Page 57 - DCOM507_STOCK_MARKET_OPERATIONS

Stock Market Operations

Notes A banker to the issue has to maintain books of accounts, records and documents for a
minimum period of at least three years regarding number of applications, names of
investors, time within which applications received were forwarded to the issuing company/
registrar to the issue and dates and amount of refund to investors.

A banker to the issue is required to furnish to the SEBI detailed information pertaining to
number of applications received, number of issues for which he acted as banker to the
issue, the dates on which applications from investors were forwarded to the issuing
company/registrar to the issue and amount of refund to investors.
A banker to the issue has to observe all the codes of conduct ordained by the SEBI for the
merchant bankers and underwriters. Besides, it has to adhere to the following norms laid
down by the SEBI:

Make all efforts to protect the interests of investors;
Observe high standards of integrity and fairness in the conduct of the business;
Exercise due diligence, ensure proper care and exercise independent professional
judgement;

Not to keep blank application forms bearing broker’s stamp at the bank premises or
at the entrance of the bank;

Not to accept applications after office hours, on bank holidays or after the date of the
closure of the issue;
Not to act any time in collusion with other agents in a manner detrimental to the
interest of small investors; and
Abide by all acts, rules, regulations, notifications, directions, circulars, instructions
and guidelines issued by the Government, the RBI, Indian Banks’ Association and
SEBI that are relevant to his operation as banker to an issue.

3.3.4 Brokers to an Issue

Brokers to an issue represent intermediaries who are concerned with procuring the subscription
to the issue from prospective investors across the country. In this way, they serve as a vital link
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 alongwith 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%.

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