Regstreet Law Advisors SEBI has notified the SEBI (Merchant Bankers) (Amendment) Regulations, 2025, introducing one of the most significant restructuring exercises to the merchant banking framework in recent years. The amendments come into force 30 days from publication in the Official Gazette. ย
๐๐๐ฒ ๐ก๐ข๐ ๐ก๐ฅ๐ข๐ ๐ก๐ญ๐ฌ ๐ข๐ง๐๐ฅ๐ฎ๐๐: ย
A. ๐๐-๐๐๐ญ๐๐ ๐จ๐ซ๐ข๐ฌ๐๐ญ๐ข๐จ๐ง ๐จ๐ ๐๐๐ซ๐๐ก๐๐ง๐ญ ๐๐๐ง๐ค๐๐ซ๐ฌ:
- Category I (all activities) and
- Category II (all except main-board IPOs); mandatory migration for existing registrants within prescribed timelines.
B.ย ๐๐๐ฏ๐ข๐ฌ๐๐ ๐๐๐ฉ๐ข๐ญ๐๐ฅ ๐ฌ๐ญ๐๐ง๐๐๐ซ๐๐ฌ ๐๐ง๐ ๐ข๐ง๐ญ๐ซ๐จ๐๐ฎ๐๐ญ๐ข๐จ๐ง ๐จ๐ ๐ฅ๐ข๐ช๐ฎ๐ข๐ ๐ง๐๐ญ ๐ฐ๐จ๐ซ๐ญ๐ก ๐ซ๐๐ช๐ฎ๐ข๐ซ๐๐ฆ๐๐ง๐ญ๐ฌ: ย oย ย ย ย ย ๐๐ข๐ต๐ฆ๐จ๐ฐ๐ณ๐บ ๐: Minimum Net worth โน50 crore; liquid net worth โน12.5 crore oย ย ย ย ย ๐๐ข๐ต๐ฆ๐จ๐ฐ๐ณ๐บ ๐๐: Minimum Net worth โน10 crore; liquid net worth โน2.5 crore ย
C.ย ๐๐ฅ๐๐๐ซ ๐ฌ๐๐ ๐ซ๐๐ ๐๐ญ๐ข๐จ๐ง ๐จ๐ ๐๐จ๐ซ๐ ๐ฆ๐๐ซ๐๐ก๐๐ง๐ญ ๐๐๐ง๐ค๐ข๐ง๐ ๐๐ฎ๐ง๐๐ญ๐ข๐จ๐ง๐ฌ: Due diligence, preparation of offer documents, and certain specified functions cannot be outsourced. ย
D. ๐๐ข๐ง๐ข๐ฆ๐ฎ๐ฆ ๐ซ๐๐ฏ๐๐ง๐ฎ๐ ๐ญ๐ก๐ซ๐๐ฌ๐ก๐จ๐ฅ๐: Merchant bankers must generate minimum revenue from permitted activities, subject to limited exceptions. ย
E. ๐๐ฑ๐ฉ๐๐ง๐๐๐ ๐ฌ๐ฎ๐ข๐ญ๐ ๐จ๐ โ๐๐๐ซ๐ฆ๐ข๐ญ๐ญ๐๐ ๐๐๐ญ๐ข๐ฏ๐ข๐ญ๐ข๐๐ฌโ: Covers public/rights issues, buy-back, delisting, open offers, valuation-linked fairness opinions, market making, private placements of listed/proposed securities, and international offerings. ย
F.ย ๐๐ญ๐ซ๐๐ง๐ ๐ญ๐ก๐๐ง๐๐ ๐ ๐จ๐ฏ๐๐ซ๐ง๐๐ง๐๐ ๐ฌ๐ญ๐๐ง๐๐๐ซ๐๐ฌ:
- Revised definition of principal officer with mandatory professional certifications for key personnel and the compliance officer;
- Mandatory independence of the compliance officer from the principal officer and transaction teams;
- Enhanced conflict-management rules, including prohibition on lead management of self-dealt issues or issues involving specified related shareholding thresholds. ย
The 2025 amendments consolidate SEBIโs policy direction towards higher institutional capacity, enhanced transparency in issue management, and ring-fencing merchant banking activities from cross-business risk.
๐๐๐๐ค๐ ๐ซ๐จ๐ฎ๐ง๐ ๐จ๐ง ๐๐๐๐๐ซ๐ซ๐๐ ๐๐๐ฌ๐ญ๐ซ๐ข๐๐ญ๐ข๐จ๐ง ๐๐ง๐ ๐๐๐ฏ๐ข๐ฌ๐๐ ๐๐ฉ๐ฉ๐ซ๐จ๐๐๐ก
SEBI had earlier (Dec 2024) proposed restricting valuation and non-market activities with mandatory hive-offs, but deferred this in March 2025 after industry feedback. The final framework adopts calibrated ring-fencing through net-worth segregation, business-unit separation (instead of immediate corporate split), and time-bound alignment for valuation activities balancing oversight with business continuity.