Page 134 - DCOM304_INDIAN_FINANCIAL_SYSTEM

Unit 7: Depositories and Custodians

5. The capital adequacy should be not less than ` 20,00,000 (Net worth). Notes
6. No underwriter should subscribe more than 20 times of their net worth at any point of
time.

Banker to an Issue

The banker to an issue is engaged in activities such as acceptance of application along with
application money from the investor in respect of capital and refund of application money.
1. Banker to an issue must obtain a certificate of registration from the SEBI.
2. Banker to an issue has to pay to the SEBI an annual fee at ` 2.5 lakhs for the first 2 years
from the date of initial registration and ` 1 lakh for the third year to keep his registration
in force. The renewal fee to be paid by him annually for the first 2 year was ` 1 lakh and
` 20,000 for the year.
3. Since 1999, schedule of fee is ` 5 lakh initial registration fee and ` 2.5 lakh renewal every
year from the fourth year from the date of initial registration.
General Obligations and Responsibilities

1. Banker to an issue has to furnish to the SEBI the following information.
2. No of issues for which he was engaged as a banker to an issue.
3. The no of application or details at the application money received.
4. The dates on which application from investor were forwarded to the issuing company
register to an issue.
5. The dates/amount of refund to the investor.

Brokers to the Issue

Brokers are the persons mainly concerned with procurement of subscription to the issue from
the prospective investor.
1. The appointment of brokers is not compulsory and the companies are free to appoint any
no of brokers.

2. The permission granted by the stock exchange also subject to other stipulation which are
set out in the letter of consent.
3. The leading merchant banker in India who act as manager to the issue have particulars of
the performance of brokers in the company.
4. A copy of the consent letter should be filed along with the prospectus to the ROR.
5. The brokerage rate applicable to all types of public issue of industrial securities is fixed at
1.5 percent, whether the issue is underwritten or not.
6. The listed companies are allowed to pay a brokerage on private placement of capital at a
maximum rate of 0.5%.
Brokerage is not allowed in respect of promoter quota including the amount taken up by the
director, their friends and employees, and in respect of the right issue taken by or renounced by
the existing shareholders.

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