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CS Executive · Capital Market and Securities Laws · Securities Market Intermediaries

Meridian Capital Ltd. wishes to act as a merchant banker and manage public issues for Indian companies. Under the SEBI Act, 1992, how does the Act treat merchant bankers and underwriters?

Merchant bankers and underwriters are intermediaries that SEBI may register and regulate. Section 11(2)(b) of the SEBI Act expressly names them among the intermediaries whose registration and working SEBI can regulate, so they are not outside SEBI's control.

  1. AThey are intermediaries whose registration and working SEBI may regulate under the measures listed in Section 11(2)Correct
  2. BThey are outside SEBI's regulatory reach and are governed only by the stock exchanges
  3. CThey are regulated only by the Central Government and not by SEBI
  4. DSEBI may regulate only their fees, not their registration

Explanation

Section 11(2)(b) of the SEBI Act lists registering and regulating the working of merchant bankers and underwriters among the measures SEBI may take. Hence they are SEBI-regulated intermediaries, and the other options wrongly exclude SEBI or limit its powers.

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