SEBI background and introduction

Introduction-

-SEBI is a statutory body established on April 12, 1992 in accordance with the
provisions of the Securities and Exchange Board of India Act, 1992.
-The basic functions of the Securities and Exchange Board of India is to protect the
interests of investors in securities and to promote and regulate the securities market.

-Before SEBI came into existence, Controller of Capital Issues was the regulatory
authority; it derived authority from the Capital Issues (Control) Act, 1947.
-In April, 1988 the SEBI was constituted as the regulator of capital markets in India
under a resolution of the Government of India.
-Initially SEBI was a non-Statutory body without any statutory power.
-It became autonomous and given statutory powers by SEBI Act 1992.
-The headquarters of SEBI is situated in Mumbai. The regional offices of SEBI are
located in Ahmedabad, Kolkata, Chennai and Delhi.

SEBI-

Establishment and Incorporation of SEBI Section 3 of the SEBI Act provides that there
shall be a Board by the name of the Securities and Exchange Board of India (SEBI)
established as –
a body corporate; having perpetual succession and a common seal; with power 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 Mumbai. Further, the Board may establish
offices at other places in India.

OBJECTIVES OF SEBI

a. To protect the interests of investors in securities

b. The promote the development of Securities Market
c. To regulate the securities market and for matters connected therewith or incidental
thereto

Chapter IV of the SEBI Act, 1992 deals with the powers and functions of SEBI.
As in next answer
Structure of SEBI

Section 4(1) of the SEBI Act provides that the SEBI shall consist of the following
members (appointed by the Central Government), namely:
Chairman
Two members from amongst the officials of the Ministry of the Central Government
dealing with finance and administration of the Companies Act, 2013
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.

SEBI is vested with the same power as that of civil court

Section 11(3) of the SEBI Act provides that the SEBI has been vested with the same
powers as are available to a Civil Court under the Code of Civil Procedure, 1908 for
trying a suit in respect of the following matters:
i. the discovery and production of books of account and other documents at such
place and such time indicated by SEBI.
ii. summoning and enforcing the attendance of persons and examining them on oath.
iii. inspection of any books, registers and other documents of any person listed
referred in section 12 of the Act at any place.
iv. inspection of any book or register or other document or record of any listed
company or a public company which intends to get its securities listed on any
recognized stock exchange.
v. issuing commissions for the examination of witnesses or documents.

-Further, a Securities Appellate Tribunal (SAT) has been constituted to protect the
interest of entities that feel aggrieved by SEBI’s decision.
-SAT consists of a Presiding Officer and two other Members.
-It has the same powers as vested in a civil court. Further, if any person feels
aggrieved by SAT’s decision or order can appeal to the Supreme Court.
-SAT is a statutory body established under the provisions of the Securities and
Exchange Board of India Act, 1992.
-It is 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;
 SEBI- Powers and functions and its role in securities market

Introduction

The Securities and Exchange Board of India (SEBI) is a statutory body established by
the Government of India in 1992 to regulate the securities market in India.
It is the apex regulatory authority for the securities market.
It aims to protect the interests of investors and promote the development of the
securities market.
It ensures fair and efficient practices in the securities market.

Chapter IV of the SEBI Act, 1992 deals with the powers and functions of SEBI.

Functions of SEBI

1.Protective Function:
The protective function implies the role that SEBI plays in protecting the investor
interest and also that of other financial participants. The protective function includes
the following activities.

a. Prohibits insider trading: Insider trading is the act of buying or selling of the
securities by the insiders of a company, which includes the directors, employees and
promoters. To prevent such trading SEBI has barred the companies to purchase their
own shares from the secondary market.

b. Check price rigging: Price rigging is the act of causing unnatural fluctuations in the
price of securities by either increasing or decreasing the market price of the stocks
that leads to unexpected losses for the investors. SEBI maintains strict watch in order
to prevent such malpractices.

c. Promoting fair practices: SEBI promotes fair trade practice and works towards
prohibiting fraudulent activities related to trading of securities.

d. Financial education provider: SEBI educates the investors by conducting online and
offline sessions that provide information related to market insights and also on
money management.

