NISM Series IX: Merchant Banking Certification 'Final Test'

Explanation:

The lead merchant banker is required to submit the following documents to SEBI:
– Statement certifying that all changes, suggestions and observations made by SEBI have been incorporated in the offer document;
– Due diligence certificate at the time of registering the prospectus with the Registrar of Companies;
– Copy of the resolution passed by the board of directors of the issuer for allotting specified securities to promoters towards amount received against promoters “contribution, before opening of the issue;
– Certificate from a Chartered Accountant, before opening of the issue, certifying that promoters” contribution has been received in accordance with these regulations, accompanying there with the names and addresses of the promoters who have contributed to the promoters; contribution and the amount paid by each of them towards such contribution;
– Due diligence certificate as per the prescribed format immediately before the opening of the issue, certifying that necessary corrective action, if any, has been taken;

– Due diligence certificate as per format provided in the Regulation after the issue has opened but before it closes for subscription.

Explanation:

The Issuer is required to enter into a listing agreement with the Stock Exchanges, where the securities of an issuer are proposed to be listed.

Explanation:

According to SEBI SAST regulations, the open offer for acquiring shares by the acquirer must be for at least twenty-six per cent of the total shares of the target company, as of the tenth working day from the closure of the tendering period. This regulation is designed to ensure a fair and transparent process in the acquisition of shares.

Explanation:

In a public issue of debt securities, the base issue size is required to be a minimum of Rs 100 crore. This stipulation is set to ensure a reasonable size for the issue, reflecting the regulatory intent for a meaningful and substantive offering in the market.

Explanation:

“Merger” is a combination of two or more companies to form a single entity, in which either one or both lose their identity and a new company is formed. A Merger is not necessarily amongst two equal or comparable stature companies

Explanation:

The fees specified shall be payable by the merchant banker by a demand draft in favour of the “Securities and Exchange Board of India” payable at Mumbai or at the respective regional office.

Explanation:

As per the SEBI ICDR regulations, the minimum number of allottees for each placement of eligible securities made under QIP shall not be less than:
(a) two, where the size is less than or equal to Rs.250 crore;
(b) five, where the issue size is greater than Rs. 250 crore, subject to the condition that no single allottee shall be allotted more than 50% of the issue.

Explanation:

For purpose of granting registration to an applicant, SEBI takes into account the “Criteria for fit and proper person” as given under the SEBI (Intermediaries) Regulations 2008. It states – For the purpose of determining as to whether an applicant or the intermediary is a ‘fit and proper person’  the Board may take into account any consideration it deems fit, including but not limited to the following criteria in relation to the applicant or the intermediary, the principal officer and the key management persons by whatever name called –

a) Integrity, reputation and character;
b) Absence of convictions and restraint orders;
c) Competence including financial solvency and networth.

Explanation:

The post-issue reports have to be filed with SEBI.

Explanation:

As per SEBI ICDR Regulations, the minimum subscription to be received in the issue shall be at least 90% of the offer through the offer document. If the issuer does not receive the minimum subscription of 90% of the offer through offer document on the date of closure of the issue, or if the subscription level falls below 90% after the closure of issue, the issuer shall forthwith refund through verifiable means the entire subscription amount received.

Explanation:

The statement is true. In the case of a public issue of debt securities, the base issue size should be a minimum of Rs 100 Crores. This stipulation ensures a meaningful size for the issue, contributing to the depth and liquidity of the debt market.

Explanation:

Information relating to the following is considered as ‘unpublished price sensitive’ information –
(i) financial results;
(ii) dividends;
(iii) change in capital structure;
(iv) mergers, de-mergers, acquisitions, delistings, disposals and expansion of business and such other transactions;
(v) changes in key managerial personnel; and
(vi) material events in accordance with the listing agreement.

Explanation:

The eligible seller is required to announce the floor price or the price band at least one day prior to the opening of the Institutional Placement Programme. This provision allows investors to have sufficient time to consider the pricing information before participating in the program.

Explanation:

The statement is true. In the process of delisting, the escrow account can include either cash deposited with a scheduled commercial bank, a bank guarantee in favor of the merchant banker, or a combination of both. This arrangement ensures flexibility in meeting financial obligations associated with the delisting process.

Explanation:

Consideration payable under the Open Offer on the first Rs. 500 crore is an amount equal to 25% of the consideration. On the balance consideration – Additional amount equal to 10% of the balance consideration.

