STEPS REQUIRED TO BE BANKER TO

AN ISSUE OF BOND TO BE RAISED BY A

COMPANY.

GROUP 2
PUNEET GARG
PARESH PATEL
ADITYA BADAR
AMAN AGGARWAL
BARNALI BHATTACHARYA
 WHAT IS MERCHANT BANKING AND SCOPE OF IT`S
ACTIVITIES?
• He is one who makes a critical link between a company raising funds and the investor.
• It refers to an organization that underwriters corporate securities and advice clients on the issue.
• Merchant Banker may be in the form of Bank, company and Proprietary.
• According to Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992;
“merchant banker” means any person who is engaged in the business of Issue Management either by making
arrangements regarding selling, buying or subscribing to securities or acting as manager, consultant, advisor or
rendering corporate advisory service in relation to such Issue Management,
• Merchant Banker involves itself in the following,
• Growth of New issue market
• Entry of foreign investors
• Development of Debt Markets
• Innovations in financial instruments
• Corporate restructuring
 CATEGORIES OF MERCHANT BANK,
SEBI (MERCHANT BANKERS) REGULATION, 1992

CATEGORY FUNCTIONS MINIMUM

NETWORTH
CATEGORY 1 To act as Adviser, Consultant, Manager, RS 5 Crores
Underwriter & Portfolio Manager
CATEGORY 2 To act as Adviser, Consultant, Co- RS 50 Lakhs
Manager, Underwriter & Portfolio
Manager
CATEGORY 3 To act as Adviser, Consultant & RS 20 Lakhs
Underwriter to the issue
CATEGORY 4 To act only as Adviser & Consultant Nil

• An application by a person for grant of a certificate shall be made to the Board in Form A.
• An application for registration made under sub-regulation (1) shall be accompanied by a non-refundable application
fee as specified in Schedule II.
• Registration with SEBI is required for Category 1 only.
 GENERAL RESPONSIBILITIES &
OBLIGATIONS
• Merchant banker not to associate with any business other than that of the securities market.
• Maintenance of books of account, records etc.
• Submission of half-yearly results.
• Maintenance of books of account, records and other documents.
• Report on steps taken on auditor’s report.
• Appointment of lead merchant bankers.
• Lead merchant banker not to associate with a merchant banker without registration.
• Merchant banker not to act as such for an associate.
• Underwriting obligations.
• Submission of due diligence certificate.
• Payment of fees to the Board.
• Appointment of compliance officer.
 SEBI GUIDELINES FOR
BANKERS TO THE ISSUE
• Bankers who are engaged in the function of acceptance of application for shares and debentures along with the
application money from investors. Bankers who refund the application money to the applicant to whom securities are not
be allotted are called banker to the issue.
• There are two types bankers involved in the issues. They are, Collecting Bankers & Co-coordinating Bankers
• The collecting bankers collect the subscriptions in cash, cheques, stock invest and coordinating bankers collect the
information on subscriptions.
• The annual registration fees for banker activities are Rs 2.5 lakhs.
• The banker should maintain book of accounts, records for 3 years.
• The banker should give daily statement regarding applicant to the company and SEBI.
• The banker not accepts applications after office hours or on bank holidays.
• The banker not allows blank applications forms bearing brokers stamps to be kept the bank premises.
GENERAL PROCESS FOR ISSUE OF DEBT SECURITIES UNDER SEBI
(ILDS) REGULATIONS, 2008

DISCLOSE THE CREDIT ENTER INTO AN AGREEMENT

RATINGS, INCLUDING THE WITH A DEPOSITORY FOR
FILE AN APPLICATION TO ONE
UNACCEPTED CREDIT RATING DEMATERIALISATION OF DEBT
OR MORE STOCK EXCHANGES
FROM ONE OR MORE CREDIT SECURITIES IN ACCORDANCE
FOR LISTING OF THE DEBT
RATING AGENCIES IN THE WITH DEPOSITARIES ACT, 1996
SECURITIES AND OBTAIN
OFFER DOCUMENT MADE AND THE RELEVANT
APPROVAL
WITH REGARD TO THE DEBT REGULATIONS MADE
SECURITIES. THEREUNDER.