2.Regulatory Function:
Regulatory functions involve establishment of rules and regulations for the financial
intermediaries along with corporates that helps in efficient management of the
market. The following are some of the regulatory functions-
a. SEBI has defined the rules and regulations and formed guidelines and code of
conduct that should be followed by the corporates as well as the financial
intermediaries.
b. Regulating the process of taking over of a company.
c. Conducting inquiries and audit of stock exchanges.
d. Regulates the working of stock brokers, merchant brokers.

3.Developmental Function:
Developmental function refers to the steps taken by SEBI in order to provide the
investors with a knowledge of the trading and market function.
The following activities are included as part of developmental function.
1. Training of intermediaries who are a part of the security market.
2. Introduction of trading through electronic means or through the internet by the
help of registered stock brokers.
3. By making the underwriting an optional system in order to reduce cost of issue.

Powers of SEBI-

SEBI has following main powers:

POWERS WITH RESPECT TO INSPECTION OF BOOKS AND DOCUMENTS Section 11(2A)

prescribes that SEBI may take measures to undertake inspection of any book, or
register, or other document or record of any listed public company or a public
company which intends to get its securities listed on any recognised stock exchange
where SEBI has reasonable grounds to believe that such company has been indulging
in insider trading or fraudulent and unfair trade practices relating to securities
market.

SEBI IS VESTED WITH THE SAME POWER AS THAT OF CIVIL COURT Section 11(3) of the
SEBI Act provides that the SEBI has been vested with the same powers as are
available to a Civil Court under the Code of Civil Procedure, 1908 for trying a suit in
respect of the following matters: i. the discovery and production of books of account
and other documents at such place and such time indicated by SEBI. ii. summoning
and enforcing the attendance of persons and examining them on oath. iii. inspection
of any books, registers and other documents of any person listed referred in section
12 of the Act at any place. iv. inspection of any book or register or other document or
record of any listed company or a public company which intends to get its securities
listed on any recognized stock exchange. v. issuing commissions for the examination
of witnesses or documents

POWER OF THE SEBI TO REGULATE OR PROHIBIT ISSUE OF PROSPECTUS, OFFER

DOCUMENT OR ADVERTISEMENT SOLICITING MONEY FOR ISSUE OF SECURITIES the
SEBI may, for the protection of investors, –
Specify, by regulations-
The matters relating to issue of capital
The manner in which such matters shall be disclosed by company
by general or special orders-
prohibit any company from issuing prospectus, any offer document, or advertisement
soliciting money from the public for the issue of securities
specify the conditions subject to which the prospectus, such offer document or
advertisement, if not prohibited, may be issued

POWER TO ISSUE DIRECTIONS AND LEVY PENALTY

Issue of Directions Section 11B of the Act provides that if the SEBI is satisfied, after
making or causing to be made an enquiry that it is necessary: SEBI may issue such
directions:
to any person or class of persons referred to in section 12, or associated with the
securities market; or
to any company in respect of matters relating to issue of capital, transfer of securities
and other matter incidental thereto. as may be appropriate in the interests of
investors in securities and the securities market.

1. in the interest of investors, or orderly development of securities market; or

2. to prevent the affairs of any intermediary or other persons referred to in section 12
being conducted in a manner detrimental to the interests of investors or securities
market; or
3. to secure the proper management of any such intermediary or person

POWER TO INVESTIGATE-
where the SEBI has reasonable ground to believe that:
a) the transactions in securities are being dealt within a manner detrimental to the
investors or the securities market; or
b) any intermediary or any person associated with the securities market has violated
any of the provisions of this Act or the rules or the regulations made or directions
issued by SEBI thereunder;
it may, at any time by order in writing, direct any person specified in the order to
investigate the affairs of such intermediary or persons associated with the securities
market and to report thereon to the SEBI

Role of SEBI in securities market

SEBI plays a crucial role in regulating the securities market in India. Its main objective
is to protect the interests of investors and to ensure fair and transparent dealings in
securities. SEBI regulates various players in the securities market, including
stockbrokers, merchant bankers, and other intermediaries. It also ensures that listed
companies comply with the regulations and guidelines laid down by it.

