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Registration of Underwriters with SEBI
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Registration Of Underwriters With SEBI

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    Who Are underwriters?

    All underwriters play a major and important role in the Indian security market. An underwriter is a designated person or company with roles and responsibilities related to the underwriting of issues. The issues would be related to the securities of companies. Under Regulation 29 of the Securities and Exchange Board of India Act, 1992 the govt. has enacted various rules concerning underwriters. It’s important for all sorts of establishments and organisations to get registered with SEBI before the commencement of activities. Thus, Registration of Underwriters with SEBI is compulsory.

    Benefits of Hiring an Underwriter

    All organisations or individuals need to perform the compliance activities associated with the Registration of Underwriters with SEBI. By doing this, an organisation remains compliant with the law.
    Organisations registered with SEBI have a good reputation in the securities market.
    A company registered with SEBI gets notifications and updates continuously. Hence, the company can maintain vigilance for good governance and compliance.

    Eligibility Criteria for Registration of Underwriters with SEBI

    The applicant must be able to pay the requisite fee for registration with SEBI. Such requirement is stated in regulation 4(c) of the SEBI (Underwriters) Rules, 1993. The Non-refundable fees to be paid alongside the application shall be Rs. 25000/-.
    The underwriter has to ensure that there’s a previous agreement or a contract with a company that the applicant is going to give underwriting services concerning a particular issue. Such requirement is given under regulation 4(b) of the SEBI (Underwriters) Rules, 1993.
    The applicant should abide by the principles and compliance norms prescribed by the SEBI and other regulatory authorities. Such requirement is present under regulation 4(d) of the SEBI (Underwriters) Rules, 1993.
    The applicant must ensure that if he’s taken prior consent from the board members and the shareholders before applying for such registration,. This requirement is as per regulation 4(a) of the SEBI (Underwriters) Rules, 1993.
    For registration of underwriters with SEBI, the applicant entity must have proper infrastructure facilities present within its office. This includes office space and the presence of adequate manpower to handle all the responsibilities. This is as per regulation 6(a) of the above mentioned SEBI regulations.
    The applicant must have some sort of past experience concerning the underwriting of issues related to securities. The administrators or the shareholders of the applicant entity need to have a minimum of 2 years of experience in underwriting a selected issue. This is mentioned in regulation 6(b) of the SEBI regulations.
    As per regulation 6(d) of the SEBI (Underwriters) Rules, 1993 the applicant must ensure sufficiency of the associated capital. The capital adequacy must not be less than Rs. 20 Lakh.

    If a stockbroker carries out activities associated with underwriting a selected issue, then the capital adequacy requirements need to be fulfilled as prescribed by the stock exchange. If a merchant banker carries out the activities associated with underwriting a selected issue, then the capital adequacy requirements need to be fulfilled as per regulation 7 of the SEBI (Merchant Banker) Regulations 1992.

    No Key Management Executives should be convicted in any case.
    The key management executives must be fit and proper.

    Procedure for Registration of Underwriters with SEBI

    The applicant has to make an application for registration to the board in Form A.. After this, the board authority will review it and see if the application is suitable as per the norms for underwriters registration.
    If more information or documentation is required, then the board would notify the applicant about the requirement and give him some time to meet them. The applicant might also be interviewed by the board before the grant of registration.
    The application must conform to the norms associated with the underwriters’ rules of SEBI. If the appliance doesn’t meet the standards of the above requirements then it would be rejected. These standards would be met only if the eligibility criterion mentioned above is fulfilled by the applicant. The capital adequacy requirement must be met by the applicant.
    If there are no issues with the application, then the board would send an intimation to the applicant regarding the grant of certificate for registration of underwriters with SEBI. Usually, this process takes a period of 1 month to complete from the date of submitting the application.
    The certificate of registration for underwriters is granted in Form B. However, it requires the payment of a prescribed fee by the applicant before the grant of certificate of registration as per Schedule II of SEBI (Underwriters) Rules.
    Every applicant should abide by the code of conduct mentioned in regulation 13 of the SEBI Underwriters Regulations 1993.

    Renewal of Registration Certificate

    There is a certain period of validity for an underwriter’s certificate. This certificate would only be valid for a period of 3 years.
    Regulation 9 of the SEBI rules requires the applicant to renew the certificate of registration. Such a process of renewal must be initiated at least three months before the expiry of the existing certificate.
    For the renewal of an existing certificate, the norms would be the same as the norms for the grant of certificate earlier.
    Document Required

    Documents Required For Registration Of Underwriters With SEBI

    Partnership /LLP
    Particulars associated with the Partners
    Partnership Deed
    Form A

    For Company

    Certificate of Incorporation of the corporate
    Form A
    Copy of Articles of Association (AoA)
    Copy of Memorandum of Association (MoA)
    Details of the administrators and Shareholders
    Copy of the Board Resolution by the corporate
    Information regarding the Year of Incorporation
    An organisational chart showing details of work responsibilities of all the workers
    Particulars of all Proprietors/ Managers/ Partners/ Officers/ Directors
    Information of the office/plan and other information on Employees
    Information on capital structure
    Signed Declaration associated with the grant of certificate of registration

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      Frequently Asked Questions on Registration of Underwriters with SEBI

      An underwriter is an individual or a corporation that carries out underwriting of selected issues of shares and securities.

      Yes, registration of underwriters is compulsory as per the rules of the Securities Exchange Board of India (Underwriters), 1993.

      Underwriting is often defined as an agreement or a contract that has the stipulation and therefore the condition to subscribe to the shares or securities of a corporate or an organisation if the shareholders or public don’t subscribe to the issue.

      Compliance with the principles associated with SEBI is one of the benefits of securing this type of registration.

      The applicant must be made by giving details in Form ‘A’ for registration.

       

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