APPOINT ONE OR MORE

THE DRAFT AND FINAL OFFER
MERCHANT BANKERS FOR
DOCUMENTS ARE DISPLAYED
LETTING THEM CREATE
ONLINE ON CONCERNED
DEBENTURE REDEMPTION
STOCK EXCHANGE WEBSITES
ACCOUNTS (WHICH COMES
AND MADE AVAILABLE FOR
INTO OPERATION WHEN THERE
DOWNLOAD IN PDF/HTML
IS A DEFAULT IN PAYMENT)
FORMATS
UNDER COMPANIES ACT, 2013.
PRE ISSUE MANAGEMENT BY LEAD MERCHANT
BANKER
PRICE DISCOVERY MINIMUM
UNDERWRITING TO
THROUGH BOOK SUBSCRIPTION TO
THE ISSUE
BUILDING THE ISSUE
• The issuer may • The issuer in • A public issue of debt
determine the price of consolation with the securities may be
debt securities in lead merchant underwritten by an
consultation with the banker may decide the underwriter (can be
lead merchant amount of minimum the lead merchant
banker and the issue subscription which it bank) registered with
may be at fixed price or seeks to raise by issue the Board and in such a
the price may be of debt securities and case adequate
determined through disclose the same in the disclosures regarding
book building process in offer document. underwriting
accordance with the • In the event of non arrangements shall be
procedure as may be receipt of minimum disclosed in the offer
specified by the Board. subscription all document.
application moneys
received in the public
issue shall be refunded
forthwith to the
applicants.
 GENERAL CONDITIONS FOR PUBLIC ISSUE OF DEBT
• The issuer making a public issue or rights issue of debt securities shall appoint one or more Merchant Bankers.
• The issuer making a public issue or rights issue of debt securities shall appoint one or more debenture trustees in accordance with
the provisions of Section 117B of the Companies Act, 1956.
• The issuer through a merchant bank makes an application to a recognized stock exchange for listing of those securities therein: Provided
that where the application is made to more than one recognized stock exchange, the issuer shall, choose one of them as the ‘designated
stock exchange’
• It has obtained in-principle approval for listing of its debt securities on a recognized stock exchange
• Credit rating is obtained from at least one credit rating agency registered with the Board and is disclosed in the offer document;
Provided that where credit ratings are obtained from more than one credit rating agencies, all the ratings, including the unaccepted
ratings, shall be disclosed in the offer document.
• A trust deed shall be executed by the issuer in favour of the debenture trustees before filing of offer document with the Registrar of
Companies and the Designated Stock Exchange.
• The issuer shall enter into an arrangement with a depository registered with the Board for dematerialization of the debt securities that
are proposed to be issued to the public.
• The Banker to the issue shall give an option to the subscribers to receive the debt securities either in the physical form or in
dematerialized form.
 FILING OF DRAFT OFFER DOCUMENT FOR PUBLIC
ISSUES
• No issuer shall make a public issue of debt securities unless a draft offer document has been filed with the Designated Stock Exchange
through a Merchant Banker, at least 7 working days prior to the filing of the offer document with the Registrar of Companies for
display on their website inviting public comments.
• In addition to the designated stock exchange, the draft offer document may also be displayed on the websites of the issuer, Lead
Merchant Bankers and other stock exchanges where the debt securities being issued in terms of the offer document are proposed to
be listed.
• The Lead Merchant Banker shall ensure that the draft Offer Document clearly specifies the names and contact particulars of the
Compliance Officer of the Lead Merchant Banker and the Issuer Company including the postal and email Address, Telephone and Fax
Numbers.
• The Lead Merchant Banker shall ensure that all comments/ complaints received on the draft offer document are suitably addressed.
• Any issuer, making a public offer of debt securities shall disclose all material and relevant disclosures in the draft offer document; (1) As
provided in Schedule II of the Companies Act, 1956 (2) Disclosures specified in Schedule I of these regulations.
• The offer document prepared as per Regulation 6 and filed with the Registrar of Companies shall be simultaneously filed with the
designated stock exchange for dissemination on its website prior to the opening of the issue.
• The Lead merchant banker shall furnish to the Board a due diligence certificate as per Schedule II of these regulations prior to filing
of the offer document with the Registrar of Companies.
 RESPONSIBILITIES OF THE MERCHANT BANK IN
MARKETING OF THE ISSUE
• Along with performing the function as a bridge between the issuing company and the investors, merchant bankers also have to generate
interest and build the confidence of the investors in the capital market.
• Merchant bankers make efforts for the promotion and marketing of the issue. They plan, co-ordinate and control the entire activities
relating to public issues and direct different agencies to contribute to the successful marketing of securities.
• Timing of the public issue is an important decision taken by lead manager. It is an important marketing strategy and is a futuristic
decision which involves the expected market conditions during the time of the issue.
• The printers are involved in the process of printing and distribution of issue related stationery. Lead merchant banker is responsible to
ensure the printing of prospectus, application forms, posters, brochures and other stationery.
• It is the duty of lead manager that the public issue offer document and other issue related material is dispatched to the designated stock
exchange(s), brokers, underwriters, bankers to the issue etc. in advance as agreed upon.
• Merchant bankers maintain a list of advertising agencies having experience and expertise in the publicity of public issues. The Company
decides on the size of the advertising budget in consultation with the lead manager. Then the advertising agency and lead manager draw
up a publicity campaign.
 PUBLICITY CAMPAIGN
The selected advertising agency is responsible for carrying on publicity campaign for wide distribution of public issue. Along with print
media, audio-visual media, hoardings, banners, posters, publicity campaign may also be carried through the followings:
• Roadshows; As a part of the marketing campaign, the issuer company may conduct road shows at various places. In a road show, the
lead manager accompanied by a team of senior officials of the company hold conference and make presentation in order to shift the
demand schedule for the company’s security.
• Research Coverage; Research coverage, forecasts and recommendations by financial analysts are important tools in the marketing of
securities. All reputed merchant bankers have their own research teams and they publish research reports about the Public Issues in
various financial dailies.
• Press Conference and Investor’s Conference; Press conferences for public issues are organized by advertising agency at different
centres having concentration of investors. Similarly, investors’ meetings are held at various cities where it is expected that their interest
could be invoked in the public issue. Cities with stock exchanges are favourable centres for such meetings.
• Network of Merchant Bankers; Leading merchant bankers having specialization in the area of issue management have wide network
to create investors interest in public issue. They maintain list of potential investors and generally have good links with qualified
institutional investors and high net worth investors. Some merchant bankers have registered broking firms as their sister concerns having
direct link with the investors
 ADVERTISEMENTS FOR PUBLIC ISSUE
OF DEBT SECURITIES
• The issuer, through Lead Merchant Bank shall make a advertisement in an national daily with wide circulation, on or
before the issue opening date and such advertisement shall, amongst other things, contain the disclosures as per Schedule
IV.
• No issuer shall issue an advertisement which is misleading in material particular or which contains any information in a
distorted manner or which is manipulative or deceptive.
• The advertisement shall be truthful, fair and clear and shall not contain a statement, promise or forecast which is untrue
or misleading.
• Any advertisement issued by the issuer shall not contain any matters which are extraneous to the contents of the offer
document.
• The advertisement shall urge the investors to invest only on the basis of information contained in the offer document.
• Any corporate or product advertisement issued by the issuer during the subscription period shall not make any reference
to the issue of debt securities or be used for solicitation.
 DEBENTURE TRUST DEED
• A trust deed for securing the issue of debt securities shall be executed by the issuer in favour of the
debenture trustee within three months of the closure of the issue.
• The trust deed shall contain such clauses as may be prescribed under section 117A of the Companies Act,
1956 and those mentioned in Schedule IV of the Securities and Exchange Board of India (Debenture Trustees)
Regulations, 1993.
• The trust deed shall not contain a clause which has the effect of –
• limiting or extinguishing the obligations and liabilities of the debenture trustees or the issuer in relation to any rights or interests of
the investors;
• limiting or restricting or waiving the provisions of the Act , these regulations and circulars or guidelines issued by the Board;
• indemnifying the debenture trustees or the issuer for loss or damage caused by their act of negligence or commission or omission.

