POWER,OBJECTIVE AND FUNCTION OF SEBI

vSECURITIES EXCHANGE BOARD OF INDIA

–           INTRODUCTION

–           ESTABLISHED IN 1988 AND GIVEN STATUTORY POWER ON 30 TH JAN 1992 AND CONTROLLER OF CAPITAL ISSUES WAS THE REGULATORY AUTHORITY BEFORE SEBI COME INTO EXISTENCE. IT  IS SIMILAR TO THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION

–           WAS ESTABLISHED ON 12 TH APRIL,1992 AS PER THE PROVISIONS OF THE SECURITIES EXCHANGE OF INDIA.

–           THE PREAMBLE OF THE SEBI DESCRIBES THE BASIC FUNCTIONS

1.       TO PROTECT THE INTERESTS OF INVESTORS IN SECURITIES

2.       PROMOTE  AND REGULATE THE DEVELOPMENT  OF SECURITIES MARKET AND FOR MATTERS CONNECTED THERE WITH AND INCIDENTAL THERE TO.

–           PURPOSE AND ROLE OF SEBI

–           SET UP TO KEEP A CHECK MALPRACTICES AND PROTECT THE INTERESTS OF INVESTORS

1.       ISSUERS:- PROVIDE MECHANISM FOR FINANCING ITS ACTIVITIES

2.       INVESTOR: PROTECTION

3.       INTERMEDIARY:- COMPETITIVE AND PROFESSIONAL MARKET

v    OBJECTIVES

1.       TO REGULATE THE ACTIVITIES OF STOCK EXCHANGE

2.       TO PROTECT THE RIGHTS OF INVESTOR

3.       TO PREVENT FRAUDULENT AND MALPRACTICES

4.       TO REGULATE AND DEVELOP A CODE OF CONDUCT FOR INTERMEDIARIES

vBOARD COMPOSITION

–           IT IS MANAGED BY ITS MEMBERS WHICH CONSISTS OF THE FOLLOWING:-

–           THE CHAIRMAN NOMINATED BY THE UNION GOVT OF INDIA( THE APPOINTMENT COMMITTEE OF THE CABINET HEADED BY PRIME MINISTER APPROVE)

–           TWO MEMBERS I.E OFFICERS FROM  UNION FINANCE MINISTRY. ONE FROM RBI

–           THE REMAINING FIVE MEMBERS ARE NOMINATED BY UNION GOVT OF INDIA AND THREE OUT OF THEM AT LEAST SHALL BE WHOLE TIME DIRECTORS.

–           ITS FIRST CHAIRMAN WAS DR. S.A DEV FROM 12,1988 TILL 23 AUGUST 1990

–           AND SECOND WAS G.V RAMAKRISHNA FOR 24 TH AUGUST 1990 TO 17 JAN 1994

vORGANIZATION STURUCTURE

–           CORPORATE STRUCTURE WITH FIVE DEPARTMENTS THAT HAVE A DEPARTMENTAL HEAD ( EXECUTIVE DIRECTOR) AND HEAD OFFICE IS IN MUMBAI

–           TWO ADVISORY COMMITTEE: RESPONSIBLE FOR PRIMARY AND SECONDARY MARKET AND ADVISE SEBI ON REGULATING INTERMEDIARIES,ISSUING SECURITIES IN THE PRIMARY MARKET,DISCLOSURE REQUIREMENT AND REGULATING AND DEVELOPING THE SECONDARY MARKET

vPRESENT COMPOSITION OF BOARD

–           AJAY TYAGI CHAIRMAN

–           GURUMOORTHY MAHALINGAM WHOLE TIME MEMEBR

–           S,K MOHANTY

–           ANATA BARUA

–           MADHABI PURI BUCH

–           PART TIME MEMBERS

•                       SUBASH CHANDRA GARG

•                       INJETI SRINIVAS

•                       N.S VISHWANATHAN

•                       ARUN P SATHE

vFUNCTIONS OF SEBI

1.       PROTECTIVE FUNCTIONS

2.       DEVELOPMENTAL FUNCTIONS

3.       REGULATOR FUNCTIONS

v    PROTECTIVE FUNCTIONS

–           MAIN FUNCTION IS TO PROVIDE PROTECTION TO INTEREST OF THE INVESTOR AND SECURITY OF THEIR INVESTMENT.