Explanation:

An anchor investor is a qualified institutional buyer making an application for a value of Rs. 10 crore or more in a public issue, one day before the opening of that public issue. This category of investors typically commits to a substantial investment in the issue, providing stability and credibility to the offering.

Explanation:

The issuer company in consultation with the merchant bankers appoint the printers who are engaged in bulk printing of the offer document and application forms. They are also responsible for ensuring timely dispatch and distribution of stationery to all centers.

Explanation:

The aggregate of the proposed Qualified Institutional Placement (QIP) and all previous QIPs made by the issuer in the same financial year shall not exceed 5 times the net worth of the issuer as per the audited balance sheet of the previous financial year. This restriction is in place to maintain prudence and financial stability in the fundraising activities of the issuer.

Explanation:

Where the company has 300 or less public shareholders and paid up value of shares held by public shareholders in such company is not more than Rs.1 crore then also the equity shares can be delisted without adopting reverse book building method.

Explanation:

Derivatives in the Indian market are allowed on various underlying assets, including currencies, commodities, and equities. This diversity enables market participants to engage in a range of derivative instruments across different asset classes, enhancing flexibility and risk management options.

Explanation:

Any acquisitions of shares or control in listed Indian companies are governed by the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 2011 Mergers, amalgamations, de-mergers, acquisitions of business units or divisions, are all governed by The Companies Act 1956.

Explanation:

If the issuer itself is a registrar to an issue registered with SEBI, then another registrar to an issue shall be appointed as registrar to the issue.

Explanation:

Mutual Funds pools money from numerous investors who wish to save or make investments having similar investment objective. The Mutual Fund invests in different types of funds in consonance with the investment objectives.

Explanation:

Disinvestment means the direct or indirect sale by the Central Government or any State Government or by a government company, as the case may be, of shares or voting rights in, or control over, a target company, which is a public sector undertaking.

Explanation:

In the process of preparation of offer document, as per SEBI ICDR Regulations, the lead manager(s) shall ensure that the information contained in the draft offer document and offer document and the particulars as per restated audited financial statements in the offer document are not more than six months old from the issue opening date.

Explanation:

The statement is false. The minimum paid-up capital requirements for listing on BSE and NSE may vary, and they are subject to the regulations and criteria set by each stock exchange. The specific criteria for listing on BSE and NSE are determined by the respective exchange authorities, and they may take into account various factors such as market capitalization, profitability, and other financial parameters. It’s important to refer to the listing requirements of each exchange for accurate and updated information.

Explanation:

Offer Document is called “Prospectus” in case of a public issue or offer for sale and “Letter of Offer” in case of a rights issue.

Explanation:

These documents need to be maintained for a minimum period of 5 accounting years by the Merchant Banker :

(a) a copy of balance sheet as at the end of the each accounting period;

(b) a copy of profit and loss account for that period;

(c) a copy of the auditor’s report on the accounts for that period;

(d) a statement of financial position.

(e) Records and documents pertaining to due diligence exercised in pre-issue and post-issue activities of issue management and in case of takeover, buy-back, and delisting of securities.

Explanation:

A rights issue shall be open for subscription for a minimum period of 15 days and a maximum period of 30 days.

Explanation:

Regulation 13 of SEBI (ICDR) Regulations states – an issuer shall be eligible to issue warrants in an initial public offer subject to the following:

a) The tenure of such warrants shall not exceed eighteen months from the date of their allotment in the initial public offer;

b) A specified security may have one or more warrants attached to it.

Explanation:

An announcement regarding the closure of issue should be made only after the lead merchant banker is satisfied that atleast 90% of the offer through the offer document have been subscribed and a certificate regarding that have been obtained from the registrar to the issue.

Explanation:

The issuer and the merchant banker are required to ensure that specified securities are allotted and/or application money is refunded within 15 days from the date of closure of the issue. This timeframe is established to expedite the processing of applications and provide timely information to investors regarding the outcome of their applications or the refund of application money if applicable. The 15-day period aims to maintain efficiency and transparency in the post-closure procedures of a securities issue.

Explanation:

The issuer and the merchant banker have to ensure that specified securities are allotted and/or application money are refunded within 15 days from the date of closure of the issue.

Explanation:

An Exchange Traded Fund (ETF) is a fund that can invest in either all of the securities or a representative sample of securities included in the index. ETFs are designed to track the performance of a specific index, and their shares are traded on stock exchanges, providing investors with a convenient way to gain exposure to a diversified portfolio of assets. ETFs offer flexibility and liquidity, making them a popular investment choice.

