Procedure for seeking prior approval for change in control
Summary
This circular specifies the procedure for Merchant Bankers and Bankers to an Issue to seek prior SEBI approval for a change in control. It mandates online applications via the SI Portal with detailed disclosures regarding shareholding, litigation, and fit-and-proper criteria. The document also outlines specific processes for changes involving NCLT schemes of arrangement and supersedes previous circulars effective from September 1, 2023.
Text
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.
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.
The intermediary shall make an online application to SEBI for prior approval through the SEBI Intermediary Portal (‘SI Portal’).
Current and proposed shareholding pattern of the intermediary.
Whether any application was made in the past to SEBI seeking registration in any capacity but was not granted? If yes, details thereof.
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.
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.
Details of litigation(s), if any.
Confirmation that all the fees due to SEBI have been paid.
Declaration cum undertaking of the intermediary and the acquirer(s) / the person(s) who shall have the control... 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...; and iii. the ‘fit and proper person’ criteria as specified in Schedule II of SEBI (Intermediaries) Regulations, 2008 are complied with.
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.
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.
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Source: SecMarx — Procedure for seeking prior approval for change in control. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.