Sebi
Sebi
Sebi
HISTORY
Before 1992, the three principal Acts governing the securities markets
were: (a) the Capital issues (Control) Act, 1947, which restricted issuers
access to the securities market and controlled the pricing of issues; (b) the
Companies Act, 1956, which sets out the code of conduct for the
corporate sector in relation to issue, allotment and transfer of securities,
and disclosures to be made in public issues; and (c) the Securities
Contract (Regulation) Act, 1956, which provides for regulation of
transactions in securities through control over stock exchanges. The
capital issues (Control) Act, 1947 had its origin during the war in 1943
when the objective was to channel resources to support the war effort.
The Act was retained with some modifications as a means of controlling
the raising of capital by companies and to ensure that national resources
were channeled into proper lines, i.e, for desirable purpose to serve goals
and priorities of the government, and to protect the interests of investors.
Under the Act, any firm wishing to issue securities had to obtain approval
from the Central Government, which also determined the amount, type
and price of the issue.
Major part of the liberalization process was the repeal of the capital issues
(Control) Act, 1947 in May 1992. With this, Governments control over
issue of capital, pricing of the issues, fixing of premia and rates of interest
on debentures etc. ceased. The office which administered the Act was
abolished and the market was allowed to allocate resources to competing
uses. However to ensure effective regulation of the market, SEBI Act,
1992 was enacted to empower SEBI with statutory powers for (a)
protecting the interests of investors in securities, (b) promoting the
development of the securities market, and (c) regulating the securities
market. Its regulatory jurisdiction extend over corporate in the issuance of
capital and transfer the securities in addition to all intermediaries and
persons associated with securities market. SEBI can specify the matters to
be disclosed and the standards of disclosure required for the protection of
investors in respect of issues; can issue directions to all intermediaries
and other persons associated with the securities market in the interest of
investors or of orderly development for securities market; and can
conduct enquiries, audits and inspection of all concerned and adjudicate
offences under the Act. In short, it has been given necessary autonmy and
authority to regulate and develop an orderly securities market.
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12 April 1992[1]
525 (2009)[2]
Agency
executive
U. K. Sinha,
Chairman
Website
www.sebi.gov.in
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CHAPTER:2
INTRODUCTION
The capital market has witnessed tremendous growth in recent times
characterized particularly by the increasing participation of public.
Investors confidence in the capital market can be sustained largely by
ensuring investor protection. With this end in view, the government
decided to vest SEBI immediately with statutory powers required to do
effectively with all matters relating to capital market.
It was felt by the government that by transferring the powers of the
controller of capital issues to an independent body it would enable it to
effectively regulate, promote and monitor the working of stock exchange
in the country.
Earlier, the regulation of the securities market was being done through the
office of controller of capital issues under the capital issues (control) Act,
1947 which has been since reapled.
Accordingly, SEBI has been set up under the SEBI Act, 1992. The CCI
Act has now ceased to have any application and stand withdrawn from
the law w.e.f 246.5.1992. The Securities Exchange Board Of India Act
was passed by the parliament as Act No.15 of 1992 and received the
assent of the President on 4th April, 1992.
The Securities and Exchange Board of India Act, 1992 (the SEBI Act)
was amended in the years 1995, 1999 and 2002 to meet the requirements
of changing needs of the securities market and responding to the
development in the securities market.
Based on the Report of Joint Parliamentary Committee (JPC) dated
December 2, 2002, the SEBI Act was amended to address certain
shortcomings in its provisions. The mission of SEBI is to make India as
one of the best securities market of the world and SEBI as one of the
most respected regulator in the world. SEBI also endeavors to achieve the
standards of IOSCO/FSAP.
In this background, the internal group constituted by SEBI consisting of
its senior officers had proposed certain amendments to the SEBI Act. The
SEBI Board had constituted an Expert Group under the Chairmanship of
Mr Justice M. H .Kania (Former Chief Justice of India) to consider the
proposals. The report of the Expert Group is placed for eliciting public
comments on the recommendations. It may be noted that the Report does
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not necessarily reflect the views of SEBI on the various proposals and
recommendations. SEBI would consider the comments received from
various sources before taking any final view on the recommendations.
