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SEBI(Securities & Exchange Board Of India)

ROLE OF SEBI IN INDIAN STOCK MARKET

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SEBI is the regulator for

Securities Market in India.

Established by the Government of India in 1988 through an

executive resolution

Was subsequently upgraded as a fully autonomous

body (a statutory Board) in the year 1992 with the passing of the

SEBI Act on 30th January 1992.

In place of Government Control, a statutory and autonomous

regulatory board with defined responsibilities, to cover bothdevelopment & regulation of the market, and independent powers

have been set up.

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3

Securities and Exchange Board ofIndia

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MARKET CRASH

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India is an ` informationally ' weak market

Boosting capital market demands restoring the

confidence of lay investors who have been beaten

down by repeated scams

Progressively softening interest rates and an under

performing economy have eroded investment

options, and require enhanced investing skills.

Why do we need a regulatory body for

Investor protection in India?

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2.POWER OF INSPECTION

The board may undertake inspection of any book,register or other documents of any listed publiccompany if board believes that company is indulgingin unfair trade practices.

3. POWERS OF COURT

The discovery & production of books of a/c at suchplace and time as board specifies and later oninspecting them.

Enforcing attendance of persons and theirexamination under oath.

Issuing commissions for the examination of witnessor documents.

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6.POWER TO ISSUE DIRECTIONS

In matters of investor protection & orderly

development of securities market.

Issue directions to any person, class of persons orcompany to secure the proper mgt

7.POWERS OF INVESTIGATION

Where board believes that securities are being dealtin a manner detrimental to investors or securitiesmarket.

Investing authority may ask company manager, M.D,and any intermediary to produce requireddocuments.

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10. PROHIBITION OF MANIPULATIVE &DECEPTIVEDEVICES, INSIDER TRADING AND SUBSTANCIALACQUISATION OF SECURITIES OR CONTROL

No person can use or employ any deceptive meansregarding issue, purchase or sale of securities.

Engage in any act or practice of business whichwould be a fraud upon any person and not inprovisions of the act.

Engage in insider trading

No person can acquire, control of company orsecurities more than the percentage of equity sharecapital of the company.

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C) to maintain books of accounts and records fails tomaintain the same he shall be liable to a penalty of 1

lacs rs for each day during which such failure continuesor 1 crore whichever is less.

2) Penalty for failure by any person to enter intoagreement with clients:-

If any person who is registered as an intermediaryunder the act fails to enter in an agreement with hisclients he shall be liable to a penalty of 1 lacs rupees foreach day during which such failure continues or 1 crorewhichever is less.

3) Penalty for failure to redress investors grievances:-

If any listed company or any person who is registered as

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an intermediary after having been called upon by the

board in writing to redress the grievances of investors fails to redress them with the timespecified liable to a penalty of 1 lacs rupees for eachday during which such failure continues or 1 crore

whichever is less.

4) Penalty for certain defaults in case of mutualfunds:-

If any person who is

A) required under this act to obtain a certificate of registration from the board for carrying on collective

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of any person deals in securities of a body corporate

listed on any stock exchange on the basis of unpublished price sensitive information he shall beliable to a penalty of twenty five crores rupees or three

times the profit whichever is higher.

8)P

enalty for non disclosure of acquisitionof shares and takeovers

If any person who is required under this act or any rules

or regulations made there under fails to

1) disclose the aggregate of his share holding in theboard corporate before he acquire any shares in thebody corporate.

2) Make a public offer by sending letter of offer to the

shareholders of the concerned company

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11. POWER TO ADJUDICATE

for the purpose of adjudicating, the board shall appoint any of its

officers not below the rank of division chief to be an adjudicatingofficer for holding an enquiry in the prescribed manner after giving anyperson concerned a reasonable opportunity of being heard for thepurpose of imposing any penalty.

12

. FACTO

RS TO

BE TAKEN INTO

ACCO

UNT BYADJUDICATING OFFICER

the amount of disproportionate gain or unfair advantage, whereverquantifiable made as result of default,

The amount of loss caused to an investor or group of investors as aresult of default

The repetitive nature of default.

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Two broad approaches of SEBI

To integrate the securities market at the national level,

To diversify the trading products, so that there is an

increase in number of traders including banks, financial

institutions, insurance companies, mutual funds,

primary dealers etc. to transact through the Exchanges.

In this context the introduction of derivatives trading

through Indian Stock Exchanges permitted by SEBI in2000 AD is a real landmark.

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SEBI GUIDELINES FOR ISSUE OF SECURITIES

SEBI has issued detailed guidelines in respect of issue of securities to

public.

The guidelines were first issued on 11th

June, 1992 and were amendedsubsequently from time to time. SEBI has now issued consolidated

guidelines as SEBI (DISCLOSURES AND INVESTOR PROTECTION)

GUIDELINES, 2000 vide its circular no.1 dated 19-1-2000.

These guidelines shall be applicable to all public issues by listed and

unlisted companies, all offers for sale and right issues by listed companies

whose equity share capital is listed, except in case of rights issues wherethe aggregate value of securities offered does not exceed Rs.50 Lacs.

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ELIGIBILITY NORMS FOR COMPANIES ISSUING SECURITIES

CONDITIONS FOR ISSUE OF SECURITIES

FILLING OF OFFER DOCUMENT

INITIAL PUBLIC OFFERING BY UNLISTED COMPANIES

PUBLIC ISSUES BY LISTED COMPANIES

EXEMPTION FROM ELIGILBILITY NORMS

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The Securities and Exchange Board of India Act,

1992 (the SEBI Act) was amended in the years

1995,

1999,

2002

to meet the requirements of changing needs of

the securities market and responding to the

development in the securities market.

Amendments

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LIMITATIONSOF SEBI

1 The central government has authorised sebi to frameits rules and regulations for actively monitoring capital

markets. These rules and regulations have to beapproved by government first this cause unnecessarydelays.2 Sebi will have to seek prior approval for filling criminalcomplaints for violation of the regulation this will again

cause delays3 Sebi has not been given autonomy. Its BOD isdominated by government nominees.

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By:

Sumit Paul

Sunil Kr Gupta

Beant Kaur