How to obtain SEBI Approval for Company Registration?

India has a diverse portfolio of the types of businesses that function and grow successfully. Further, based on certain business activities, some types of ventures are governed by regulatory bodies. For example, all businesses of the financial securities sector are governed by the regulations placed by Securities and Exchange Board of India, i.e., SEBI. Whereas, the businesses of the Non Banking Financial Companies are governed by the Reserve Bank of India (RBI). This article shines light on the types of companies that require SEBI Approval and the steps on how to get SEBI registered. 

What is SEBI Certificate? 

SEBI is a regulatory body in India. It is the sole authority that governs and regulates the intermediaries associated with the securities market in India. As per the SEBI regulations, all individuals and corporates wilful of starting a business in the financial securities sector need to obtain the SEBI Certificate before they can start a business in India. The SEBI Certificate approval is what allows the entities and persons to complete their online company registration in India. 

When does a business need to obtain sebi registration? 

SEBI registration stands for the sebi approval through issuance of a no objection certificate. This certificate (NOC) means that the business in question is compliant of the norms and regulations set by SEBI for its specific business activity. The below list shows some light on the types of businesses that require SEBI Approval before company registration: 

• Stock Brokers; 
• Sub-Brokers;
• Investment advisors;
• Merchant Bankers; 
• Registrar and Transfer Agents (RTA);
• Mutual Funds;
• Venture Capital Firms;
• Portfolio Management businesses; and 
• Asset Management.

How to get SEBI approval registered?

Below is the step by step guide on the generalised process to obtain SEBI approval before company registration. 

Step 1: Go through compliance requirements

Before you can start with the process of obtaining your SEBI certificate, you need to be aware of the specific compliance applicable to your business based on its activities. This is a necessary step because the process of obtaining SEBI is determined on the basis of the business activity. You can make yourself aware of the compliance by going through the SEBI guidelines as applicable to you. 

Step 2: Register yourself as User

The SEBI introduced a digital platform to provide ease of access to business owners in applications for registration or renewal of SEBI Certificates. Hence, you need to register yourself as an ‘intermediary’ on the SEBI portal. 

Step 3: Application for SEBI Approval 

After logging into the portal, you need to furnish your business details in the prescribed format along with the applicable fees for SEBI approval. As an applicant, you have to furnish the following information: 

• Business name;
• Business activities;
• Organisational structure; 
• Business plan;
• Capital structure; 
• Place of incorporation, and 
• Lastly, a covering letter (specifying whether you are looking for a new registration, or had applied for registration before as well). 

After you furnish authentic information and submit the form, the governing authority will go through the form and the supporting documents. Thereafter, you will receive a response in  25 to 30 working days of filing the application and making the payment. 

Step 4: On – site due diligence

This step is not a compulsion in all cases. However, in certain specific cases, the SEBI might feel the need to conduct an on site inspection to check client servicing and complaint handling (grievance redressal mechanism) in a business. The SEBI officials usually conduct this due diligence for Mutual Funds and Credit Rating Agencies (CRA). 

Step 5: Grant of SEBI Certificate

After clearance of the inspection, the SEBI goes through the documents and checks its compliance with the registration guidelines. Once the officials are sure that the applicant is compliant with all requirements, they inform the applicant about approval and the receipt of fees for registration. Upon receiving the approval information, the applicant has to submit a draft of the applicable payment, in the name of Securities and Exchange Board of India, payable at Mumbai. Once this payment receipt is clear, the SEBI grants registration certificate. 

Post SEBI approval compliances

The following three pointers are useful tips to keep your SEBI approval valid: 

• From time to time, keep a track on the SEBI regulations and compliances;
• Stay updated with all the news and other modifications on the SEBI portal; and 
• Lastly, keep SEBI updated with the acknowledgement of any changes in details furnished, as applicable. 

When to use the SEBI approval for company registration?

The first step in a company registration process is the process of reserving a unique name (RUN) application. The guidelines for RUN application state that any company consisting of the terms mutual funds, stock exchange, venture capital, asset management, etc. need to submit their SEBI approval along with the RUN Application. 

Further, the companies with SEBI approval also need to submit the sebi certificate along with the spice form for company incorporation. 

Conclusion

All businesses operating in India need to ensure compliance with the authorities that are governing them. Non – compliance with the authorities can lead to hefty penalties and might also lead to non- operational status of a business. For example, if you fail to provide SEBI approval during the incorporation process, you will not be able to incorporate your company. Feel free to connect with experts at LegalWiz.in to incorporate your business successfully!