1. SEBI PROHIBITS PRICE RIGGING WHICH MEANS MANIPULATING THE PRICING FOR COMMITTING CHEATING AND FRAUD TO ANY INVESTOR
2. IT PROHIBITS INSIDER TRADING. INSIDERS ARE THOSE PERSONS WHO ARE CONNECTED WITH COMPANY LIKE DIRECTORS,PROMOTERS ,WORKERS ETC WHO MIGHT HAVE ACCESS TO THE SENSITIVE INFORMATION WHICH COULD AFFECT THE PRICES OF THE SECURITIES.

1. IT ALWAYS RESTRICTS THE COMPANIES ADOPTING FRAUDULENT AND UNFAIR TRADE PRACTICES

1. SOME TIMES PROVIDE EDUCATION TO INVESTORS

5. ISSUES GUIDELINES TO PROTECT THE INTEREST OF INVESTORS AND DEBENTURE HOLDERS
6. EMPOWERED TO INVESTIGATE CASES OF INSIDER TRADING
7. STOPPED THE PRACTICE OF ALLOTMENT OF PREFERENTIAL SHARES UNRELATED TO MARKET PRICES

vDEVELOPMENTAL FUNCTIONS

1.       PROMOTES TRAINING OF INTERMEDIARIES

2.       PROMOTE THE ACTIVITIES OF STOCK EXCHANGE:-

a)       BY PERMITTING INTERNET TRADING THROUGH REGISTERED STOCK BROKERS

b)       MADE UNDERWRITING OPTIONAL

c)        E IPO IS PERMITTED THROUGH STOCK EXCHANGE

v    REGULATORY FUNCTIONS

1.       FRAMED RULES AND REGULATION AND CODE OF CONDUCT TO REGULATE THE INTERMEDIARIES AND PRIVATE PLACEMENT HAS BEEN MADE MORE RESTRICTIVE

2.       REGISTER AND REGULATE THE WORKING OF STOCK BROKERS,SUB BROKERS,MERCHANT BANKERS AND ALL THOSE WHO ARE ASSOCIATED WITH STOCK EXCHANGE

3.       REGISTER AND REGULATE THE WORKING OF MUTUAL FUNDS

4.       REGULATES THE TAKE OVER OF COMPANIES

5.       CONDUCT INQUIRIES AND AUDIT OF STOCK EXCHANGE

v    OTHER FUNCTIONS

–           REGISTERING AND REGULATING THE WORKING OF :-

I.            STOCK BROKERS,SUB BROKERS

II.            SHARE TRANSFER AGENT

III.            BANKERS TO THE ISSUE

IV.            MERCHANT BANKERS,PORTFOLIO MANGERS,INVESTMENT AD VISORS

V.            BANKERS TO THE ISSUE

VI.            TRUSTEE OF THE TRUST DEED

VII.            REGISTRAR TO AN ISSUE

VIII.            UNDERWRITERS

vOTHER FUNCTIONS

–           ALSO REGISTER AND REGULATE THE WORKING OF :-

a)       DEPOSITORIES

b)       CUSTODIANS OF SECURITIES

c)        FOREIGN INSTITUTIONAL INVESTORS

d)       CREDIT RATING AGENCIES

e)       VENTURE CAPITAL FUNDS

f)        MUTUAL FUNDS

§   PROMOTING AND REGULATING SELF REGULATORY ORGANIZATIONS

§   CALLING FOR INFORMATION,CONDUCTING INSPECTION AND AUDIT

vFUNCTIONS AND POWERS OF SEBI

–           FUNCTIONS AS:-

1.       QUASI JUDICIAL:- CAN DELIVER AND JUDGMENT AND ORDER ACTIONS FOR ALL MATTERS WITH IN THE AMBIT OF THE SECURITIES MARKET

2.       QUASI LEGISLATIVE: ALLOWED TO MAKE RULES ,REGULATIONS/GUIDELINES  FOR THE PROTECTION OF INVESTORS

3.       QUASI EXECUTIVE:-POWERS TO ADMINISTERS ITS REGULATIONS AND TO TAKE ACTIONS AGAINST ANY A ENTITY VIOLATING THEM. ALSO CAN INVESTIGATE BOOKS/DOCUMENT/ACCOUNT

vPOWER OF SEBI

1.       CAN ASK INFORMATION REGARDING THEIR BUSINESS TRANSACTIONS FOR INSPECTION,SCRUTINY FOR STOCK EXCHANGE AND INTERMEDIARIES

2.       CAN IMPOSE FINE/SUSPENSION/CANCELLATION

3.       EMPOWERED TO NOMINATE THREE MEMBERS ON THE GOVERNING BODY OF EVERY STOCK EXCHANGE