Explanation:

As per the SEBI ICDR Regulations – No advertisement shall be issued giving any impression that the issue has been fully subscribed or oversubscribed during the period the issue is open for subscription.

An announcement regarding the closure of issue should be made only after the lead merchant banker is satisfied that atleast 90% of the offer through the offer document have been subscribed and a certificate regarding that have been obtained from the registrar to the issue.

However, such announcement should not be made before the issue closure date

Explanation:

A company cannot come out with a Rights issue unless all existing partly paid-up equity shares of the issuer have either been fully paid up or forfeited.

Explanation:

True. The merchant banker leading a public offer is indeed popularly known as the Lead Manager. The Lead Manager plays a crucial role in the issuance process, coordinating various aspects of the offering, and ensuring compliance with regulatory requirements.

Explanation:

A person aggrieved by any order of SEBI can appeal to the Securities Appellate Tribunal (SAT) within a period of 45 days from the date on which a copy of the order was received. This timeframe is established to provide individuals with a reasonable window to contest SEBI’s decisions and seek redress through the appellate process.

Explanation:

In case of Debt Securities its 7 days and in case of equity shares, its 21 days.

Explanation:

As per the Depositories Act, the principal function of the Depository is to provide a facility for investors to hold securities in dematerialized form and transfer the ownership of securities electronically by book entry. This means that ownership changes and transfers of securities are recorded and facilitated through electronic means rather than physical documents. It enhances efficiency, reduces paperwork, and streamlines the process of securities transactions in a digital format.

Explanation:

The floor price or the final price shall not be less than the face value of the specified securities.

Explanation:

In the case of a further public offer or a rights issue the issuer shall obtain in-principle approval from:
a) All recognised stock exchanges where the specified securities are listed;
b) From all exchanges on which the securities are proposed to be listed, in cases where the specified securities are not listed on any recognized stock exchanges having nationwide terminals;
c) All recognised stock exchanges having nationwide terminals, in case the securities are traded on recognised stock exchanges, with nationwide terminals as well as those which are not having nationwide terminals.

Explanation:

Government securities are issued by the central government, state government and semi-government authorities.

Explanation:

The excess fees must be paid within 7 working days.

Explanation:

The listing agreement is to done only with the exchange on which the issuer wants to list its securities for which a letter of application and a form of Listing Application is prescribed by the Exchange.

Explanation:

Regulation 13 of SEBI (ICDR) Regulations specifies that – an issuer shall be eligible to issue warrants in an initial public offer but the tenure of such warrants shall not exceed eighteen months from the date of their allotment in the initial public offer.

Explanation:

The objective of Securities Contracts (Regulation) Act is to prevent undesirable speculation and to regulate contracts and transactions in securities.

Explanation:

As per the SEBI (Prohibition of Insider Trading) Regulations, every listed company, market intermediary, and other persons formulating a code of conduct shall identify and designate a Compliance Officer to administer the code of conduct. The Compliance Officer plays a crucial role in ensuring adherence to the insider trading regulations and overseeing the implementation of the code of conduct within the organization. Their responsibilities include monitoring and reporting insider trading activities, maintaining records, and ensuring compliance with regulatory requirements.

Explanation:

Voluntary delisting is a condition when the issuer company no longer wants to be on the trading platform of the exchange and exits out of the Exchange. Whereas the involuntary delisting ie. Compulsory Delisting involves delisting by exchanges on account of any disciplinary action initiated by either the Exchanges or by SEBI on non-fulfillment of the listing criteria set by the exchanges.

Explanation:

The exception to the rule in Section 33 of the Companies Act 2013, which mandates the inclusion of an abridged prospectus with a securities purchase application, includes situations where securities are not offered to the public, the offer is exclusively made to existing members or debenture holders, and when the offer is linked to a bona fide invitation for an underwriting agreement. The correct answer is “All of the above,” indicating that if any of these conditions apply, the requirement for an abridged prospectus is waived.

Explanation:

According to SEBI-ICDR (Securities and Exchange Board of India – Issue of Capital and Disclosure Requirements) Regulations, the aggregate reservation on a competitive basis for employees cannot exceed 5% of the post-issue capital of the issuer. This limitation is in place to ensure a balanced allocation of shares during the issuance process.

