Procedure for seeking prior approval for change in control with respect to Merchant Bankers and Bankers to an Issue

CIRCULAR
SEBI/HO/CFD/PoD-2/P/CIR/2023/141 August 10, 2023 To All Registered Merchant Bankers All Registered Bankers to an Issue Dear Sir / Madam, Sub: Procedure for seeking prior approval for change in control

1. Securities and Exchange Board of India (“SEBI”) vide circular no.
   CIR/MIRSD/14/2011 dated August 02, 2011 had specified the procedure for seeking prior approval for change in control of certain intermediaries including Merchant Bankers and Bankers to an Issue.
2. Regulation 9A(1)(a) of SEBI (Merchant Bankers) Regulations, 1992 and
   Regulation 8A(1)(a) of SEBI (Bankers to an Issue) Regulations, 1994 provide that Merchant Bankers and Bankers to an Issue respectively shall obtain prior approval of SEBI in case of change in control.
3. To streamline the process of obtaining approval for the proposed change in
   control of Merchant Bankers and Bankers to an Issue (hereinafter referred as intermediary), the following procedure has been specified:
   i. The intermediary shall make an online application to SEBI
   for prior approval through the SEBI Intermediary Portal (‘SI Portal’) (https://siportal.sebi.gov.in).
   ii. The online application in SI portal shall be accompanied by the
   following information / declaration / undertaking about itself, the acquirer(s) / the person(s) who shall have the control and the

directors / partners of the acquirer(s) / the person(s) who shall have the control:
a) Current and proposed shareholding pattern of the intermediary. b) Whether any application was made in the past to SEBI seeking registration in any capacity but was not granted? If yes, details thereof. c) Whether any action has been initiated/taken under Securities Contracts (Regulation) Act, 1956 (SCRA) / Securities and Exchange Board of India Act, 1992 (SEBI Act) or rules and regulations made thereunder? If yes, the status thereof along with the corrective action taken to avoid such violations in the future. The acquirer(s) / the person(s) who shall have the control shall also confirm that it shall honour all past liabilities / obligations of the applicant, if any. d) Whether any investor complaint is pending? If yes, steps taken and confirmation that the acquirer(s) / the person(s) who shall have the control shall resolve the same. e) Details of litigation(s), if any. f) Confirmation that all the fees due to SEBI have been paid. g) Declaration cum undertaking of the intermediary and the acquirer(s) / the person(s) who shall have the control (in a format enclosed at Annexure A), duly stamped and signed by their authorized signatories that:
i. there will not be any change in the Board of Directors of
incumbent, till the time prior approval is granted;
ii. pursuant to grant of prior approval by SEBI, the
incumbent shall inform all the existing investors/ clients of the intermediary about the proposed change prior to effecting the same, in order to enable them to take informed decision regarding their continuance or otherwise with the new management; and

iii. the ‘fit and proper person’ criteria as specified in
Schedule II of SEBI (Intermediaries) Regulations, 2008
are complied with. h) In case the incumbent intermediary is a registered stock broker, clearing member, depository participant, in addition to the above, it shall obtain approval / NOC from all the stock exchanges / clearing corporations / depositories, where the incumbent is a member/depository participant and submit self￾attested copy of the same to SEBI.
iii. Subject to other appropriate sectoral regulator’s approval with regard
to change in control, the prior approval granted by SEBI shall be valid for a period of six months from the date of SEBI’s approval within which the applicant shall file application for fresh registration pursuant to change in control.
4. To streamline the process of providing approval to the proposed change in
control of an intermediary in matters which involve scheme(s) of arrangement which needs sanction of the National Company Law Tribunal (“NCLT”) in terms of the provisions of the Companies Act, 2013, the following has been decided:
i. The application for approval of the proposed change in control of the
intermediary shall be filed with SEBI prior to filing the application with NCLT.
ii. Upon being satisfied with compliance of the applicable
regulatory requirements, an in-principle approval will be granted by SEBI;
iii. The validity of such in-principle approval shall be three months from the
date of issuance, within which the relevant application shall be made to NCLT.
iv. Within 15 days from the date of order of NCLT, the intermediary shall
submit an online application in terms of paragraph 3 of this circular along with the following documents to SEBI for final approval:

