Incorporation of asset management companies and other intermediaries in securities market - Companies Law - CIRCULAR NO. 5/94

CIRCULAR NO. 5/94 [F.NO. 3/14/92-CL-V], DATED 15-4-1994, ISSUED BY THE DEPARTMENT OF COMPANY AFFAIRS Subject:- Incorporation of asset management companies and other intermediaries in securities market Registrar of Companies are advised not to insist upon seeking prior approval of SEBI for registration of intermediaries like merchant bankers, registrar to an issue, investment adviser, portfolio manager, etc. However, they may register an AMC only after its draft memorandum and articles of association is cleared by SEBI. 1. I am directed to say that some Registrars are insisting upon the promoters proposing to carry on activities as merchant bankers, registrars to an issue, investment advisers, portfolio manager, etc., to obtain prior approval of the SEBI before making available the proposed name or incorporation of a company. In this connection, it may be pointed out that under section 12 of the Securities and Exchange Board of India Act, 1992 the intermediaries associated with securities market are required to seek registration by making an application to the SEBI, as per regulations made thereunder, which, inter alia, require the applicant to state the date and place of registration, details of directors, as also to furnish memorandum and articles of association, if the applicant is a company. However, in terms of regulation 10(2) of the SEBI (Mutual Fund) Regulations, 1993, asset management companies (AMCs) are required to submit to the SEBI their respective memoranda and articles of association for approval. Therefore, unlike the memoranda and articles of association of other intermediaries, it would be in the interest of concerned AMCs to get their memoranda and articles of association cleared by the SEBI before the same are presented to the concerned Registrar of Companies for registration. 2. In view of the above, you are requested not to insist upon seeking prior approval of the SEBI for registration of intermediaries like merchant bankers, registrar to an issue, investment adviser, profolio manager, etc. However, this Department's Circular No. 4/92, dated 2nd September, 1992 will continue to be in force and you may register an AMC only after its draft memorandum and articles of association is cleared by the SEBI.