| Bankers_to_an_Issue_Apr17_2020 |
| 23 Liability for action in case of default. for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, |
| 1 (1) These regulations may be called the Securities and Exchange Board of India (Bankers to an Issue) Regulations, 1994. |
| 1 (2) They shall come into force on the date of their publication in the Official Gazette. |
| 2 In these regulations, unless the context otherwise requires,—1[(a) “Act” means the Securities and Exchange Board of India Act, 1992 (15 of1992);(aa) “banker to an issue” means a scheduled bank carrying on all or any of thefollowing 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;(ab) “body corporate” shall have the meaning assigned to it in or under clause (7)of section 2 of the Companies Act, 1956 (1 of 1956);(ac) “certificate” means a certificate of 2[***] registration issued by the Board ;2006, w.e.f, 7-9-2006.Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016.(Bankers to an Issue) (Amendment) Regulations, 2011, w.e.f. 05-07-2011.(ad) 3[***](ae) “change in control”, in relation to a banker to an issue being a body corporate,means :—(i) if its shares are listed on any recognised stock exchange, change incontrol within the meaning of regulation 12 of the Securities andExchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations, 1997;(ii) in any other case, change in the controlling interest in the bodycorporate.interest” means an interest, whether direct or indirect, to the extent of at leastfifty-one per cent of voting rights in the body corporate;]4[***](b) “form” means a form specified in Schedule I;(c) “ inspecting authority ” means one or more persons appointed by the ReserveBank of India to exercise powers conferred under Chapter IV;5[(ca) “issue” means an offer of sale or purchase of securities by any bodycorporate or by any other person or group of persons on his or its or theirbehalf, as the case may be, to or from the public, or the holders of securitiesof such body corporate or person or group of persons ;](d) “Reserve Bank” means the Reserve Bank of India established under section3 of the Reserve Bank of India Act, 1934;6[(e) “scheduled bank” means a bank included in the Second Schedule of theReserve Bank of India Act, 1934 (2 of 1934);]Intermediaries) (Amendment) Regulations, 2011. Prior to the omission clause (a) read as under:“(ad) change of status or constitution” in relation to a banker to an issue—(i) means any change in its status or constitution of whatsoever nature; and(ii) without prejudice to generality of sub-clause (i), includes—(A) amalgamation, demerger, consolidation or any other kind of corporate restructuring falling withinthe scope of section 391 of the Companies Act, 1956 (1 of 1956) or the corresponding provision of anyother law for the time being in force;(B) change in its managing director or whole time director; and(C) any change in control over the body corporate;Enquiry Officer and Imposing Penalty) Regulations, 2002, w.e.f. 27-09-2002. Prior to the omission clause(a) read as under:“a. “enquiry officer” means any officer of the Board , or any other person, having experience indealing with the problems relating to securities market, who is authorized by the Board under Chapter V;”2006, w.e.f, 7-9-2006.6 Substituted by the Securities and Exchange Board of India (Bankers to an Issue) (Amendment)Regulations, 2006, w.e.f, 7-9-2006. Prior to its substitution, clause (e) read as under:‘(e) “rules” means Securities and Exchange Board of India (Bankers to an Issue) Rules, 1994;’ |
| 3 (1) An application by scheduled bank for grant of a certificate 11[of 12[***] registration] as banker to an issue shall be made to the Board in Form A. 13[(1A) An application for registration made under sub-regulation (1) shall be accompanied by a non-refundable application fee as specified in Schedule II.] |
| 3 (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. |
| 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. |
| 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. |
| 5 (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. (Amendment) Regulations, 2006, w.e.f, 7-9-2006. (Bankers to an Issue) (Amendment) Regulations, 2006, w.e.f, 7-9-2006. 2011, w.e.f.05-07-2011. Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016. 2011, w.e.f. 05-07-2011. Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016. |
| 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 dataprocessing facilities and manpower to effectively discharge its activities;(b) the applicant or any of its directors is not involved in any litigation connectedwith the securities market and which has an adverse bearing on the businessof the applicant or has not been convicted of any economic offence;(c) the applicant is a scheduled bank;14[(cc) the applicant is a fit and proper person;] |
| 6A For the purpose of determining whether an applicant or the banker to an issue is a fit and proper person, the Board may take into account the criteria specified in Schedule II of the Securities and Exchange Board of India (Intermediaries) |
| 7 7. Grant of certificate of 17[***] registration.(1) The Board, on being satisfied that the applicant is eligible, shall send anintimation to the applicant , within one month of such satisfaction, that it has beenfound eligible for grant of certificate of 18[***] registration and grant a certificate inForm B.19[(2) The certificate of registration granted under sub- regulation (1) shall be validunless it is suspended or cancelled by the Board.]1998, w.e.f. 05-01-1998.India (Criteria for Fit and Proper Person) Regulations, 2004, w.e.f. 20-03-2004, read as under:“6A. Applicability of Securities and Exchange Board of India (Criteria for Fit and Proper Person)Regulations, 2004.- The Provisions of the Securities and Exchange Board of India (Criteria for Fit andProper Person) Regulations, 2004 shall, as far as may be, apply to all applicant s or underwriters under theseregulations.”16 Substituted by the Securities and Exchange Board of India (Bankers to an Issue) (Amendment)Regulations, 2011. Prior to the substitution, the Regulation read as under:“Procedure for registration. 7. (1) The Board on being satisfied that the applicant is eligible shall grant acertificate 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.”Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016.Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016.19 Substituted by the Securities and Exchange Board of India (Change In Conditions Of Registration OfCertain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016. Prior to substitution it read asunder:“(2) The certificate of initial registration granted under sub-regulation (1) shall be valid for a period of fiveyears from the date of its issue to the applicant .”20[(3) The bankers to an issue who has already been granted certificate ofregistration by the Board, prior to the commencement of the Securities andExchange Board of India (Change in Conditions of Registration of CertainIntermediaries) (Amendment) Regulations, 2016 shall be deemed to have beengranted a certificate of registration, in terms of sub-regulation (1).] |