Explanation:

ASBA stands for “Application Supported by Blocked Amount.” It is an application submitted by investors during the initial public offering (IPO) or rights issue process. ASBA includes an authorization to block the application money in the investor’s bank account temporarily. This ensures that the required funds are set aside and blocked in the account until the allotment process is completed. The incorrect answer “USVA” is not a recognized term in this context, and “ASBA” is the appropriate term for the described process.

Explanation:

As per SEBI SAST (Substantial Acquisition of Shares and Takeovers) Regulations, the acquirer is required to deposit 25% of the consideration payable under the open offer for the first Rs.500 Crores in the escrow account. This is a regulatory requirement to ensure the availability of funds for the open offer and to safeguard the interests of the shareholders involved in the transaction.

Explanation:

SEBI (Securities and Exchange Board of India) may provide its observations or specify changes, if any, on the draft offer document within 30 days from the date of receiving a satisfactory reply from the lead merchant bankers, in cases where clarification or additional information has been sought. This timeframe is specified to ensure a timely and efficient review process during the issuance of securities.

Explanation:

According to SEBI ICDR (Issue of Capital and Disclosure Requirements) Regulations, when the issue size under Qualified Institutions Placement (QIP) exceeds Rs.250 crore, the minimum number of allottees for each placement of eligible securities should not be less than five. Additionally, a condition is imposed that no single allottee shall be allotted more than 50% of the issue. This regulation aims to ensure a broader distribution of securities and prevent concentration in the hands of a single entity.

Explanation:

According to the regulations, the issuer is required to announce the floor price band at least 5 working days before the opening of the bid in the case of an IPO (Initial Public Offering) and at least 1 working day before the opening of the bid in an FPO (Follow-on Public Offering). This announcement is to be made in all the newspapers where the pre-issue advertisement was released. This timeline allows investors and the market to be informed about the price band before the bidding process begins.

Explanation:

According to the SEBI Merchant Banking Regulations, it is indeed a requirement that every Merchant Banker intimates SEBI regarding the location where their books of accounts, records, and documents are maintained. This is to ensure transparency, regulatory compliance, and easy accessibility for regulatory oversight.

Explanation:

The money market that deals with bonds and deposits is regulated by the RBI (Reserve Bank of India). The RBI is the central bank of India and plays a key role in regulating and overseeing various aspects of the financial market, including money market instruments like bonds and deposits. The Finance Ministry, SEBI, and the Central Bank of India (if interpreted as a separate entity from the RBI) may have roles in financial oversight, but for the regulation of the money market, particularly in the context of bonds and deposits, the primary regulatory authority is the RBI.

Explanation:

The role of a Merchant Banker in takeovers and acquisitions of shares is described in the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. These regulations provide the framework and guidelines for the acquisition of shares and takeovers in India, outlining the responsibilities and procedures that merchant bankers must adhere to in such transactions. The Monopolies and Restrictive Trade Practices Act, 1969 (MRTPA), and The Companies Act, 1956, are not specifically focused on the regulation of takeovers and acquisitions in the same way as the SEBI regulations.

Explanation:

Semi-government authorities can issue Government securities in India. These entities, often referred to as quasi-government or semi-government bodies, are typically associated with public-sector activities but are distinct from the central government. They are authorized to issue government securities as part of the government’s borrowing program. This allows them to raise funds from the market by issuing securities that investors can subscribe to, contributing to the overall financing needs of the government.

Explanation:

In the due diligence process, both Statutory Auditors and Legal Counsels play crucial roles in assisting the lead manager and issuer. Statutory Auditors contribute by examining financial records and ensuring their accuracy, while Legal Counsels provide legal expertise to review contracts, agreements, and ensure compliance with regulatory requirements. The collaboration of both entities helps ensure a comprehensive and thorough due diligence process. Printers are not typically directly involved in the due diligence process.

Explanation:

In the case of an IPO, the issuer is required to announce the floor price band at least two working days before the opening of the bid, not three as mentioned in the question. Therefore, the statement is false. This timeline is specified to provide investors with adequate information about the price band before the bidding process begins.

Explanation:

Disinvestment transactions commonly take place in the form of both:

a) Offer for Sale through the Stock Exchange Mechanism

b) Offer for sale by the selling shareholder through the prospectus

This is because disinvestment can occur through the sale of shares on the stock exchange (Option a) or through a public offering with a prospectus (Option b). Both methods provide avenues for the government or a selling shareholder to divest their ownership stake in a company.