• The debenture trustee shall be vested with the requisite powers for protecting the interest of holders of
debt securities including a right to appoint a nominee director on the Board of the issuer in consultation with
institutional holders of such securities.
 OBLIGATIONS OF THE LEAD
MERCHANT BANKER
• The issuer shall disclose all the material facts in the offer documents issued or distributed to the public and shall ensure
that all the disclosures made in the offer document are true, fair and adequate and there is no mis-leading or untrue
statements or mis-statement in the offer document.
• The Merchant Banker shall verify and confirm that the disclosures made in the offer documents are true, fair and
adequate and ensure that the issuer is in compliance with these regulations as well as all transaction specific disclosures
required in Schedule I of these regulations and Schedule II of the Companies Act, 1956.
• The issuer shall treat the applicants in a public issue of debt securities in a fair and equitable manner as per the
procedures as may be specified by the Board.
• The intermediaries shall be responsible for the due diligence in respect of assignments undertaken by them in respect of
issue, offer and distribution of securities to the public.
• No person shall employ any device, scheme or artifice to defraud in connection with issue or subscription or distribution
of debt securities which are listed or proposed to be listed on a recognized stock exchange.
• The issuer and the merchant banker shall ensure that the security created to secure the debt securities is adequate to
ensure 100% asset cover for the debt securities
ADITYA BIRLA FINANCE LIMITED DRAFT SHELF
PROSPECTUS
ADITYA BIRLA FINANCE LIMITED DRAFT SHELF
PROSPECTUS
THANK YOU