Who are underwriters under SEBI Act?
In the Insurance sector, underwriters determine whether an insurance agency should undertake a risk of insuring a client. They analyse the risk and exposure of client and also determine how much insurance policy should be granted to clients, and what they should pay for it and whether or not to offer an insurance policy to the client in the first instance.
In the Equity or Stock market, underwriters determines the risk and the price of a particular security. It is a process seen commonly during initial public offering, wherein the Investment Banks first buy or underwrite the securities of the issuing entity and then sell them in the market. This ensures that the issuer of the security can raise the full amount of capital while earning the underwriters a premium in return of the service.
1.He should hold a certificate granted to it by the Board.
2.Every stock broker or merchant banker holding a valid certificate of registration under section 12 of the Act, shall be entitled to act as an underwriter without operating a separate license.
3.He should be a fit and proper person as defined under schedule II of SEBI (Intermediaries) Regulations, 2008.
4.Capital adequacy- 20 Lakhs.
However the Board may require the underwriter to submit further information in order to consider the application. It may take the following things as criteria for consideration of the application.
1.Necessary infrastructure, office space, equipments’, manpower.
2.Any past experience in underwriting or has in employment minimum 2 persons who have such experience.
3.Any such persons directly or indirectly connected with applicant has not been granted certificate earlier.
4.Fulfills the capital adequacy norms.
5.Is a fit and proper person.
Therefore, after getting satisfied by the eligibility of the application, shall send an intimation to applicant, and then will issue certificate of registration or license to act as an underwriter in Form B.
Certificate shall be valid for a period of 5 years.
2. Every underwriter shall pay fees of thirteen Lakh Thirty Three Thousand and Three Hundred Rupees at the time of grant of certificate of initial registration.
3. If the underwriter wants to renew his term for permanent registration, fees of Five Lakh Rupees shall be paid.