Description
A Power Point Presentation on Regulatory Institutions.
GURUKUL COLLEGE OF COMMERCE
Presentation on
Regulatory Institutions
(SYBBI 2011-2012)
by
Keval Jethva
Regulatory Institutions
? ?
Companies Act, 1956 The Securities Contracts Act Regulation Act,
1956
? ?
Capital Issues (Control) Act, 1947 SEBI Act 1992
Companies Act, 1956
?
One of the most important laws in the Indian Corporate legislation.
?
Objective was to control and regulate the corporate sector.
? ?
Consists of 13 parts and 14 schedules. Important provisions are pertaining to capital and
financial Markets.
?
1. Part
III
? Relevant
to the capital market. ? Relates to a company’s issue of capital, issue of prospectus, allotment and other matters relating to the issue of shares and debentures. ? Section 55 to 68 deals with this matter. ? These sections also include matters related speculation.
?
2. Buy back of Shares
? Purchases
by a company of its own shares. ? Done to reward the shareholder ? Common practice in the USA
?
3. Insider Trading
? Insiders
are those who have confidential info about the company. ? With this info and their position in the company they manipulate the share prices for profits. ? Companies act provides full disclosure about the no. of shares held by the directors, auditors etc.
?
4. Prospectus
? Vehicle
of Publicity ? Contains all info about the company ? Act says to prepare a new prospectus if the company is going for IPO
?
?
5. Fixed Deposits
Attractive source of short term capital for companies as well as investors Issue of Fixed deposits subject to certain regulations Advertisement should be given in a leading news paper Penalty if the company does not repay the deposits on when it is due.
?
?
?
?
? ?
6. Financial Disclosure
Free flow market information Adequate and reliable info to be provided for investors to take sound decisions
?
7. Inter corporate loans and investments
? Act
provides inter-corporate loans and investment by Jt. Stock Cos. ? Resolution to be passed at the AGM ? Should maintain records in the form of a register about the loans.
?
8. Part I
? Contains
the basics like definition
?
9. Part II
? Relates
to the Incorporation of the Co.
?
10. Part IV
? Relates
to the Share Capital and debentures (no.of shares, share certificate no.etc.
?
11. Part V
? Relates
to various charges related to registration
?
12. Part VI
? General
Provisions like Annual returns, meetings, Proxies etc. ? Also related to directors and their remuneration
?
13. Part VII
? Relates
to winding up of the company
However the companies Act did not cover and fulfill all the functions therefore a new bill was drafted in 1993 to replace the Company’s act Post LPG
Securities Contract Act, 1956
? ? ?
An imp. Milestone in the history of Indian securities Regulate the buying and selling of securities Act was passed to prevent undesirable transactions in securities.
? ?
Came into effect from Feb, 1957
Imp. Provisions of the act are as follows:
Exemptions ? Rules ? Stock Exchange ? Stock Exchange Recognition
?
? Application ? Grant
of Recognition
Recognized Stock Exchanges ? Powers of SEBI ? Rules of Stock Exchanges ? Dealers Licensing ? Listing and delisting of Securities
?
Capital Issues Control Act, 1947
? ?
?
Governed the entire new Issue market which included the dividend, timing of the issue, timing of bonus shares etc. Applicable only for private companies. Public Companies were exempt from their regulations. Objectives: ? To channelise the balanced Investment of resources ? Further growth of companies with sound capital structure ? Promote healthy expansion in the corporate sector ? Regulate bonus issue and control pricing of issue ? Regulate mergers and amalgamations who go for new issues.
SEBI Act, 1992
Objectives
? ?
To Protect of investors Interest To promote development of and to regulate the securities market.
?
To regulate operations of financial intermediaries such as brokers, underwriters, portfolio managers etc.
?
To provide suitable education and guidance to investors.
Role/Functions of SEBI
? ? ? ? ? ? ? ?
?
? ?