Explanation:

In the case of a public issue of debt securities, the Draft Prospectus should be made available to the public for comments for a period of 7 days. This allows stakeholders and the public to review the prospectus and provide any necessary feedback or comments before the finalization of the prospectus for the debt securities issuance.

Explanation:

An issue shall be opened after at least 3 working days from the date of registering the red herring prospectus with the Registrar of Companies. This waiting period allows investors and the market to have sufficient time to review the prospectus and make informed decisions before the opening of the issue.

Explanation:

Explanation:

As per the SEBI (Delisting of Equity Shares) Regulations, if a company has 300 or fewer public shareholders, and the paid-up value of shares held by these public shareholders is not more than Rs.1 crore, the equity shares can be delisted without adopting the reverse book building method. This provision is in place to provide an alternative and simplified delisting process for companies with a limited number of public shareholders and a relatively lower value of shares held by them.

Explanation:

A Further Public Offer (FPO) can indeed be made through the FAST TRACK ISSUE (FTI) Process. The FTI process is designed to facilitate a faster and more streamlined issuance of securities, and it is applicable to various types of offerings, including FPOs. This allows companies to efficiently raise additional capital from the public through a faster issuance process.

Explanation:

A Merchant Banker with a certificate of permanent registration is required to pay a fee of five lakh rupees every three years. This obligation starts from the sixth year from the date of the initial registration certificate or from the completion of the period of renewed certificate of registration, as applicable. This fee is essential for the maintenance of the registration and compliance with regulatory requirements.

Explanation:

A Financial Institution, scheduled bank, foreign portfolio investor (other than Category III foreign portfolio investor), and Mutual Fund shall not be deemed a promoter solely because they hold 10% or more of the equity share capital of the issuer. This provision recognizes that significant shareholding by these entities does not automatically confer promoter status. The threshold is set at 10% to allow for a reasonable ownership stake without triggering promoter responsibilities.

Explanation:

Regulation 8 of the SEBI ICDR (Issue of Capital and Disclosure Requirements) Regulations is the correct answer. This regulation specifically outlines the details of the documents that need to be submitted to the Securities and Exchange Board of India (SEBI) before the opening of a securities issue. It establishes the procedural requirements and documentation necessary for regulatory approval and compliance with SEBI regulations related to the issuance of capital by companies.

Explanation:

In a merger, the merchant banker is primarily responsible for tasks related to the “Preparation and Circulation of information memoranda” and “Deal structuring & negotiations. The merchant banker ensures the creation and distribution of essential merger information and plays a key role in structuring and negotiating the terms of the deal.

Explanation:

The statement is FALSE. When one company takes over another and clearly establishes itself as the new owner, the purchase is called an acquisition, not a merger. In a merger, two companies combine to form a new entity, and the ownership and control are typically shared. An acquisition, on the other hand, involves one company acquiring another, resulting in the acquiring company becoming the new owner.

Explanation:

When there are multiple merchant bankers for an issue, responsibilities are typically allocated based on their expertise, capacity, and specific roles defined in the agreement. The division of responsibilities is not necessarily predetermined or based on a first-come-first-served basis. Instead, it is often determined based on the strengths and capabilities of each merchant banker, and tasks are assigned as needed during the course of the issue. This ensures that each merchant banker contributes effectively to the aspects of the issue where they can add the most value.

Explanation:

A merchant banker can undertake all of the services.

Explanation:

Capital Market is divided into the Primary Market and Secondary Market whereas Money Market is classified into Organized Money Market and Unorganized Money Market.

Explanation:

In India, Government securities are issued exclusively by the central government. The central government is responsible for issuing these securities as a means of raising funds to meet its financial requirements.

Explanation:

Yes, in the process of acquisition, the offer price can be paid in cash. This is a common method of payment in acquisition transactions where the acquiring company pays a certain amount of cash per share or as a lump sum to acquire the target company.

Explanation:

Institutional investors comprise domestic Financial institutions, Mutual funds, FIIs, etc commonly known as Qualified Institutional Buyers (QIBs).

Explanation:

Under the ASBA (Applications Supported by Blocked Amount) facility, investors can apply in both Preferential Issues (option a) and Rights Issues (option b) by using their bank account. Therefore, the correct answer is (c) “Both (1) and (2).” The ASBA facility allows investors to apply for securities in public issues, rights issues, and preferential issues without transferring the application money from their bank account. Instead, the application amount is blocked in the investor’s bank account until the allotment process is completed.

