24.4 Sebi

Introduction to SEBI
www.edutap.co.in
Securities and Exchange Board of India
Formation of SEBI
Role & Functions of SEBI
Organisational Framework of SEBI
Securities Appellate Tribunal
www.edutap.co.in
Need for SEBI
• Before SEBI the law relating to the securities market in India was
contained in different enactments;
• like Companies Act, 1956, Securities Contract (Regulation) Act, 1956,
and the Capital Issues (Control) Act, 1947.
• As the capital market witnessed tremendous growth,
• Administrative agencies did not have proper manpower or expertise
to deal with the investors.
• Even there was no monitoring or prosecuting machinery to check
malpractices, insider trading, etc.
• Then, Government of India decided to set up an agency or regulatory
body known as Securities & Exchange Board of India (SEBI).
www.edutap.co.in
Birth of SEBI
• SEBI was constituted on 12th April 1988 as an interim administrative

body under the Finance Ministry.
• It was constituted as the regulator of capital markets in India under a
resolution of the Government of India.
• Its objective was to protect the interests of investors in securities
and to promote the development and regulation of securities
market.
• Four years later, on 4th April 1992 a notification awarding statutory
powers to SEBI was issued (Securities and Exchange Board of India
Act, 1992).
www.edutap.co.in
What does the Preamble of SEBI Act say?
www.edutap.co.in
Constitution of SEBI
SEBI (hereinafter called 'the Board') has been established as-
• a body corporate
• having perpetual succession and a common seal,
• with powers to acquire, hold and dispose of property, both movable and immovable, and
• to contract as also to sue or be sued by the name of SEBI.
• The head office of the Board shall be at Mumbai.
• Further the Board may establish offices at other places in India
www.edutap.co.in
Offices of SEBI
SEBI has its headquarters at the

business district of Bandra Kurla
Complex in Mumbai, and has
Northern, Eastern, Southern and
Western Regional Offices in
New Delhi, Kolkata, Chennai
and Ahmedabad respectively.
Constitution of SEBI “Board”
www.edutap.co.in
Present Organisation Structure
www.edutap.co.in
Terms of SEBI Board
• Chairman and the five other members as referred in the section,

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.
• Chairman and Whole time Members may hold office for a period of
three years subject to the maximum age limit of 65 years and can be
re- appointed by the Central Government.
• A part-time member may also hold office for a maximum of three
years but there is no age limit.
www.edutap.co.in
Powers and Functions of SEBI
Quasi-legislative
Quasi-judicial Quasi-executive
function
Passes rulings and

Drafting of Rules & judgments; prosecute and SEBI is involved in
investigation and
Regulations judge directly certain
enforcement actions
violations
www.edutap.co.in
Stock Market
Securities Investors
Corporate
Intermediaries
Entities
Stock
Exchanges
www.edutap.co.in
• Regulating the business in stock exchanges and any other securities

markets
• 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
www.edutap.co.in
Calling for Information and Records
• Calling for information, undertaking inspection, conducting inquiries

and audits of the stock exchanges, persons associated with securities
market, intermediaries in the securities market etc.
• Calling for information and records from any person including any
bank or any other authority or board or corporation established by or
under any Central or State Act relevant to any investigation or inquiry
in respect of any transaction in securities.
• Calling for information from, or furnishing information to, other
authorities, whether in India or outside India, having functions similar
to those of the Board, in the matters relating to the prevention or
detection of violations in respect of securities laws.
www.edutap.co.in
Regulating working of Persons involved in Securities Market
He is a professional individual who executes buy and sell orders on behalf of

Stock-Brokers clients for stocks.
They manage issue related activities namely acceptance of application and

Bankers to Issue application monies; acceptance of allotment; refund of application monies
Registrar to an It is appointed by company to carry on activities of collecting applications from

Issue investors in respect of an issue; keeping a proper record of applications etc.
They provide consultancy on matters and manage different aspects pertaining

Merchant Banker to issue of securities.
Underwriting is a process during IPOs, wherein investment banks first buy or

Underwriter underwrite the securities of the issuing entity and then sell them in the market.
Other They include sub-brokers, share transfer agents, portfolio managers, investment
Intermediaries advisors and other intermediaries associated with securities market.
www.edutap.co.in
Powers of Civil Court
In deciding any matter brought before it,

Board shall have powers of Civil Court
www.edutap.co.in
What type of Orders can be passed by SEBI ?
• Suspend the trading of any security in a recognised stock exchange

• Restrain persons from accessing the securities market and prohibit
any person associated with securities market to buy, sell or deal in
securities
• Suspend any office-bearer of any stock exchange or self-regulatory
organization from holding such position
• Impound and retain the proceeds or securities in respect of any
transaction which is under investigation
• Attach, after passing of an order on an application made for approval
by the Judicial Magistrate, bank account(s) of any intermediary,
involved in violation of provisions of this Act, rules or regulations.
www.edutap.co.in
Functions assigned under Securities Contracts (Regulation) Act, 1956
SEBI will receive from every recognised Stock Exchange such periodical returns relating to its affairs as
may be prescribed
Any recognised stock exchange may make bye-laws for the regulation and control of contracts with
the previous approval of SEBI
SEBI may either on a request from the governing body of recognised stock exchange or on its own
make bye-laws or amend any bye-laws made by such stock exchange
SEBI has been empowered to grant a Iicense to any person for the business of dealing in securities
in any State
Securities of the specified nature shall be offered to the public or listed on any stock exchange unless
the issuer fulfills eligibility criteria and requirements as specified by SEBI regulations
www.edutap.co.in
Penalty for Insider Trading
www.edutap.co.in
Penalty for Insider Trading
• When insiders, e.g. key employees or executives who have access to

