SEBI Revamps Merchant Banker Regulations: New Adequacy Rules Unveiled
The Securities and Exchange Board of India (SEBI) has revised its regulations for merchant bankers. This includes a capital adequacy framework, divided categories based on net worth, and rules for managing non-regulated activities. Independent valuers are now mandated for ESOP valuations, replacing merchant bankers.
- Country:
- India
The Securities and Exchange Board of India (SEBI) has announced a significant overhaul of merchant banker regulations. The regulator has introduced a capital adequacy framework, mandating requirements for liquid net worth and minimum revenue from permitted activities.
The new rules are designed to enhance financial stability, improve risk management, and streamline business operations. Notably, merchant bankers are now allowed to engage in some activities outside SEBI's purview, as long as they comply with specific conditions.
Additionally, SEBI has abolished the previous requirement that non-regulated activities be separated into a different legal entity. Instead, merchant bankers are classified into two categories based on net worth, with specific activity permissions and obligations for each. SEBI also updated compensation valuation norms, now mandating independent valuers for ESOP and Sweat Equity evaluations, replacing merchant bankers.
(With inputs from agencies.)
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