| 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. 23[(1A) An application for renewal made under sub-regulation (1) shall be accompanied by a non-refundable application fee as specified in Schedule II.] |
| 8 (2) The application for renewal, under sub-regulation (1), shall be dealt with in the same manner as if it were an application made under sub-regulation (1) of regulation 3 for grant of a certificate. |
| 8 (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 . |
| 8 (4) On the grant of a certificate, the applicant shall be liable to pay the fees in accordance with Schedule II .” 2006 , w.e.f. 07-09-2006. 25 Substituted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016. Prior to substitution it read as under: “(1) Any 25[initial registration granted under regulation 7 or permanent registration granted under regulation 7A] shall be subject to the following conditions, namely :—” Also, the words and figure “registration granted under regulation 7 or any renewal granted under regulation 8” were substituted with the words and figures “initial registration granted under regulation 7 or permanent registration granted under regulation 7A” by the Securities and Exchange Board of India (Bankers to an Issue) (Amendment) Regulations, 2011 w.e.f. 05-07-2011. 26 Substituted the words “to change its status or constitution” with “change in control” by Securities and Exchange Board of India (Change in conditions of Registration of certain Intermediaries) (Amendment) Regulations, 2011, w.e.f. 19-04-2011. 27 Substituted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016. Prior to substitution it read as under: “(c) manner provided in these regulations;” Also, the words “registration or renewal” were substituted with the words “initial registration or permanent registration” were substituted by the Securities and Exchange Board of India (Bankers to an Issue) (Amendment) Regulations, 2011, w.e.f. 05-07-2011. it shall pay the fees for 27[initial registration or permanent registration], as the case may be, in the complaints received and the manner in which such complaints have been redressed;(e) it shall abide by the regulations made under the Act in respect of theactivities carried on by it as banker to an issue.28[(f) it shall immediately intimate the Board, details of changes that have takenplace in the information that was submitted, while seeking registration.](2) Nothing contained in clause (a) of sub-regulation (1) shall affect the obligationto obtain a fresh registration under section 12 of the Act in cases where it is |
| 8A 25[(1)Registration granted under regulation 7 shall be subject to the following conditions, namely – ”] obtain prior approval of the Board for continuing to act as such after the change; where the banker to an issue proposes 26[change in control], it shall(a)(b) it shall enter into a legally binding agreement with the body corporate for oron whose behalf it is acting as banker to an issue stating therein the allocationof duties and responsibilities between itself and the body corporate for theissue for which it is acting as a banker to an issue;27[(c) it shall pay the fees for registration, in the manner provided in theseregulations.](d) it shall take adequate steps for redressal of grievances of the investorswithin one month of the date of the receipt of the complaint and keep theBoard informed about the number, nature and other particulars of the |
| 8B The certificate of registration granted under regulation 7 and its renewal granted under regulation 8, shall be valid for a period of three years from the date of its issue”. 30 Substituted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016. Prior to substitution it read as under: “(1) Where an application for grant of a certificate 30[of initial registration under regulation 3 or of permanent registration under regulation 7A], does not satisfy the requirements set out in regulation 6, the Board may reject the application after giving an opportunity of being heard.” 31 Substituted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016. Prior to substitution it read as under: “(2) The 31[refusal to grant initial or permanent registration, as the case may be] 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.” Also, the words “refusal to grant or renew registration” were substituted with words “refusal to grant initial or permanent registration, as the case may be” by the Securities and Exchange Board of India (Bankers to an |
| 9 30[(1) Where an application for grant of a certificate of registration under regulation 3 does not satisfy the criteria set out in regulation 6, the Board shall reject the application after giving an opportunity of being heard.]31[(2) The refusal to grant registration, shall be communicated by the Board withinthirty days of such refusal to the applicant stating therein the grounds on whichthe 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 suchintimation to the Board for reconsideration of its decision.(4) The Board shall reconsider an application made under sub-regulation (3) andcommunicate its decision as soon as possible in writing to the applicant .Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016.2011, w.e.f. 05-07-2011. Prior to the omission regulation 8B read as under: |
| 10 ***] |
| 11 33[(1) Every applicant eligible for grant of registration, shall pay the fees in such 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 |