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CHAPTER:3
ESTABLISHMENT OF THE
SECURITIES AND EXCHANGE BOARD OF INDIA
Establishment and incorporation of Board: With effect from such date as the Central Government may, by
notification, appoint, there shall be established, for the purposes of this
Act, a Board by the name of the Securities and Exchange Board of
India.
The Board shall be a body corporate by the name aforesaid, having
perpetual succession and a common seal, with power subject to the
provisions of this Act, to acquire, hold and dispose of property, both
movable and immovable, and to contract, and shall, by the said name,
sue or be sued.
The head office of the Board shall be at Bombay.
The Board may establish offices at other places in India.
Management of the Board: The Board shall consist of the following members, namely: a Chairman;
two members from amongst the officials of the [Ministry] of the
Central Government dealing with
Finance [and
administration of the Companies Act, 1956(1 of 1956)];
one member from amongst the officials of [the Reserve Bank];
five other members of whom at least three shall be the whole-time
members] to be appointed by the central Government.
The general superintendence, direction and management of the affairs
of the Board shall vest in a Board of members, which may exercise all
powers and do all acts and things which may be exercised or done by
the Board.
Save as otherwise determined by regulations, the Chairman shall also
have powers of general superintendence and direction of the affairs of
the Board and may also exercise all powers and do all acts and things
which may be exercised or done by that Board.
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The Chairman and members referred to in clauses (a) and (d) of subsection (1) shall be appointed by the Central Government and the
members referred to in clauses (b) and (c) of that sub-section shall be
nominated by the Central Government and the [Reserve Bank]
respectively.
The Chairman and the other members referred to in clauses (a) and (d)
of sub-section (1) shall be persons of ability, integrity and standing
who have shown capacity in dealing with problems relating to
securities market or have special knowledge or experience of law,
finance, economics, accountancy, administration or in any other
discipline which, in the opinion of the Central Government, shall be
useful to the Board.
Term of office and conditions of service of Chairman and members of
the Board: The term of office and other conditions of service of the Chairman and
the members referred to in clause (d) of sub- section (1) of section 4
shall be such as may be prescribed.
Notwithstanding anything contained in sub-section (1), the Central
Government shall have the right to terminate the services of the
Chairman or a member appointed under clause (d) of sub-section (1)
of section 4, at any time before the expiry of the period prescribed
under sub-section (1), by giving him notice of not less than three
months in writing or three months salary and allowances in lieu
thereof, and the Chairman or a member, as the case may be, shall also
have the right to relinquish his office, at any time before the expiry of
the period prescribed under sub-section (1), by giving to the Central
Government notice of not less than three months in writing.
Removal of member from office:The Central Government shall remove a member from office if he
is, or at any time has been, adjudicated as insolvent;
is of unsound mind and stands so declared by a competent court;
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CHAPTER:4
ORGANIZATION STRUCTURE
THE BOARD COMPRISES
Name
Designation
Upendra Kumar
Sinha
Chairman
Prashant Saran
Rajeev Kumar
Agarwal
Dr. Thomas
Mathew
V. K. Jairath
magya
Member Appointed
Anand Sinha
Naved Masood
Secretary,Ministry of Corporate
Affairs
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CHAPTER:5
POWERS AND FUNCTIONS OF SEBI
Functions of Board: Subject to the provisions of this Act, it shall be the duty of the Board
to protect the interests of investors in securities and to promote the
development of, and to regulate the securities market, by such
measures as it thinks fit.