SEBI is responsible for supervising the functioning of the securities market in India. It
monitors the operations of various players in the market to ensure that they comply
with the regulations and guidelines laid down by it. SEBI also conducts inspections
and investigations to ensure that there are no malpractices or violations of
regulations.

SEBI plays a developmental role in the securities market by promoting and

developing it. It has taken various initiatives to develop the securities market in India,
such as introducing new products and instruments, encouraging foreign investment,
and promoting investor education and awareness. SEBI has also taken steps to
improve the infrastructure and technology used in the securities market.

One of the primary functions of SEBI is to protect the interests of investors. It does so
by ensuring that listed companies provide accurate and timely information to
investors, preventing insider trading and fraudulent practices, and by taking action
against those who violate regulations. SEBI also educates investors about the risks
and rewards of investing in securities and provides them with a grievance redressal
mechanism.

SEBI has the power to enforce its regulations and guidelines by taking action against
those who violate them. It can impose fines, initiate legal proceedings, and even
suspend or cancel the registration of intermediaries who violate its regulations. SEBI
also has the power to investigate and take action against insider trading and other
fraudulent practices.

SEBI’s regulations mandate that companies must provide accurate and timely
information to investors. Listed companies must comply with the listing agreement
and disclosure requirements, including disclosing material information such as
financial statements, board meetings, and other important information to the stock
exchange and investors. This requirement ensures that investors can make informed
decisions and increases transparency in the securities market.

SEBI also plays an important role in regulating insider trading in India. Insider trading
is the practice of buying or selling securities based on confidential information that is
not available to the public. This practice can be harmful to the integrity of the
securities market, and can cause significant losses to investors. SEBI has laid down
stringent regulations to prevent insider trading, and it monitors the market to detect
any instances of insider trading. It takes strict action against those who violate the
regulations, including imposing fines, suspending trading activities, and even
initiating criminal proceedings.

SEBI also regulates the functioning of stock exchanges in India. It lays down the
guidelines for the registration, functioning, and conduct of stock exchanges. SEBI
monitors the performance of stock exchanges and takes action against those who
violate the regulations.

Conclusion:
SEBI plays a critical role in the functioning of the securities market in India. It
regulates various players in the market, ensures fair and transparent dealings in
securities, and protects the interests of investors. SEBI also plays a developmental
role in promoting and developing the securities market and has the power to enforce
its regulations and guidelines. Its efforts have helped in making the securities market
in India more efficient, transparent, and investor-friendly.

Securities Appellate Tribunal

Introduction-

-The Securities and Exchange Board of India was established on April 12, 1992 in
accordance with the provisions of the Securities and Exchange Board of India Act,
1992.
-Securities Appellate Tribunal is a statutory body developed under the provisions of
Section 15K of the Securities and Exchange Board of India Act.
-Securities Appellate Tribunal was mainly established to hear an appeal against the
order passed by the SEBI (Securities and Exchange Board of India) or by an
adjudicating officer under the SEBI Act.

Establishment of Securities Appellate Tribunals-

-As per Section 15K, the Central Government is empowered to establish a Tribunal by
notification, to be known as the Securities Appellate Tribunal to exercise the
jurisdiction, power and authorities conferred on it or under the Act or any other law
for the time being in force.
-The Central Government shall also specify in the notification the matters and places
in relation to which the Securities Appellate Tribunal may exercise jurisdiction.

Composition of Securities Appellate Tribunal –

-According to Section 15 L, the Securities Appellate Tribunal shall consist of-

1.Presiding Officer and
2.such number of Judicial Members and Technical Members
as the Central Government may determine, to exercise the powers and discharge the
functions.
-The Presiding Officer may transfer a Judicial Member or a Technical Member of the
Securities Appellate Tribunal from one Bench to another Bench.
-A Bench may be constituted by the Presiding Officer of the Securities Appellate
Tribunal with two or more Judicial or Technical Members as he may deem fit;
However, every Bench constituted shall include at least one Judicial Member and one
Technical Member; c) the Benches of the Securities Appellate Tribunal shall ordinarily
sit at Mumbai and may also sit at such other places as the Central Government may,
in consultation with the Presiding Officer, notify.

