Investment Bank

 

۱- Definition

An Investment bank is a financial institution that assists individuals, corporations, and

governments in raising financial capital by underwriting or acting as the client’s agent in

the issuance of securities (or both). An investment bank may also assist companies

involved in mergers and acquisitions (M&A) and provide ancillary services like market

making. According to Security Market Act of Islamic Republic of Iran (2005) paragraph

۱۸ of article 1; Investment Bank means a company which is operating as an intermediary

between the securities issuer and all investors and may get involved in brokerage,

dealership, market-making, consulting, portfolio management, subscription, underwriting

and similar operations by obtaining a license from SEO.

۲-  Purposes

According to the rules governing the operations of investment bank, the Investment bank

operates in the following areas:

 

     a) The main areas of activity include: subscription, underwriting, and

undertaking to purchase securities in the secondary offerings within its own

financial ability or through forming a syndicate with similar entities.

     b) The secondary areas of activity include:

۱- Providing consultancy in the areas such as:

۱-۱- The optimal method and proposed schedule for financing and the

amount of required funds as well;

۱-۲- The procedure and scheduled suggestion for securities offering;

۱-۳- The price of securities offered by the issuer;

۱-۴- The procedures of securities registration and obtaining a license for offering them;

۱-۵- The process of securities transfer;

۱-۶- Listing of the issuer’s securities on any Exchange and accomplish all

procedures thereon on behalf of the issuer;

۱-۷- Merger, acquisition, organizational and financial restructuring of entities;

۱-۸- Risk management affairs;

۱-۹- Preparing entities to be rated by rating agencies and performance of all procedures thereon on behalf of them;

۱-۱۰- Investment affairs;

۱-۱۱- The services required by companies with respect to new investments, development, completion, planning, budgeting and securities valuation.

۲- Marketing and/or managing the process of securities transfer;

۳- Accomplishment of procedures on behalf of the issuer in respect of

securities registration and obtaining license for offering them;

۴- Providing services relating to design and issue of financial instruments for companies;

۵- Providing assets management services;

۶- Providing services relating to mutual funds and managing such funds and investment in them;

۷- Brokerage;

۸- Broker/dealership;

۹- Portfolio management;

۱۰- Market-making;

۱۱- Investing the entity’s surplus resources in the investment deposits accounts with banks and reputable credit and financial institutions and securities guaranteed by the government and/or  banks;

۱۲- Attracting the support of banks, insurances, credit and finance institutions and financial institutions for the company in subscribing the securities;

۱۳- Giving assistance to companies in providing the credit and financial resources;

۱۴- Providing assistance towards issuance, confirmation and acceptance of letters of guarantee.