Last updated: January 4th, 2020 4:48 PM

Registration of Underwriters

As per the rules of Securities and Exchange Board of India (SEBI), an underwriter is an authorised risk-assessor. The underwriters evaluate the risks in the planning and functioning of the other party. The underwriter has to register themself with SEBI and must be authorised by getting a license. This profession mainly deals in areas like:

• Insurance industry
• Mortgage industry
• Debt securities
• Equity market and trading
• Banking industry

The underwriters are also termed as “risk experts” and help organisations/institutes to preclude financial losses in the long-term investments. To act as a professional underwriter in the market, the aspiring applicant needs to get a license or registration under the SEBI. Underwriting has to be performed under the guidelines established by SEBI under the Securities and Exchange Board of India (Underwriters) Regulations laid in 1993.

Registration Procedure

1. The applicant has to fill out Form A from the link https://www.sebi.gov.in/acts/act162.html?uc_sub_sec_id=5&uc_sec_id=1#FORM%20A

The application has 2 major parts, namely: Part-I on General/Personal Information and Part-II on Business Information.

• The Part-I of application will collect information on the applicant as mentioned below:
  • General Information-Information of Applicant
  • Details of Organisation Structure
  • Details of Infrastructure Facilities
  • Business Plans for three years
  • Financial Information
• The Part-II of application will collect information on the Business as mentioned below:
  • Nature of Underwriting
  • Experience details

2. If the board feels that information is incomplete and need further information from the applicant, then the applicant or principal officer to appear before the board. This gives the opportunity to the applicant to provide more information under Regulation 3, where Form-A can be used.
3. Application to conform to the requirements

If the application is not complete in any aspect or is not according to the instructions given in the form, then the form will be summarily rejected. Prior to rejection, the applicant will be provided one month of time to remove any objection that could have been indicated by the board. Applicants will also be provided with an additional one month to meet the requirements of the board.

Application Consideration

Basic Requirements

The board will approve the certificate of the applicant if all of the following conditions are met with reference to underwriting:

1. Candidate should have required office space, instruments, and manpower to effectively carry out his work.
2. Candidate should have experience in underwriting or employ a minimum of 2 people who have experience in underwriting
   • Any individual who is involved with the applicant directly or indirectly who has undergone any kind of disciplinary action will not be considered for underwriting

3. Applicant fulfils the capital requirements as per below, which is followed by Regulation 7:

• • The applicant should have capital, not less than the net worth of rupees twenty lakhs.
  • If the underwriter is involved with stocks, the underwriter should fulfil the capital adequacy requirements specified by the stock exchange (Stock Brokers and Sub-Brokers Regulations, 1992).
  • If the underwriter is involved with banks, the underwriter shall fulfil the Securities and Exchange Board of India (Merchant Banker) Regulations 1992.

4. The director or partner or principal officer of the company should not have been convicted for any offence involving moral-related offence or has been found guilty of any economic offences.

Fee Guidelines

If the board is satisfied with the application, the applicant is eligible to get a certificate in Form-B. The board will send an intimation letter within 1 month. Candidate has to pay fees as per Regulation 12, which is provided below:

• The applicable registration fee of Rs.5 lakhs should be paid by the eligible underwriter at the time of issuing license certificate by the Board
  • The renewal fee of Rs.2 lakhs every three years is applicable.
• The fee should be paid within fifteen days from the date of receipt of intimation from the Board
• The fees can be paid by the underwriter through a DD in the name of "Securities and Exchange Board of India" payable at Mumbai or the respective regional office.

Code of Conduct of Underwriter

• Every underwriter should maintain high standards of integrity, dignity and fairness with clients
• An underwriter should act ethically in all their dealings with a body corporate making an issue of securities
• The underwriter should not indulge in any unfair competition which could harm the interest of other underwriters or carrying out any assignment.
• The underwriter should not make any statement, either oral or written, which would misrepresent
• The underwriter should not divulge the confidential informations to others like Press or any party.
• The underwriter should not suppress the material facts in any documents, reports, papers or information furnished to the Board.

For more details, the user can go through this link: https://www.sebi.gov.in/acts/uwregu93.html  The FAQs can be accessed here: