A rights issue is the offer of shares of a company to the existing shareholders. A merchant banker has the following responsibilities in Rights issue.
Rights Issue: Responsibilities of merchant bankers
1. The merchant banker will ensure that when Rights issues are taken up by a company, the merchant banker who is responsible for the Rights issue, shall see that an advertisement regarding the same is published in an English national daily, in an Hindi national daily and in a regional daily.
These newspapers should be in circulation in the city / town where the registered office of the company is located.
2. It is the duty of the merchant banker to ensure that the application forms for Rights issue should be made available to the shareholders and if they are not available, a duplicate composite application form is made available to them within a reasonable time.
3. If the shareholders are not able to obtain neither the original nor the duplicate application for Rights shares, they can apply on a plain paper through the merchant banker.
4. The details that should be furnished in the plain paper, while applying for Rights shares should be provided by the merchant hanker.
5. The merchant banker should mention in the advertisement, the company official to whom the shareholders should apply for Rights shares.
6. The merchant banker should also inform that no individual can apply twice, in standard form as well as in plain paper.