On March 30, 2021, the Securities and Exchange Board of India has notified the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2021. The amendment provides that every merchant banker acting as an underwriter shall enter into an agreement with each body corporate on whose behalf it is acting as an underwriter and the said agreement shall, amongst other things, provide for the following, namely—

  • period for which the agreement shall be in force;
  • allocation of duties and responsibilities between the underwriter and the client
  • number of underwriting obligations;
  • period, within which the underwriter has to subscribe to the issue after being intimated by or on behalf of such body corporate;
  • amount of commission or brokerage payable to the underwriter;
  • details of arrangements, if any, made by the underwriter for fulfilling the underwriting obligations.

Further, In Schedule III, after clause 32, the following new clauses have been inserted:

“33. A merchant banker or any of its directors, partners or manager having the management of the whole or substantially the whole of affairs of the business, shall not either through its account or their respective accounts or through their associates or family members, relatives or friends indulge in any insider trading.

34.A merchant banker acting as an underwriter shall not make any statement, either oral or written, which would misrepresent—(a) the services that the underwriter is capable of performing for its client, or has rendered to any other issuer company; (b) his underwriting commitment.

35.A merchant banker acting as an underwriter shall not indulge in any unfair competition, which is likely to be harmful to the interest of other entities acting as underwriters carrying on the business of underwriting or likely to place such other underwriters in a dis-advantageous position in relation to the underwriter while competing for, or carrying out any assignment.”


*Tanvi Singh, Editorial Assistant who has put this story together.

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