Without prejudice to the generality of the foregoing provisions, the
measures referred to therein may provide for regulating the business in stock exchanges and any other securities
markets;
registering and regulating the working of stock brokers, subbrokers, share transfer agents, bankers an issue, trustees of trust
deeds, registrars to an issue, merchant bankers, underwriters,
portfolio managers, investment advisers and such other
intermediaries who may be associated with securities markets in
any manner;
registering and regulating the working of the depositories,
[participants,] custodians of securities, foreign institutional
investors, credit rating agencies and such other intermediaries as
the Board may, by notification, specify in this behalf;
registering and regulating the working of [venture capital funds and
collective investment schemes],including mutual funds;
promoting and regulating self-regulatory organisations;
prohibiting fraudulent and unfair trade practices relating to
securities markets;
promoting investors' education and training of intermediaries of
securities markets; prohibiting insider trading in securities;
regulating substantial acquisition of shares and take-over of
companies;
calling for information from, undertaking inspection, conducting
inquiries and audits of the [ stock exchanges, mutual funds, other
persons associated with the securities market] intermediaries and
self- regulatory organizations in the securities market;
calling for information and record from any bank or any other
authority or board or corporation established or constituted by or
under any Central, State or Provincial Act in respect of any
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CHAPTER:6
OBJECTIVE OF SEBI
In 1988 the Securities and Exchange Board of India (SEBI) was
established by the Government of India through an executive resolution,
and was subsequently upgraded as a fully autonomous body (a statutory
Board) in the year 1992 with the passing of the Securities and Exchange
Board of India Act (SEBI Act) on 30th January 1992. In place of
Government Control, a statutory and autonomous regulatory board with
defined responsibilities, to cover both development & regulation of the
market, and independent powers have been set up. Paradoxically this is a
positive outcome of the Securities Scam of 1990-91.
The basic objectives of the Board were identified as:
Since its inception SEBI has been working targeting the securities and is
attending to the fulfillment of its objectives with commendable zeal and
dexterity. The improvements in the securities markets like capitalization
requirements, margining, establishment of clearing corporations etc.
reduced the risk of credit and also reduced the market.
SEBI has introduced the comprehensive regulatory measures, prescribed
registration norms, the eligibility criteria, the code of obligations and the
code of conduct for different intermediaries like, bankers to issue,
merchant bankers, brokers and sub-brokers, registrars, portfolio
managers, credit rating agencies, underwriters and others. It has framed
bye-laws, risk identification and risk management systems for Clearing
houses of stock exchanges, surveillance system etc. which has made
dealing in securities both safe and transparent to the end investor.
Another significant event is the approval of trading in stock indices (like
S&P CNX Nifty & Sensex) in 2000. A market Index is a convenient and
effective product because of the following reasons:
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CHAPTER:7
SEBI - SEBI ADMINISTRATION
The Securities and Exchange Board of India Act, 1992 is having
retrospective effect and is deemed to have come into force on January 30,
1992. Relatively a brief act containing 35 sections, the SEBI Act governs
all the Stock Exchanges and the Securities Transactions in India.
A Board by the name of the Securities and Exchange Board of India
(SEBI) was constituted under the SEBI Act to administer its provisions. It
consists of one Chairman and five members.
One each from the department of Finance and Law of the Central
Government, one from the Reserve Bank of India and two other persons
and having its head office in Bombay and regional offices in Delhi,
Calcutta and Madras.
The Central Government reserves the right to terminate the services of
the Chairman or any member of the Board. The Board decides questions
in the meeting by majority vote with the Chairman having a second or
casting vote.
Section 11 of the SEBI Act provides that to protect the interest of
investors in securities and to promote the development of and to regulate
the securities market by such measures, it is the duty of the Board. It has
given power to the Board to regulate the business in Stock Exchanges,
register and regulate the working of stock brokers, sub-brokers, share
transfer agents, bankers to an issue, trustees of trust deeds, registrars to an
issue, merchant bankers, underwriters, portfolio managers, investment
advisers, etc., also to register and regulate the working of collective
investment schemes including mutual funds, to prohibit fraudulent and
unfair trade practices and insider trading, to regulate take-overs, to
conduct enquiries and audits of the stock exchanges, etc.
