Securities And Exchange Board Of India (Underwriters) (Amendment) Regulations, 2006 - S.O. No.1449 (E) - SEBI/LAD/DOP/0709/2006 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 7th September, 2006 S.O. No.1449 (E). In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following Regulations to further amend the Securities and Exchange Board of India (Underwriters) Regulations, 1993, namely :- 1. These Regulations may be called the Securities and Exchange Board of India (Underwriters) (Amendment) Regulations, 2006. 2. They shall come into force on the date of their publication in the Official Gazette. 3. In the Securities and Exchange Board of India (Underwriters) Regulations, 1993- (i) in regulation 2 a. after the opening part and before clause (b), the following clauses shall be inserted, namely:- (a) Act means the Securities and Exchange Board of India Act, 1992 (15 of 1992); (aa) body corporate shall have the meaning assigned to it in or under clause (7) of section 2 of the Companies Act, 1956 (1 of 1956); (ab) certificate means a certificate of registration issued by the Board; (ac) change of status or constitution in relation to an underwriter means any change in its status or constitution of whatsoever nature and includes (i) in case of a body corporate (A) amalgamation, demerger, consolidation or any other kind of corporate restructuring falling within the scope of section 391 of the Companies Act, 1956 (1 of 1956) or the corresponding provision of any other law for the time being in force; (B) change in its managing director or whole-time director; and (C) any change in control over the body corporate; (ii) any change between the following legal forms individual, partnership firm, Hindu undivided family, private company, public company, unlimited company or statutory corporation and other similar changes; (iii) in case of a partnership firm any change in partners not amounting to dissolution of the firm; (ad) change in control , in relation to an underwriter being a body corporate, means:- (i) if its shares are listed on any recognised stock exchange, change in control within the meaning of regulation 12 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997; (ii) in any other case, change in the controlling interest in the body corporate; Explanation : For the purpose of sub-clause (ii), the expression controlling interest means an interest, whether direct or indirect, to the extent of at least fifty one percent. of voting rights in the body corporate; b. after clause (c), the following clause shall be inserted, namely:- (ca) issue means an offer of sale of securities by any body corporate or by any other person or group of persons on its or his or their behalf, as the case may be, to the public, or, the holders of securities of such body corporate or person or group of persons; c. for clause (f), the following clauses shall be substituted, namely:- (f) underwriter means a person who engages in the business of underwriting of an issue of securities of a body corporate; (fa) underwriting means an agreement with or without conditions to subscribe to the securities of a body corporate when the existing shareholders of such body corporate or the public do not subscribe to the securities offered to them; d. in clause (g), the words and the rules occurring after the words defined in the Act and the words or the rules, as the case may be occurring at the end shall be omitted; (ii) regulation 3 shall be renumbered as regulation 3A and before the regulation so renumbered, the following regulation shall be inserted, namely:- Registration as underwriter 3. (1) No person shall act as underwriter unless he holds a certificate granted by the Board under these regulations. (2) Notwithstanding anything contained in sub-regulation (1), every stock broker or merchant banker holding a valid certificate of registration under section 12 of the Act, shall be entitled to act as an underwriter without obtaining a separate certificate under these regulations. (3) A stock broker or merchant banker acting as an underwriter under sub-regulation (2) shall be governed by these regulations in other respects. (iii) in regulation 3A, so renumbered, after sub-regulation (1), the following sub-regulation shall be inserted, namely:- (1A) An application for registration made under sub-regulation (1) shall be accompanied by a non-refundable application fee as specified in Schedule II. (iv) in regulation 4, in sub-regulation (2), for the words regulation 3 occurring at the end, the words regulation 3A shall be substituted; (v) in regulation 5, for the words sub-regulation (2) of regulation 3 , the words sub-regulation (2) of