Sebi refines process for approval for change in control merchant bankers

Capital markets regulator Sebi on Thursday streamlined the procedure of obtaining prior approval for the proposed change in control of merchant bankers and bankers to an issue.

The new process will be applicable from September 1, the Securities and Exchange Board of India (Sebi) said in a circular.

Under the process, the intermediary will have to make an online application to Sebi for prior approval through its intermediary portal. The online application in the portal would be accompanied by information about itself, the acquirer, the person who will have control and the directors or partners of the acquirer.

This information includes the current and proposed shareholding pattern of the intermediary, details about any pending investors' complaints, details of litigation, and confirmation that all the fees due to Sebi have been paid.

In addition to this procedure, in case the incumbent intermediary is a registered stock broker, clearing member, or depository participant, it will have to obtain approval from all the stock exchanges, clearing corporations, and depositories, where the incumbent is a member or depository participant.

The prior approval granted by Sebi will be valid for six months from the date of such approval within which the applicant needs to file application for fresh registration pursuant to a change in control.

Also, the regulator put in place a streamlined process of providing approval to the proposed change in control of an intermediary in matters which involve a scheme of arrangement which needs the sanction of the National Company Law Tribunal (NCLT).

The application for approval of the proposed change in control of the intermediary needs to be filed with Sebi before filing the application with NCLT.

After being satisfied with compliance with the applicable regulatory requirements, an in-principle approval will be granted by Sebi. The validity of such in-principle approval will be three months from the date of issuance, within which the relevant application will be made to NCLT, the regulator said.

Within 15 days from the date of the order of NCLT, the intermediary will have to submit an online application along with certain documents to Sebi for final approval.

These documents relate to a copy of the NCLT order approving the scheme; copy of the approved scheme; statement explaining modifications in the approved scheme vis-a-vis the draft scheme and the reasons for the same; and details of compliance with the conditions mentioned in the in-principle approval provided by Sebi.