All the stock brokers, sub-brokers, share transfer agents, bankers to an
issue, trustees of trust deed, registrars to an issue, merchant bankers,
underwriters, portfolio managers, investment advisers and such other
intermediary who may be associated with the Securities Markets are to
register with the Board under the provisions of the Act, under Section 12
of the Sebi Act. The Board has the power to suspend or cancel such
registration. The Board is bound by the directions vested by the Central
Government from time to time on questions of policy and the Central
Government reserves the right to supersede the Board. The Board is also
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CHAPTER:8
DEPARTMENT OF SEBI AND ITS FUNCTIONS
MARKET
INTERMEDIARIES
REGULATION
SUPERVISION DEPARTMENT (MIRSD):-
AND
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MIRSD-4
This division would look after the work relating to
Registration, monitoring, supervision, inspection, investor grievances
and policy related issues of the following intermediaries:
Debenture Trustees,
Credit Rating Agencies
Depository Participants
MIRSD-5
This division looks into the matters relating to the following
intermediaries:
Sub-brokers
Debenture Trustees
Bankers to Issue
DEPARTMENT OF ECONOMIC AND POLICY ANALYSIS
(DEPA):The Department will handle its functions through the following
Divisions:
Division of Policy Analysis (DPA)
This division would look after the following:
Partnering/vetting of policy/concept papers.
Need based research
Regulatory Impact Assessment (RIA) and benchmarking of
regulations.
Research Support to Committees and Working Groups set up by
SEBI.
Development of Strategic Action Plan/Vision Statement.
Any other tasks that may be assigned.
Division of Economic Analysis (DEA)
This division would look after the following:
Tracking and analysis of market developments.
Tracking and analysis of other economic developments.
Repository of data (and data analysis)
Preparation and publication of Annual Report.
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CHAPTER: 9
SEBI FORMATION
MUTUAL FUND
An investment vehicle that is made up of a pool of funds collected from
many investors for the purpose of investing in securities such as stocks,
bonds, money market instruments and similar assets. Mutual funds are
operated by money managers, who invest the fund's capital and attempt to
produce capital gains and income for the fund's investors. A mutual fund's
portfolio is structured and maintained to match the investment objectives
stated in its prospectus.
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CAPITAL MARKET
ROLE OF SEBI IN INDIAN CAPITAL MARKET
SEBI is regulator to control Indian capital market. Since its establishment
in 1992, it is doing hard work for protecting the interests of
Indian investors. SEBI gets education from past cheating with naive
investors of India. Now, SEBI is more strict with those who commit
frauds in capital market.The role of security exchange board of India
(SEBI) in regulating Indian capital market is very important because
government of India can only open or take decision to open new stock
exchange in India after getting advice from SEBI. If SEBI thinks that
it will be against its rules and regulations, SEBI can ban on any stock
exchange to trade in shares and stocks.Now, we explain role of SEBI in
regulating Indian Capital Market more deeply with following points:
Power to make rules for controlling stock exchange :SEBI has power to make new rules for controlling stock exchange in
India. For example, SEBI fixed the time of trading 9 AM and 5
PM in stock market.
To provide license to dealers and brokers :SEBI has power to provide license to dealers and brokers of capital
market. If SEBI sees that any financial product is of capital nature,
then SEBI can also control to that product and its dealers. One of
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main example is ULIPs case. SEBI said, " It is just like mutual
fundsand all banks and financial and insurance companies who want
to issue it, must take permission from SEBI."
To Stop fraud in Capital Market:SEBI has many powers for stopping fraud in capital market.
It can ban on the trading of those brokers who are involved in
fraudulent and unfair trade practices relating to stock market.
It can impose the penalties on capital market intermediaries if they
involve in insider trading.
To Control the Merge, Acquisition and Takeover the companies :
Many big companies in India want to create monopoly in capital
market. So, these companies buy all other companies or deal
of merging. SEBI sees whether this merge or acquisition is for
development of business or to harm capital market.
To audit the performance of stock market :
SEBI uses his powers to audit the performance of different Indian
stock exchange for bringing transparency in the working of stock
exchanges.
To make new rules on carry - forward transactions :
Share trading transactions carry forward can not exceed 25% of
broker's total transactions.
90 day limit for carry forward.