regulation 3A shall be substituted; (vi) in regulation 9, after sub-regulation (1), the following sub-regulation shall be inserted, namely:- (1A) An application for renewal made under sub-regulation (1) shall be accompanied by a non-refundable application fee as specified in Schedule II. (vii) after regulation 9, the following regulations shall be inserted, namely:- Conditions of registration 9A. (1) Any registration granted under regulation 8 or any renewal granted under regulation 9 shall be subject to the following conditions, namely:- (a) where the underwriter proposes to change its status or constitution, it shall obtain prior approval of the Board for continuing to act as such after the change; (b) it shall enter into a valid agreement with the body corporate on whose behalf it is acting as underwriter; (c) it shall pay the fees for registration or renewal, as the case may be, in the manner provided in these regulations; (d) it shall maintain capital adequacy requirements specified in regulation 7 at all times during the period of the certificate or renewal thereof; (e) it shall abide by the regulations made under the Act in respect of the activities carried on by it as underwriter. (2) Nothing contained in clause (a) of sub-regulation (1) shall affect the obligation to obtain a fresh registration under section 12 of the Act in cases where it is applicable. Period of validity of certificate 9B. The certificate of registration granted under regulation 8 and its renewal granted under regulation 9, shall be valid for a period of three years from the date of its issue to the applicant. (viii) in regulation 14, a. in the opening paragraph, for the words, brackets and figures clause (b) of rule 4 , the words, brackets and figures clause (b) of sub-regulation (1) of regulation 9A shall be substituted; b. after clause (i), the following clause shall be inserted, namely:- (ia) the allocation of duties and responsibilities between the underwriter and the client; (ix) in regulation 15, in sub-regulation (3), for the words, brackets and figures clause (b) of rule 4 , the words, brackets and figures clause (b) of sub-regulation (1) of regulation 9A shall be substituted; (x) in regulation 16, in sub-regulation (3), for the words, brackets and figures clause (b) of rule 4 wherever they occur, the words, brackets and figures clause (b) of sub-regulation (1) of regulation 9A shall be substituted; (xi) in Schedule II a. in paragraph 1, for the words Rupees five lacs , the words ten lakh rupees shall be substituted; b. in paragraph 2, for the words and figures Rs. 2 lacs , the words five lakh rupees shall be substituted; c. after paragraph 3, the following paragraph shall be inserted, namely:- 3A. The non-refundable fee payable along with an application for registration under sub-regulation (1A) of regulation 3A or an application for renewal of registration under sub-regulation (1A) of regulation 9 shall be a sum of twenty five thousand rupees. d. in paragraph 4, for the words and figures paragraphs 1 and 2 the words and figures paragraphs 1, 2 and 3A shall be substituted. F.No. SEBI/LAD/DOP/0709/2006 M. DAMODARAN, Chairman Footnotes: 1. The Securities and Exchange Board of India (Underwriters) Regulations, 1993, the Principal Regulations were published in the Gazette of India on October 8, 1993 vide No. LE/10(E). 2. The Securities and Exchange Board of India (Underwriters) Regulations, 1993 was subsequently amended a. on November 28, 1995 by the Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 1995 vide S.O. No.939(E). b. on January 17, 1997 by the Securities and Exchange Board of India (Underwriters) (Amendment) Regulations, 1997 vide S.O. No.46(E). c. on January 5, 1998 by the Securities and Exchange Board of India (Underwriters) (Amendment) Regulations, 1998 vide S.O. No.21(E). d. on September 30, 1999 by the Securities and Exchange Board of India (Underwriters) (Amendment) Regulations, 1999 vide S.O. No.797(E). e. on March 28, 2000 by the Securities and Exchange Board of India (Appeal to the Securities Appellate Tribunal) (Amendment) Regulations, 2000 vide S.O. No.278(E). f. on May 29, 2001 by the Securities and Exchange Board of India (Investment Advice by Intermediaries) (Amendment) Regulations, 2001 vide S.O. No.476(E). g. on September 27, 2002 by the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 vide S.O. No.1045(E). h. on December 10, 2002 by the Securities and Exchange Board of India (Underwriters) (Amendment) Regulations, 2002 vide S.O. No.1291(E). i. on March 10, 2004 by the Securities and Exchange Board of India (Criteria for Fit and Proper Person) Regulations, 2004 vide S.O. No. 398(E).