NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Introduction to Securities Markets
In the Indian securities market, which entity acts as the first point of contact for the issuer when a company raises money through a fresh public issue of shares, taking responsibility for managing the issue process and due diligence?
The merchant banker, also called the lead manager, is the intermediary that manages a public issue. It carries out due diligence, prepares offer documents and coordinates the process with the issuer. Clearing corporations, rating agencies and depository participants perform different post-issue or support roles.
- AMerchant banker (lead manager)Correct
- BClearing corporation
- CCredit rating agency
- DDepository participant
Explanation
A SEBI-registered merchant banker acts as the lead manager to a public issue, handling due diligence, documentation and marketing of the issue. A clearing corporation handles settlement of trades, a rating agency opines on credit risk and a depository participant provides demat services, so none of these manage the issue.
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