Explanation:

The major investors in the government securities market in India include State Governments, Provident Funds, and Banks and Insurance Companies. Therefore, the correct answer is (d) “All of the Above.” These entities actively participate in the government securities market as key investors, contributing to the overall stability and liquidity of the market.

Explanation:

Offer Document is called a Prospectus in case of a public issue or offer for sale and a Letter of Offer in case of a rights issue.

Explanation:

The Companies Act is the legislative act that deals with laws relating to both listed and unlisted companies. It provides comprehensive regulations and guidelines governing the incorporation, management, and operation of companies in India.

Explanation:

Securities are issued to investors for the first time in the Primary Market. This is the market where companies or governments directly offer their securities to the public through processes such as Initial Public Offerings (IPOs) or other primary market offerings. The Secondary Market involves the trading of existing securities among investors, while the Repo Market deals with repurchase agreements, and the Currency Market is focused on foreign exchange transactions.

Explanation:

The statement is true. No advertisement can be issued during the subscription period of an issue, giving the impression that the issue has been fully subscribed or oversubscribed. This restriction is in place to ensure transparency and prevent misinformation during the subscription phase.

Explanation:

A merger occurs when two companies combine to form a new enterprise, and neither of the previous companies survives independently.

Explanation:

The Reserve Bank derives statutory powers to regulate market segments from specific provisions of the Reserve Bank of India Act, of 1934. The prudential guidelines issued to eligible market participants form the broad regulatory framework for the Government.

Explanation:

The Reserve Bank derives its statutory powers to regulate market segments from the Reserve Bank of India Act, 1934. The overarching regulatory framework for the government, based on prudential guidelines issued to eligible market participants, constitutes 95% (the correct answer) of the given options. These guidelines form the broad regulatory structure within which eligible market participants operate in the financial markets.

Explanation:

Grindlays Bank began merchant banking operations in 1967 with a license obtained from the RBI followed by Citibank in 1970.

Explanation:

The tenure of such warrants shall not exceed eighteen months from their date of allotment in the public/rights issue.

Explanation:

A Merchant Banker is not involved in stock trading. Also regarding the printing of forms – The issuer company in consultation with the merchant bankers appoints the printers who are engaged in bulk printing of the offer document and application forms.

Explanation:

An issue shall be opened after at least 3 working days from the date of registering the red herring prospectus with the Registrar of Companies. This waiting period allows for regulatory review and ensures that investors have sufficient time to consider the information provided in the prospectus before the opening of the issue.

Explanation:

Government securities in India are issued by the central government. However, the correct answer is “All of the above” because the statement allows for the inclusion of both the central government and state government. While the central government is the primary issuer, state governments may also issue their own securities. The option “All of the above” covers both possibilities.

Explanation:

Regulation 13 of SEBI (ICDR) Regulations states an issuer shall be eligible to issue warrants in an initial public offer subject to : the tenure of such warrants shall not exceed eighteen months from the date of their allotment in the initial public

Explanation:

Application Supported by Blocked Amount (ASBA) is an application containing an authorization to block the application money in the bank account, for subscribing to an issue.

Explanation:

Mutual Funds are investment vehicles where people with similar investment objective come together to pool their money.

Explanation:

A public issue can be declared closed even if 90% of it is subscribed. This means that the issuer has the discretion to close the issue if a significant portion, but not necessarily the entire issue, is subscribed. This flexibility allows for the timely closure of the issue based on the level of subscriptions received.

Explanation:

Yes, it will certainly affect the registration of the merchant banker. According to regulatory requirements, merchant bankers are obligated to inform SEBI about major changes in control. Failure to do so can lead to regulatory consequences and may impact the certificate of registration. Regulatory authorities need to be informed to ensure transparency and compliance with established norms.

Explanation:

The eligibility conditions to be fulfilled by an issuer for making an IPO is specified in Regulation 6 of the SEBI (ICDR) Regulations, 2018. As per regulation 6(1) of the SEBI ICDR Regulations, an issuer may make an IPO if it has net tangible assets

Explanation:

Regulation 7 of the SEBI Merchant Banker Regulations stipulates the capital adequacy requirements for individuals seeking registration as merchant bankers. According to this regulation, applicants must have a net worth of at least Rs. 5 crore. Net worth, in this context, is defined as the sum of paid-up capital and free reserves, minus the intangible assets and revaluation reserves. This financial criterion is set to ensure that merchant bankers have a sufficient financial base to carry out their activities effectively and meet regulatory standards.