Background
Securities and Exchange Board of India ('SEBI') is keen on bringing in slew of reforms for merchant bankers. In last three to four months SEBI has brought a consultation paper to reform merchant banking provisions, revamping rights issue process in the context of merchant banker role and recent exchange circular on guidance to merchant bankers in SME IPO process. Recently there have been public issues on SME platform which were halted by SEBI as it proactively undertook investigation to ascertain credibility of the information provided by these companies. On investigation, SEBI found that the disclosures in offer documents given by the SMEs were false and misleading. In furtherance to this SEBI has brought certain reforms to avoid similar situations.
Introduction
As per regulation 14 of SEBI (Merchant Banker) Regulations, 1992 merchant bankers are obligated to maintain records and documents pertaining to due diligence in both pre-issue and post-issue activities.
SEBI has now rolled out a significant initiative to simplify how Merchant Bankers handle their due diligence records during public issues. To ensure smoother record maintenance,
What's the change
Come January 1, 2025 merchant bankers will have to upload all documents used by them in doing due diligence of public issues (both main board and SME platform) with a repository at stock exchanges.
SEBI is introducing an online Document Repository platform for merchant bankers. This repository will be developed and managed by stock exchanges. In this repository merchant bankers will have to upload and store record and documents used by merchant bankers in conducting due diligence of public issues.
All uploaded documents must be relevant, complete, and legible to ensure proper record-keeping.
Timelines for uploading documents
- From January 1, 2025: Merchant bankers must upload documents within 20 days of filing the draft offer document with SEBI or stock exchanges or listing on stock exchanges.
- From April 1, 2025: The timeline is reduced to 10 days for filing the draft offer document with SEBI or stock exchanges or listing on stock exchanges.
It is not necessary for merchant bankers to upload the records on both exchanges. They can upload it to one stock exchange and inform others where the issuer company is listed.
Confidentiality of the repository
These documents uploaded by merchant bankers in the document repository will be placed in their individual login credentials. These documents shall be available to the merchant bankers only. These documents shall be available to SEBI as and when they are required.
For more information, check out the full circular: Click Here
Disclaimer: This article provides general information existing at the time of preparation and we take no responsibility to update it with the subsequent changes in the law. The article is intended as a news update and Affluence Advisory neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this article. It is recommended that professional advice be taken based on specific facts and circumstances. This article does not substitute the need to refer to the original pronouncement.
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