To create relationship with ICAI:ICAI is the authority for making new auditors of companies. SEBI
creates good relationship with ICAI for bringing more transparency
in the auditing work of company accounts because audited financial
statements are mirror to see the real face of company and after this
investors can decide to invest or not to invest. Moreover, investors of
India can easily trust on audited financial reports. After Satyam Scam,
SEBI is investigating with ICAI, whether CAs are doing their duty by
ethical way or not.
Introduction of derivative contracts on Volatility Index: For reducing the risk of investors, SEBI has now been decided to
permit Stock Exchanges to introduce derivative contracts on
Volatility Index, subject to the condition that;
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STOCK EXCHANGES
Powers of sebi in stock exchanges
Power to call for information:The Board may from time to time call for any information, documents
or records from the recognised stock exchange or the recognised
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Repeal and savings.: On and from the commencement of these regulations, the
Securities Contracts (Regulation) (Manner of Increasing and
Maintaining Public Shareholding in Recognized Stock Exchanges)
Regulations, 2006, shall stand repealed.
Notwithstanding such repeal, anything done or any action taken or
purported to have been taken or contemplated under the repealed
regulations before the commencement of these regulations shall be
deemed to have been done or taken or commenced or contemplated
under the corresponding provisions of these regulations.
After the repeal of the regulations referred to in sub-regulation (1),
any reference thereto in any regulation, guideline, circular or
direction issued by the Board shall be deemed to be a reference to
the relevant provisions of these regulations.
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CHAPTER:10
REGISTRATION CERTIFICATE
Registration of stock brokers, sub-brokers, share transfer agents,
etc.
No stock-broker, sub- broker, share transfer agent, banker to an
issue, trustee of trust deed, registrar to an issue, merchant banker,
underwriter, portfolio manager, investment adviser and such other
intermediary who may be associated with securities market shall
buy, sell or deal in securities except under, and in accordance with,
the conditions of certificate of registration obtained from the Board
in accordance with the
[regulations] made under this Act:
Provided that a person buying or selling securities or otherwise
dealing with the securities market as a stock- broker, sub-broker,
share transfer agent, banker to an issue, trustee of trust deed,
registrar to an issue, merchant banker, underwriter, portfolio
manager, investment adviser and such other intermediary who may
be associated with securities market immediately before the
establishment of the Board for which no registration certificate was
necessary prior to such establishment, may continue to do so for a
period of three months from such establishment or, if he has made
an application for such registration within the said period of three
months, till the disposal of such application.
Provided further that any certificate of registration, obtained
immediately before the commencement of the Securities Laws
(Amendment) Act, 1995, shall be deemed to have been obtained
from the Board in accordance with the regulations providing for
such registration.
No depository, [participant,] custodian of securities, foreign
institutional investor, credit rating agency or any other
intermediary associated with the securities market as the
Board may by notification in this behalf specify, shall buy or
sell or deal in securities except under and in accordance
with the conditions of a certificate of registration obtained
from the Board in accordance with the regulations made
under this Act:
Provided that a person buying or selling securities or
otherwise dealing with the securities market as a depository,
[participant,] custodian of securities, foreign institutional
investor or credit rating agency immediately before the
commencement of the Securities Laws (Amendment) Act,
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CHAPTER:11
CONCLUSION
The enactment of the SEBI Act within the context of other statutes such
as the Companies Act and Depositories Act has provided a strong
regulatory framework for the Indian market. Subsequently much of the
growth of the Indian market can be attributed to the robust processes for
issuance, pricing, allotment and listing of securities enabled by SEBI.
Strengthening SEBI's power in the investigative, administrative and legal
aspects of enforcement would enable it to speedily address legal
challenges such as those faced during dematerialization or disclosure
requirements. In the future, SEBI should adopt more transparency to gain
higher public confidence.
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CHAPTER:12
BIBLOGRAPHY
http://www.investopedia.com/terms/s/sebi.asp
http://www.123helpme.com/securities-and-exchange-board-of-indiasebi-view.asp?id=167244
www.wikipedia.com
www.sebi.gov.in
www.slideshare.com
www.scribd.com
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