| 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 onwhich the applications were received and the amount so received from the investors ;(b) the time within which the applications received from the investors wereforwarded to the body corporate or registrar to an issue, as the case may be;(c) dates and amount of refund monies paid to the investors ;(d) dates, names and amount of dividend/interest warrant paid to the investors . |
| 12 (2) Every banker to an issue shall intimate to the Board the place where the records and documents mentioned in sub-regulation (1) are kept. Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016. Prior to omission it read as under: “32[10. Effect of refusal to grant certificate of permanent registration. A banker to an issue whose application for grant of certificate of permanent registration has been refused by the Board , on and from the date of the receipt of the communication, shall cease to carry on any activity as banker to an issue: Provided that the Board may, in the interest of the investors of the securities market, permit to carry on activities undertaken prior to the receipt of the intimation of refusal subject to such condition as the Board may specify.” Also, regulation 10 was substituted by the Securities and Exchange Board of India (Bankers to an Issue) |
| 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.” 33 Substituted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016. Prior to substitution it read as under: “(1) Every applicant eligible for grant of a certificate 33[of initial or permanent registration, as the case may be] shall pay such fees in such a manner and within the period specified in Schedule II.” Exchange Board of India (Bankers to an Issue) (Amendment) Regulations, 2011, w.e.f. 05-07-2011.(3) The banker to an issue shall preserve the records and documents specified insub-regulation (1) for a minimum period of 34[eight] years. |
| 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 a banker to an issue;(b) the number of applications and details of the application monies received bythe banker to an issue;(c) the dates on which the applications received from the investors wereforwarded to the body corporate or registrar to an issue;(d) the dates on which and the amount refunded to the investors ;(e) the payment or dividend/or interest warrants to the investors . |
| 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. |
| 14 (2) The agreement referred to in sub-regulation (1) shall contain the following clauses, namely :—(a) the number of centres at which the applications and application monies of anissue of a body corporate will be collected from the investors ;(b) the time within which the statement regarding the applications and applicationmonies received from the investors investing in an issue of a body corporatewill be forwarded to the registrar to an issue or the body corporate, as thecase may be;(c) that a daily statement will be sent by the designated controlling branch of thebankers to the issue to the registrar to an issue indicating the number ofapplications received on that date from the investors investing in the issue ofa body corporate, and the amount of application money received. |
| 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 an 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. |
| 16 Every banker to an issue shall abide by the code of conduct as specified in Schedule III. Regulations, 2018, w.e.f. 30-05-2018. Prior to substitution it read as “three”. |
| 16A (1) Every banker to an issue shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions, etc., issued by the Board or the Central Government and for redressal of investors’ grievances. |
| 16A (2) The compliance officer shall immediately and independently report to the |
| 17 The Board may request the Reserve Bank of India to undertake inspection of the books of account, records and documents of the banker to an issue for any of the purposes specified in regulation 18. |
| 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 mannerrequired;(b) that the provisions of the Act, rules , regulations are being complied with;(c) to investigate into the complaints received from investors, body corporate orany other person on any matter having a bearing on the activities of thebanker to an issue; and(d) to investigate into such matters as may be required by the Board. |
| 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. |
| 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 mayrequire. |
| 20 (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 (Amendment) Regulations, 2001, w.e.f. 29-05-2001. 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. |
| 20 (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. |
| 20 (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 |
| 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 . |
| 22 The Board or the Chairman shall after consideration of inspection or investigation report take such action as the Board or Chairman may deem fit and appropriate including action under 37[Chapter V of the Securities and Exchange Board of |
| 23 A banker to issue who contravenes any of the provisions of the Act, Rules or Regulations framed thereunder shall be liable for one or more actions specified therein including the action under Chapter V of the Securities and Exchange |
| 32 (1) The Board may, exempt any person or class of persons from the operation of all or any of the provisions of these regulations for a period as may be specified but not exceeding twelve months, for furthering innovation in technological aspects relating to testing new products, processes, services, business models,etc. in live environment of regulatory sandbox in the securities markets . |
| 32 (2) Any exemption granted by the Board under sub-regulation (1) shall be subject to the applicant satisfying such conditions as may be specified by the Board including conditions to be complied with on a continuous basis. means a live testing environment where new products, processes, services, business models, etc. may be deployed on a limited set of eligible customers for a specified period of time, for furthering innovation in the securities market , subject to such conditions as may be specified by the Board.](a) suspension of registration; or(b) cancellation of registration. |