Key Codes of Conduct of Merchant Banking Services as per SEBI Regulations

SEBI (Merchant Bankers) Regulations, 1992 specifies various codes of conduct that merchant banks must adhere to in India. Some of the key codes of conduct are:

  1. Confidentiality: Merchant banks must maintain confidentiality of their client’s information, except where the disclosure is required by law or where the client has given explicit consent.
  2. Conflict of interest: Merchant banks must avoid conflicts of interest and must not engage in any activity that may compromise their ability to act in the best interests of their clients.
  3. Due diligence: Merchant banks must exercise due diligence and ensure that all information provided by the clients is true and accurate. They must also verify the client’s identity, financial position, and business operations before taking up any assignment.
  4. Fair treatment of clients: Merchant banks must treat all their clients fairly and impartially, irrespective of their size or nature of the business. They must not discriminate between clients based on any factors, including race, religion, gender, or nationality.
  5. Transparency: Merchant banks must provide full disclosure of their fees and charges, including any markups or commissions. They must also disclose any potential conflicts of interest and seek the client’s consent before taking up any assignment.
  6. Code of ethics: Merchant banks must maintain a code of ethics that promotes ethical and professional conduct. The code of ethics must include provisions on integrity, fairness, and accountability.
  7. Client relationship: Merchant banks must establish a professional relationship with their clients based on mutual trust and confidence. They must also ensure that the client is fully informed about the scope of the services provided and the risks associated with the transaction.
  8. Compliance: Merchant banks must comply with all the applicable laws, regulations, and guidelines related to their activities. They must also establish effective systems for monitoring and reporting compliance.

These codes of conduct are designed to promote transparency, accountability, and ethical conduct in merchant banking activities. By adhering to these codes, merchant banks can build trust with clients and investors and help to promote the development of India’s capital markets.