficient and cost effective manner.
5. A banker to an issue shall not divulge to other clients, the press or any other party any confidential information about his client, which has come to his knowledge.
6. A banker to an issue shall not -
(a) allow blank application forms bearing brokers stamp to be kept at the bank premises or peddled anywhere near the entrance of the premises.
(b) accept applications after office hours or after the date of closure of the issue or on bank holidays.
7. A banker to an issue shall not at any time act in collusion with other agents in a manner that is detrimental to the smaller investor.
(A banker to an issue shall abide by the provisions of such Acts and rules, regulations, guidelines, resolutions, notifications, directions, circulars and instructions as may be issued from time to time by the Central Government, the Reserve Bank of India, the Indian Banks Association or the Board and as may be applicable and relevant to the activities carried on by the banker to the issue.)