Protection of Investors Interest Guidelines on capital Issues Restriction on Insider Training Regulate mergers, takeovers and acquisitions Regulates stock brokers activities Prohibit fraudulent and unfair practices Monitoring of Stock exchanges Research and publicity Regulates working of mutual funds Regulates merchant banking Capital Market Reforms
Powers of SEBI
? ? ? ? ?
Powers relating to Stock Exchanges.
Powers relating to monetary penalties.
Powers relating to insider trading.
Powers to regulate business of stock exchange
Powers to make rules
CHAPTER 4- CALL MONEY MARKET
? ? ? ? ?
Introduction Importance Participants Location
Call Rates
Introduction
?
? ?
? ?
?
? ?
?
Market for short term funds Maturity if loans is just one day to 15 days All loans are repayable on demand and at the option of either the lender or borrower These are highly liquid instruments Also called as inter-bank call money market Call money market was in operation since the RBI in 1935 LIC and UTI were permitted in 1970 With the recommendations of various committees like Sukhumoy committee, Vaghul Committee call money market became active and had participants like DFHI Other institutions like NABARD, IDBI, were also permitted later
Importance
?
? ?
Important component of money market Help to different banks Helps to meet CRR and SLR requirements by banks
Location of Call Money Markets
?
? ?
Located in big industrial areas like Mumbai, Kolkatta, Chennai and Ahemdabad. Mumbai Market most imp of all Apart from big cities there are local call money markets
Participants
?
?
?
?
?
?
Commercial banks, Non- scheduled Commercial Banks, Foreign Banks, Co-operative banks and DFHI Previously only large banks participated but now even small banks participate in call money market. Contribution of banks in 1960-61 was 30.93 cr which increased to 36,093 cr. In 2002-03. SBI was a major contributor in the call money market (lender than a borrower) Setting of DFHI developed the call money market to a great extent in 1988. As per RBI policy LIC, UTI, GIC and NABARD were allowed to participate only as lenders but not borrowers.
Call Rates
?
? ? ?
?
?
?
Rate of interest paid on call loans is known as call rates Determined by the forces of demand and supply Varies from day to day and location to location Usually high in Kolkatta (demand is more supply is less)and low in Mumbai (supply is more as compared to demand) In 1973 call rate had reached a high level of 30% so RBI had to interfere to bring it down to reasonable limits. Indian Banks Association gave a ceiling rate of 15% in 1973 and 10% in 1980 At present call rates has been in the range of 4 to 5 %.
doc_424841258.pptx
A Power Point Presentation on Regulatory Institutions.
GURUKUL COLLEGE OF COMMERCE
Presentation on
Regulatory Institutions
(SYBBI 2011-2012)
by
Keval Jethva
Regulatory Institutions
? ?
Companies Act, 1956 The Securities Contracts Act Regulation Act,
1956
? ?
Capital Issues (Control) Act, 1947 SEBI Act 1992
Companies Act, 1956
?
One of the most important laws in the Indian Corporate legislation.
?
Objective was to control and regulate the corporate sector.
? ?
Consists of 13 parts and 14 schedules. Important provisions are pertaining to capital and
financial Markets.
?
1. Part
III
? Relevant
to the capital market. ? Relates to a company’s issue of capital, issue of prospectus, allotment and other matters relating to the issue of shares and debentures. ? Section 55 to 68 deals with this matter. ? These sections also include matters related speculation.
?
2. Buy back of Shares
? Purchases
by a company of its own shares. ? Done to reward the shareholder ? Common practice in the USA
?
3. Insider Trading
? Insiders
are those who have confidential info about the company. ? With this info and their position in the company they manipulate the share prices for profits. ? Companies act provides full disclosure about the no. of shares held by the directors, auditors etc.
?
4. Prospectus
? Vehicle
of Publicity ? Contains all info about the company ? Act says to prepare a new prospectus if the company is going for IPO
?
?
5. Fixed Deposits
Attractive source of short term capital for companies as well as investors Issue of Fixed deposits subject to certain regulations Advertisement should be given in a leading news paper Penalty if the company does not repay the deposits on when it is due.
