What are the functions of merchant bankers? What are their obligations?

What are the functions of merchant bankers? What are their obligations? 

Ans. The functions of Merchant bankers are as follows: 

(a) Determining type of securities to be issued, 

(b) Drafting offer documents, application forms etc. 

(c) Taking care of legal formalities, 

(d) Appointing registrars to deal with share application and transfers etc. 

(e) Taking care of listing of securities, 

(f) Doing underwriting contracts, placing of issues, publicity and advertisements etc. Their obligations are as follows: 

(i) Entering into a contract with the issuing company specifying their mutual rights, obligations and liabilities. 

(ii) Submitting a copy of such contract to SEBI at least one month before the date of opening of the issue. 

(iii) Refusing to accept to act as merchant banker if the issuing company is an associate. 

(iv) Submitting to SEBI documents like particulars of the issue, draft prospectus, other documents to be circulated to investors at least two weeks before the date of filing them with ROC and Regional Stock exchange. 

(v) Ensuring that modifications and suggestions made by SEBI regarding above documents have been incorporated. 

(vi) Submitting a “due diligence certificate” to SEBI at least two weeks before the opening of the issue for subscription after verification offer regarding the issue and reasonableness of the content of views expressed therein. 

(vii) Doing all duties until the subscribers have received share certificates. 

(viii) Submitting complete particulars with SEBI within 15 days of the acquisition of securities of the company. 

(ix) Making following disclosures to SEBI: 

(a) Its responsibilities regarding the management of the issue. 

(b) Any change in the information or particulars furnished with SEBI having bearing on certificate of registration issued to it. 

(c) Details relating to the breach of capital adequacy norms. 

(d) Details of the companies whose issues it has managed or has been associated with. 

(e) Information about its activities as manager, underwriter, consultant or advisor to the issue.