NISM Series IX (Merchant Banking) key terms

The segment of the capital market where securities are issued and sold for the first time by a company to investors, raising fresh capital directly for the issuer rather than trading existing shares.

The platform, such as a recognised stock exchange, where already-issued securities are bought and sold between investors, providing liquidity and price discovery without giving the issuer new funds.

The Securities and Exchange Board of India, the statutory regulator established to protect investors, develop the securities market and regulate intermediaries including merchant bankers, stock brokers and depositories.

An entity that holds securities of investors in electronic, dematerialised form and enables transfer of ownership through book entries instead of physical certificates, working through registered depository participants.

A SEBI-registered intermediary, typically a bank or broker, that acts as the investor's agent for opening demat accounts and processing settlement of trades in electronic form with the depository.

An account with a depository participant in which an investor's shares and other securities are held electronically, allowing paperless holding, transfer and pledge of those securities.

A recognised marketplace where securities are listed and traded under regulated rules, providing price discovery, liquidity and surveillance of trading activity for investors.

A SEBI-registered intermediary whose permitted activities include managing public issues, underwriting, advising on capital structure and mergers, and providing other issue- and advisory-related services.

The merchant banker appointed by an issuer to manage an issue, coordinate due diligence, marketing, allotment and listing, and act as the primary point of contact with SEBI and the stock exchanges.

An arrangement in which a person agrees, for a commission, to subscribe to any unsubscribed portion of an issue up to a stated amount, thereby assuring the issuer of a minimum subscription.

A person or entity that enters into an agreement with the issuer to take up securities not subscribed by the public, bearing the risk of undersubscription in return for an agreed commission.

A certificate filed by the lead manager with SEBI confirming that reasonable care was taken and the offer document contains true, fair and adequate disclosures, as required by regulation.

The regulations that govern registration, capital adequacy, conduct, record-keeping and permitted activities of merchant bankers operating in the Indian securities market.

The minimum net worth a merchant banker must continuously maintain to hold registration, calculated as paid-up capital plus free reserves less accumulated losses and specified intangible assets.

The certificate granted by SEBI to a merchant banker after satisfying eligibility conditions, specifying the category of registration and the activities the holder is permitted to undertake.

The prescribed standards of ethical and professional behaviour that a registered merchant banker must follow, including fair dealing, confidentiality and avoidance of misleading representations.

An internal information barrier separating departments or teams within a firm so that confidential or price-sensitive information held by one part is not misused by another.

Trading in securities while in possession of unpublished price-sensitive information, or communicating such information improperly, which is prohibited by SEBI regulations.

Material information about a company or its securities that is not generally available and could materially affect security prices once known, such as financial results or major corporate actions.

A company's first sale of equity shares to the public through a regulated issue process, resulting in listing of the shares and raising fresh capital for the issuer.

A public issue of securities by a company whose shares are already listed, used to raise additional capital from the public after the initial public offering.

An offer of new securities by a listed company to its existing shareholders in proportion to their holdings, usually at a price below the market price, with a right to renounce.

An issue of securities by a listed company to a selected group of investors, such as promoters or institutions, on terms approved under SEBI regulations rather than through a public offer.

A category of institutional investor, including mutual funds, insurers, banks and foreign portfolio investors meeting prescribed conditions, eligible to participate in specified issue segments.

A qualified institutional buyer allotted shares in a public issue before the issue opens, at a price determined through the book-building process, subject to a lock-in period.

A price discovery mechanism in which the issuer sets a price band and investors bid within it, with the final issue price determined from demand gathered during the bidding period.

The floor and cap prices within which investors may bid in a book-built issue, disclosed in the offer document before the issue opens for subscription.

The formal disclosure document, such as a red herring prospectus, containing details of the issuer, its business, risks, objects of the issue and terms of the offer.

A prospectus that does not state the final issue price or the exact number of securities offered, used during book building before the price is determined.

The minimum amount that must be subscribed for an issue to proceed, failing which the issue is withdrawn and application money refunded to investors.

The admission of a company's securities to trading on a recognised stock exchange after the exchange grants permission, enabling investors to buy and sell those securities.

A bank account in which issue proceeds or promoter contributions are held under the control of specified parties until conditions such as allotment or listing are fulfilled.

An over-allotment facility allowing the stabilising agent to allot more securities than offered and later buy them back to support the price after listing.

The acquisition of control over a listed company by acquiring shares or voting rights beyond prescribed thresholds, triggering mandatory open offer obligations under SEBI regulations.

A public offer made by an acquirer to the shareholders of a listed company to purchase their shares at a specified price, as required or permitted under takeover regulations.

The permanent removal of a company's securities from trading on a stock exchange, which may be voluntary with shareholder approval or compulsory under exchange action.

A company's purchase of its own shares or other specified securities, subject to limits and procedural conditions, typically used to return surplus cash or support share price.

A report prepared by a registered valuer or merchant banker assessing the fair value of shares or assets, commonly required for mergers, buybacks and preferential allotments.