Page 97 - DCOM304_INDIAN_FINANCIAL_SYSTEM

Indian Financial System

Notes between the issuer and the prospective investors and assist in speedy subscription of the issue
by the public.
An issuing company can appoint as many number of brokers as it wants provided the stock
exchange of which the issuer is a member permits and the listing requirements are fulfilled. A
copy of the consent letter should be filed with the Registrar of Companies along with a copy of
the prospectus stating the names and addresses of the brokers to the issue.
The brokers to the issue must be endowed with the expertise, professional competence and must
be honest so as to be able to carry out the various functions of an issue.
The issuing company has to pay brokerage according to the provisions of the Companies Act
and rules and regulations the agreement between the brokers and the company and guidelines
prescribed by the SEBI. Maximum brokerage rate, applicable to all types of industrial securities,
whether underwritten or not, is 1.5 percent. The brokers will have to meet all mailing costs,
canvassing expenses and all other out-of-pocket expenses relating to the subscription of the
issue out of their brokerage. On private placement, the listed company can pay brokerage at the
maximum rate of 0.5%.

Registrar to an Issue and Transfer Agent

Registrar and transfer agent are the two categories of intermediaries who actively participate in
the new issue activity of a company. The Registrar performs the functions of collecting
applications from prospective investors, keeping a record of the applications and moneys received
from the investors, assisting the issuing company in the determination of the basis of allotment
of securities, processing and dispatching of allotment letters and refund orders, share and
debenture certificates and other documents related to the issue and acting as Depository
Participants (DPs).
Transfer Agent, on the other hand, carries out the activities, such as maintaining the records of
holders of securities of the company for and on behalf of the company, handling all matters
relating to transfer and redemption of securities of the company and acting as Depository
Participants (DPs).

Tasks and Responsibilities of Registrar and Transfer Agent

The SEBI has prescribed the following rules regarding duties and responsibilities of registrar
and transfer agent:
1. Both registrar and transfer agent have to obtain certificate of registration from the SEBI.
The SEBI issues the certificate on being satisfied about their ability to perform their functions
efficiently and honestly, adequacy of their infrastructure and capital. Capital adequacy
norm for Category I registrar (one who acts as registrar to an issue and transfer agent) is
` 6,00,000 and for Category II registrar (one who acts as registrar or as a transfer agent)
` 3,00,000. An annual fee of ` 50,000 and ` 30,000 has to be paid for initial registration by
Category I and Category II Registrars, respectively. Renewal fee for every 3 years for
Category I registrar is ` 40,000 and for Category II registrar ` 25,000.
2. The registrar and transfer agent are required to maintain for a minimum period of 3 years
records, books and documents containing details about the issue, rejected applications
together with the reasons for rejection, basis of allotment, terms and conditions of purchase
of securities, allotment of securities, list of allottees and non-allottees, names of transferors
and transferees and the dates of transfer of securities. They have to provide for periodic
reporting to and inspection by the SEBI.

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