the strategic information about the company, use the same for
trading in the company's stocks or securities,
• it is called insider trading and is highly discouraged by the Securities

and Exchange Board of India to promote fair trading in the market
for the benefit of the common investor.
• Any insider shall be liable to a penalty of more than ten lakh rupees
extending upto twenty-five crore rupees / three times the amount of
profits made out of insider trading.
www.edutap.co.in
Securities and Appellate Tribunal
• Securities Appellate Tribunal is a statutory body established under

the provisions of the Securities and Exchange Board of India Act, 1992
• To hear and dispose of appeals against orders passed by the
Securities and Exchange Board of India or by an adjudicating officer
under the Act and;
• To exercise jurisdiction, powers and authority conferred on the
Tribunal by or under this Act or any other law for the time being in
force.
www.edutap.co.in
Need for Securities Appellate Tribunal
• Since vast powers make SEBI a very powerful body, an appeal
process has been created to ensure accountability.
• For the quasi judicial functions, there is a Securities Appellate

Tribunal, which is a three-member tribunal.
• A second appeal lies directly to the Supreme Court.
• SAT is empowered to hear and dispose of appeals against orders

passed by the Securities and Exchange Board of India or by an
adjudicating officer under the Act
www.edutap.co.in
Appellate Mechanism under Securities Law
Securities and Exchange Securities Appellate Supreme Court

Board of India Tribunal
www.edutap.co.in
Administrative Aspects of SAT
• Securities Appellate Tribunal shall consist of a Presiding Officer and

such number of Judicial Members and Technical Members as the
Central Government may determine.
• Securities Appellate Tribunal has one bench that sits at Mumbai and
has jurisdiction over all of India.
• Securities Appellate Tribunal is not be bound by the procedure laid
down by the Code of Civil Procedure, 1908,
• but is be guided by the principles of natural justice and, subject to
the other provisions of Depositories Act, 1996.
www.edutap.co.in
MCQ’s
www.edutap.co.in
1. Securities Exchange Board of India (SEBI) was constituted in:
a) 1984
b) 1988
c) 1991
d) 1995
2. Securities Exchange Board of India (SEBI) was initially constituted as an administrative body
under which of the following ministries?
a) Ministry of Finance
b) Ministry of Corporate Affairs
c) Ministry of Commerce
d) Ministry of Home Affairs
www.edutap.co.in
3. Securities Exchange Board of India (SEBI) became a statutory body in?
a) 1988
b) 1990
c) 1992
d) 1995
4. Chairman and Whole time Members of SEBI may hold office for a period of three years subject
to the maximum age limit of:
a) 60 years
b) 65 years
c) 70 years
d) 75 years
www.edutap.co.in
5. Securities Exchange Board of India (SEBI) regulates the functioning of:
a) Stock-Brokers
b) Merchant Banker
c) Underwriter
d) All of the above
6. Which of the following is incorrect regarding Securities and Appellate Tribunal (SAT)?
a) It is a statutory body
b) It hears and disposes of appeals against orders passed by the Securities and Exchange Board
of India
c) Appeals against its orders lies before High Court
d) It is not be bound by the procedure laid down by the Code of Civil Procedure, 1908
www.edutap.co.in
ANSWERS
1. B
2. A
3. C
4. B
5. D
6. C
www.edutap.co.in
Thank You! Happy Learning!
www.edutap.co.in

24.4 Sebi

Uploaded by

Copyright:

Available Formats

24.4 Sebi

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

24.4 Sebi

Uploaded by

Copyright:

Available Formats

Introduction to SEBI

Role & Functions of SEBI

Organisational Framework of SEBI

Securities Appellate Tribunal

• SEBI was constituted on 12th April 1988 as an interim administrative

SEBI (hereinafter called 'the Board') has been established as-

SEBI has its headquarters at the

• Chairman and the five other members as referred in the section,

Passes rulings and

• Regulating the business in stock exchanges and any other securities

• Calling for information, undertaking inspection, conducting inquiries

He is a professional individual who executes buy and sell orders on behalf of

They manage issue related activities namely acceptance of application and

Registrar to an It is appointed by company to carry on activities of collecting applications from

They provide consultancy on matters and manage different aspects pertaining

Underwriting is a process during IPOs, wherein investment banks first buy or

In deciding any matter brought before it,

• Suspend the trading of any security in a recognised stock exchange

• When insiders, e.g. key employees or executives who have access to

• it is called insider trading and is highly discouraged by the Securities

• Securities Appellate Tribunal is a statutory body established under

• For the quasi judicial functions, there is a Securities Appellate

• A second appeal lies directly to the Supreme Court.

• SAT is empowered to hear and dispose of appeals against orders

Securities and Exchange Securities Appellate Supreme Court

• Securities Appellate Tribunal shall consist of a Presiding Officer and

You might also like