Who can make an appeal?

Every person aggrieved by order of the Securities and Exchange Board of India or
adjudicating officer is liable to make an appeal to the Securities Appellate Tribunal
(SAT). No appeal can be made to the Securities Appellate Tribunal (SAT) against any
order made with the consent of the part
Appeal to the Securities Appellate Tribunal
-Section 15T and 15U deal with the appeal procedure and powers of Securities
Appellate Tribunal.
-Any person aggrieved by the decision of the SEBI or order made by and adjudicating
officer under this Act may make an appeal to SAT within 45 days of receiving such
order
-On receipt of appeal and after giving the parties to opportunity of being heard SAT,
pass order as thinks fit and shall confirm, modify or set aside the order appealed
against.
-The Securities Appellate Tribunal may entertain an appeal after the expiry of the said
period of forty-five days if it is satisfied that there was sufficient cause for not filing it
within that period
-SAT shall dispose of the appeal within 6 months.
-A memorandum of appeal shall be presented in the Form and accompanied by
respective fees, by the aggrieved person in the registry of the Appellate Tribunal or
sent by registered post addressed to the Registrar.
-Every memorandum of appeal shall be under distinct heads, the grounds of such
appeal without any argument or narrative, and such ground shall be typewritten,
cyclostyled or printed neatly, legibly and numbered consecutively.

Appeal to Supreme Court-

-Any person aggrieved by the decision or order of the SAT may file an appeal to the
Supreme Court within 60 days from the date of order of SAT.
-Appeal can be on any question of law arising out of such orders.
-Further extension of 60 days can be granted is sufficient cause for delay is explained.

Procedure of SAT

-Section 15U lays down that the Securities Appellate Tribunal shall not be bound by
the procedure laid down by the Code of Civil Procedure, 1908
-It shall be guided by the principles of natural justice.
-Subject to the other provisions of this Act, the Securities Appellate Tribunal shall
have powers to regulate their own procedure including the places at which they shall
have their sitting.
-The provisions of the Limitations Act, 1963 shall apply to an appeal made to
Securities Appellate Tribunal.
-No civil court shall have jurisdiction in respect of any matter which the SEBI (or the
adjudicating officer) is empowered by or under, this Act to pass any order and
-No injunction shall be granted by any court or other authority in respect of any
action taken or to be taken in pursuance of any order passed by the SEBI or the
adjudicating officer by, or under, the SEBI Act.

Power of Securities Appellate Tribunal (SAT)

The Securities Appellate Tribunal (SAT) will have the same powers as vested in a civil
court under the code of civil procedure while trying a suit, with respect of the
following matters namely:
 Enforce and summon the attendance of any person
 Require the discovery and production of documents
 Receive evidence on affidavits
 Issue commissions for the examination of the documents or witnesses
 Dismiss an application for default or deciding it ex-parte
 Set aside any order or dismissal of any application for default or any other
order passed by it ex-parte
 Any other matter as and when prescribed.

Function:

-To protect the interests of investors in securities and to promote and regulate the
securities market.
-Securities are tradable financial instruments used to raise capital in public and
private markets.
There are primarily three types of securities:
equity—which provides ownership rights to holders;
debt—essentially loans repaid with periodic payments; and
hybrids—which combine aspects of debt and equity.
-Registering and regulating the working of stock brokers, merchant bankers,
underwriters, portfolio managers, investment advisers and such other intermediaries
who may be associated with securities markets in any manner.
-SEBI is a quasi-legislative, quasi-judicial and quasi-executive body. It can draft
regulations, conduct inquiries, pass rulings and impose penalties.

Conclusion

SEBI is the prime regulator of the Securities market. And through its regulations, if it
fails to satisfy the company or organization then the person can file an appeal in the
Securities Appellate Tribunal. SAT works to mitigate the problems arising out of the
orders of SEBI since 1995. In many cases, SAT has proved to check for the
accountability and answerability of the SEBI.