The Hindu Business Line : Understanding the role of intermediaries

syndicate members, registrars to the issue, bankers to the issue, auditors of the company, underwriters to the issue, solicitors, etc are the intermediaries to an issue.

The issuer discloses the addresses, telephone/fax numbers and email addresses of these intermediaries.

In addition to this, the issuer also discloses the details of the compliance officer appointed by the company for the purpose of the issue.

Who is eligible to be a BRLM?

A merchant banker possessing a valid SEBI registration in accordance

with the SEBI (Merchant Bankers) Regulations, 1992 is eligible to act as a Book Running Lead Manager to an issue.

What is the role of a lead manager? (pre and post issue)

In the pre-issue process, the lead manager (LM) takes up the due diligence of company's operations/ management/ business plans/ legal etc.

Other activities of the LM include drafting and design of offer documents, prospectus, statutory advertisements and memorandum containing salient features of the prospectus.

The BRLMs shall ensure compliance with the stipulated requirements and completion of prescribed formalities with the stock exchanges, RoC and SEBI including finalisation of prospectus and RoC filing.

Appointment of other intermediaries viz., registrar(s), printers, advertising agency and bankers to the offer is also included in the pre-issue processes. The LM also draws up the various

marketing strategies for the issue.

The post-issue activities including management of escrow accounts, coordinate non-institutional allocation, intimation of allocation and dispatch of refunds to bidders etc are performed by the LM. The post offer activities for the offer will involve essential follow-up steps, which include the finalisation of trading and dealing of instruments and dispatch of certificates and demat of delivery of shares, with the various agencies connected with the work such as the registrar(s) to the offer andbankers to the offer and the bank handling refund business.

The merchant banker shall be responsible for ensuring that these agencies fulfil their functions and enable it to discharge this responsibility through suitable agreements with the company.

What is the role of a registrar?

The registrar finalises the list of eligible allottees after deleting the invalid applications and ensures that the corporate action for crediting of shares to the demat accounts of the applicants is done and the dispatch of refund orders to those applicable are sent.

The lead manager coordinates with the registrar to ensure follow up so that that the flow of applications from collecting bank branches, processing of the applications and other matters till the basis of allotment is finalised, dispatch security certificates and refund orders completed and securities listed.

What is the role of bankers to the issue?

Bankers to the issue, as the name suggests, carries out all the activities of ensuring that the funds are collected and transferred to the escrow accounts.

The Lead Merchant Banker shall ensure that Bankers to the issue are appointed in all the mandatory collection centres as specified in DIP guidelines.

The LM also ensures follow-up with bankers to the issue to get quick estimates of collection, advising the issuer about closure of the issue, based on the correct figures.

What is due diligence?

The Lead Managers state that they have examined various documents including those relating to litigation such as commercial, patent disputes, disputes with collaborators etc. and other materials in connection with the finalisation of the offer document pertaining to the said issue.

On the basis of such examination and the discussions with the company, its directors and other officers, other agencies, independent verification of the statements concerning the objects of the issue, projected profitability, price justification, etc., they state that they have ensured that they are in compliance with SEBI, the Government and any other competent authority in this behalf.

Source: www.sebi.gov.in

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