Role of Merchant Banker in a Public Issue

Merchant bankers play an important role in public issue process. While acting as a banker to an issue, a merchant banker has to disclose full details to the Securities Exchange Board of India (SEBI). The details submitted by merchant banker about the public issue should contain the following.

Merchant bankers role in Public Issue

1. Furnishing Information:

  • Number of issues for which the merchant banker is engaged as banker to issue.
  • Number of applications received and details of application money received
  • Dates on which applications from investors were forwarded to issuing company.
  • Details of amount as refund to investors.

2. Books to be Maintained:

  • Books of accounts for a minimum period of 3 years
  • Records regarding the company
  • Documents such as company applications, names of investors, etc.

3. Agreement with issuing company

Agreement with the issuing company by the merchant banker should contain

  • Number of collection centres
  • Application money received
  • Daily statement by each branch which is a collecting centre.

4. Action by RBI: Any action by RBI on merchant banker should be informed to SEBI by the
merchant banker concerned.

5. Code of Conduct

  • Having high integration in dealing with clients.
  • Disclosure of all details to the authorities concerned. Avoiding making exaggerated statements.
  • Disclosing all the facts to its customers.
  • Not disclosing any confidential matter of the clients to third parties.

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