Companies going in for preferential issues of equity or convertible debentures by listed companies will necessarily have to appoint merchant bankers, according to the recommendations made by a committee appointed by Securities and Exchange Board of India (Sebi).
At present, for such issues, while Sebi has released the necessary guidelines for the transaction, there is no mechanism for involvement of a merchant banker to ensure conformity to the guidelines.
The committee constituted by has Sebi given its report on the formation of a self regulatory organisation (SRO) for merchant bankers while specifying the role to be played by the Association of Merchant Bankers of India (Ambi) and Sebi.
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The committee has recommended a member-defined self SRO structure for the in the short term. In the long term it could evolve into a supervised SRO, it said. Underwriting activity or portfolio management activity carried on by the merchant bankers who are members of the SRO, will also be governed by the SRO.
To carry out its functions as an SRO, the supervision and direction of Ambi