The role of Underwriters, Consultants to the Issues and Bankers to Issues in Initial Public Offering (IPOs) is of an important nature as they not only assist companies in raising funds through public offerings but also provide comfort to the prospective investors.
Underwriting is a regulated security activity under the Securities Act, 2015. Further the federal government in exercise of its power conferred under Section 63 of the Act, has also notified the Consultant to the Issue and Banker to the Issue as regulated securities activity under the Act vide their notice dated April 26, 2017.
For regulations of underwriters, consultant to the issue and bankers to an issue, the SECP promulgated the Public Offering (Regulated Securities Activities Licensing) Regulations, 2017 on May 02, 2017. All the underwriters, consultants to the issuers and bankers to the issues shall obtain licence from the SECP under these regulations. These regulations prescribe the eligibility conditions, registration procedure, duties and responsibilities of underwriters, consultants to the Issue and Bankers to the Issue.
Grant of Licence
An application for a licence, by person meeting the eligibility criteria as specified in Schedule I, shall be made to the Commission in Form ‘A’ along with all the documents specified in Annexures ‘I’ and receipt evidencing payment of non-refundable fee as prescribed in Schedule II.
The Commission on being satisfied, after conducting such inquiries and after obtaining such further information as it deems appropriate, that the applicant is eligible for licence, the applicant is in compliance with the provisions of the Act, these regulations and any directive, guidelines or code issued thereunder; and it is in the interest of the capital market may grant a licence to the applicant on Form B, subject to such conditions or restrictions as it considers necessary.
The licence shall remain valid for a period of one year from the date of its grant unless it is restricted, suspended or cancelled earlier by the Commission.
Renewal of Licence
Subject to provisions of the Act and these regulations, a banker to an issue or consultant to the issue or underwriter shall, one month prior to the date of expiry of its licence, apply to the Commission on Form ‘C’ providing therewith a receipt evidencing payment of a non-refundable renewal fee of such amount as prescribed in Schedule II and documents as specified in Annexure ‘III’.
The Commission upon being satisfied that the applicant continues to meet the requirements for licensing and is eligible for renewal of licence shall renew the licence of a banker to an issue or consultant to the issue or underwriter and issue a certificate of renewal of licence to the applicant on Form D.
The detailed procedure for grant/renewal of licence and Annexures and Forms as mentioned above may be seen in Public Offering (Regulated Securities Activities Licensing) Regulations, 2017