a. Copy of the NCLT Order approving the scheme; b. Copy of the approved scheme;
c. Statement explaining modifications, if any, in the approved
scheme vis-à-vis the draft scheme and the reasons for the same; and d. Details of compliance with the conditions/ observations, if any, mentioned in the in-principle approval provided by SEBI.
5. This Circular shall supersede the circular no. CIR/MIRSD/14/2011 dated
August 02, 2011 with effect from the date of applicability of this circular, to the extent they relate to Merchant Bankers and Bankers to an Issue.
6. The provisions of this circular shall be applicable with effect from September
01, 2023.
7. This Circular is issued in exercise of the powers conferred under Section 11(1)
of the Securities and Exchange Board of India Act, 1992.
8. A copy of this circular is available on SEBI website at www.sebi.gov.in under
the categories “Legal Framework → Circulars”.
Yours faithfully,
Vimal Bhatter
Deputy General Manager
Corporation Finance Department
Policy and Development - 1
+91 22 2644 9386
Email – vimalb@sebi.gov.in

Annexure A
Declaration-Cum-Undertaking
We, M/s. (Name of the intermediary/the acquirer(s)/person(s) who shall have the control), hereby declare and undertake the following with respect to the application for prior approval for change in control of (name of the intermediary along with the SEBI registration no.):

1. The intermediary (Name) and its principal officer, the directors or managing
   partners, the compliance officer and the key management persons and the promoters or persons holding controlling interest or persons exercising control over the applicant, directly or indirectly (in case of an unlisted applicant or intermediary, any person holding twenty percent or more voting rights, irrespective of whether they hold controlling interest or exercise control, shall be required to fulfill the ‘fit and proper person’ criteria) are fit and proper person in terms of Schedule II of SEBI (Intermediaries) Regulations, 2008.
2. We bear integrity, honesty, ethical behaviour, reputation, fairness and character.
3. We do not incur following disqualifications mentioned in Clause 3(b) of Schedule II
   of SEBI (Intermediaries) Regulations, 2008 i.e.
   i. No criminal complaint or information under section 154 of the Code of
   Criminal Procedure, 1973 (2 of 1974) has been filed against us by the Board and which is pending.
   ii. No charge sheet has been filed against us by any enforcement agency
   in matters concerning economic offences and is pending.
   iii. No order of restraint, prohibition or debarment has been passed against
   us by the Board or any other regulatory authority or enforcement agency in any matter concerning securities laws or financial markets and such order is in force.
   iv. No recovery proceedings have been initiated by the Board against us
   and are pending.
   v. No order of conviction has been passed against us by a court for any
   offence involving moral turpitude.
   vi. No winding up proceedings have been initiated or an order for winding
   up has been passed against us.
   vii. We have not been declared insolvent.

viii. We have not been found to be of unsound mind by a court of competent
jurisdiction and no such finding is in force.
ix. We have not been categorized as a wilful defaulter.
x. We have not been declared a fugitive economic offender.
4. We have not been declared as not ‘fit and proper person’ by an order of the Board.
5. No notice to show cause has been issued for proceedings under SEBI
(Intermediaries) Regulations, 2008 or under section 11(4) or section 11B of the SEBI Act during last one year against us.
6. It is hereby declared that we and each of our promoters, directors, principal officer,
compliance officer and key managerial persons are not associated with vanishing companies.
7. We hereby undertake that there will not be any change in the Board of Directors of
incumbent, till the time prior approval is granted.
8. We hereby undertake that pursuant to grant of prior approval by SEBI, the
incumbent shall inform all the existing investors/ clients about the proposed change prior to effecting the same, in order to enable them to take informed decision regarding their continuance or otherwise with the new management. The said information is true to our knowledge. (stamped and signed by the Authorised Signatories)