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Pankaj Tyagi
| Updated: 10 Jan, 2021 | Category: Company Registration

How to avail SEBI Approval to Start Financial Securities Business in India?

SEBI Approval to Start Financial Securities Business in India

Certain forms of businesses are governed by specific authorities depending on their activities. For example, a business dealing with private fiscal lending requires the approval of the Reserve Bank of India, whereas to a financial securities business, prior approval of the Securities and Exchange Board of India (SEBI) is required. In this blog, we would provide some essential briefing on how to avail SEBI Approval to commence financial securities business. 

What is the Securities and Exchange Board of India (SEBI)?

Securities and Exchange Board of India (SEBI) is an apex government institution that regulates the entities acting as an intermediary for the securities market. Henceforth, any individual or entity undertaking such a task needs prior SEBI approval to commence such a business. This includes sub-brokers, merchant bankers, stockbrokers, portfolio managers, investment advisors, asset management companies, venture capital funds, etc. Let’s find out at what instance you would require the SEBI approval for registration of the company. 

Before making an online application for company registration, one must visit the MC’s online portal for the reservation of the company name. To serve such a purpose, the applicant is required to fill the web-based form located under the services called RUN (Reserve Company Name).

The ROC and the applicants must abide by the regulations outlined for the availability of the name. If the proposed company name includes the terms like Asset Management, Stock exchange, Mutual fund[1], Venture capital, etc., then these entities are liable to avail permission in the proposed name of the company from SEBI & attach the same with the form for name reservation. 

Read our article:How SEBI Protects Investor Right?

Process of Registering a Company with SEBI

Process of Registering a Company with SEBI

SEBI has laid down plenty of norms relating to eligibility criteria for different kinds of companies depending on their type of operation. First, depending on the activity, we need to track down the applicable compliance and the suitable process for availing permission.

The section below would brief the process for availing prior permission from SEBI. We have tried to outline the process as intuitive as possible. After ensuring that the minimum eligibility criterion is being met, the applicant can precede further to make an application for NOC. 

Securities and Exchange Board of India (SEBI) has introduced a digital platform to simplify the process of application for registration/renewal. First, the applicant is required to head over to SEBI’s official portal to get access of the registration form for intermediaries. 

Note on Filing of an Application 

  • The applicant must furnish the complete web-based form in the prescribed application along with the requested documents to avail NOC from the authority i.e. SEBI. 
  • At this stage, it is advisable to head over to the SEBI regulation to speed up the process. 
  • In the web-based form, the applicant is required to fulfill the detail such as company name, business plan, organization structure, place of incorporation, capital structure, and other essential particulars based on the activity. 
  • In the covering letter, the applicants need to specify whether they are the new users or the registered ones.
  • A duly filed web-based form goes along with the requested application fee which is non –refundable in nature. 
  • Upon applying, the SEBI would conduct an in-depth examination of the same for possible loopholes and respond within 25-30 working days in the form of a reply. 

Determining on-site Due Diligence

In some circumstances, SEBI may opt to inspect the business to determine its candidature on account of infrastructure and grievance control mechanism. Such inspection is primarily done for Mutual Funds or Credit Rating Agency.

Granting the Certification

  • SEBI take several legal attribute into the account before granting the certification to the application. 
  • After verifying whether the applicant stays in compliant with the requirement, SEBI stamps their approval on the application and informs the applicant for the grant of certification on receipt of payment of the registration underlining deemed terms and conditions. 
  • After receiving permission from SEBI, the applicant is supposed to make payment of registration fees via demand draft (DD) in favor of “The Securities and Exchange Board of India” payable at Mumbai. In general, the registration fees for the corporates are higher than the individual. 
  • After receiving the receipt of payment, SEBI grants the NOC to the applicant. 

Compliances Related to the Post-Registration

  • After becoming the registered entity, the company must look into the requirements as prescribed by SEBI every now and then to stay in compliant. 
  • The entities must be vigilant as far as the announcement of new updates, circulars, or guidelines is the concern. 
  • Also, the entity is required to stay in touch with concerned authority in case of any changes made to the furnished details. 

After acquiring the required SEBI approval, the applicant can proceed further to avail of the company registration via an online channel. The absence of SEBI approval may drive the MCA to reject the application for the company registration. Make sure to secure the required SEBI approval before diving into the process of company registration. 

Conclusion

The first-timer always has trouble in securing government license and registration such as SEBI approval, and that’s where professionalism comes into the picture.

At CorpBiz, we make sure that our client gets the best possible services regarding the registration process or document processing. After ascertaining the client’s requirement in the preliminary stage, we endeavor to outline the optimized blueprint to ensure the best turnaround time for rendering the license. 

Read our article:Amendments in the SEBI (Mutual Funds) Regulations, 1996

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Pankaj Tyagi

Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.

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