?
?
?
?
? ?
6. Financial Disclosure
Free flow market information Adequate and reliable info to be provided for investors to take sound decisions
?
7. Inter corporate loans and investments
? Act
provides inter-corporate loans and investment by Jt. Stock Cos. ? Resolution to be passed at the AGM ? Should maintain records in the form of a register about the loans.
?
8. Part I
? Contains
the basics like definition
?
9. Part II
? Relates
to the Incorporation of the Co.
?
10. Part IV
? Relates
to the Share Capital and debentures (no.of shares, share certificate no.etc.
?
11. Part V
? Relates
to various charges related to registration
?
12. Part VI
? General
Provisions like Annual returns, meetings, Proxies etc. ? Also related to directors and their remuneration
?
13. Part VII
? Relates
to winding up of the company
However the companies Act did not cover and fulfill all the functions therefore a new bill was drafted in 1993 to replace the Company’s act Post LPG
Securities Contract Act, 1956
? ? ?
An imp. Milestone in the history of Indian securities Regulate the buying and selling of securities Act was passed to prevent undesirable transactions in securities.
? ?
Came into effect from Feb, 1957
Imp. Provisions of the act are as follows:
Exemptions ? Rules ? Stock Exchange ? Stock Exchange Recognition
?
? Application ? Grant
of Recognition
Recognized Stock Exchanges ? Powers of SEBI ? Rules of Stock Exchanges ? Dealers Licensing ? Listing and delisting of Securities
?
Capital Issues Control Act, 1947
? ?
?
Governed the entire new Issue market which included the dividend, timing of the issue, timing of bonus shares etc. Applicable only for private companies. Public Companies were exempt from their regulations. Objectives: ? To channelise the balanced Investment of resources ? Further growth of companies with sound capital structure ? Promote healthy expansion in the corporate sector ? Regulate bonus issue and control pricing of issue ? Regulate mergers and amalgamations who go for new issues.
SEBI Act, 1992
Objectives
? ?
To Protect of investors Interest To promote development of and to regulate the securities market.
?
To regulate operations of financial intermediaries such as brokers, underwriters, portfolio managers etc.
?
To provide suitable education and guidance to investors.
Role/Functions of SEBI
? ? ? ? ? ? ? ?
?
? ?
Protection of Investors Interest Guidelines on capital Issues Restriction on Insider Training Regulate mergers, takeovers and acquisitions Regulates stock brokers activities Prohibit fraudulent and unfair practices Monitoring of Stock exchanges Research and publicity Regulates working of mutual funds Regulates merchant banking Capital Market Reforms
Powers of SEBI
? ? ? ? ?
Powers relating to Stock Exchanges.
Powers relating to monetary penalties.
Powers relating to insider trading.
Powers to regulate business of stock exchange
Powers to make rules
CHAPTER 4- CALL MONEY MARKET
? ? ? ? ?
Introduction Importance Participants Location
Call Rates
Introduction
?
? ?
? ?
?
? ?
?
Market for short term funds Maturity if loans is just one day to 15 days All loans are repayable on demand and at the option of either the lender or borrower These are highly liquid instruments Also called as inter-bank call money market Call money market was in operation since the RBI in 1935 LIC and UTI were permitted in 1970 With the recommendations of various committees like Sukhumoy committee, Vaghul Committee call money market became active and had participants like DFHI Other institutions like NABARD, IDBI, were also permitted later
Importance
?
? ?
Important component of money market Help to different banks Helps to meet CRR and SLR requirements by banks
Location of Call Money Markets
?
? ?
Located in big industrial areas like Mumbai, Kolkatta, Chennai and Ahemdabad. Mumbai Market most imp of all Apart from big cities there are local call money markets
Participants
?
?
?
?
?
?
Commercial banks, Non- scheduled Commercial Banks, Foreign Banks, Co-operative banks and DFHI Previously only large banks participated but now even small banks participate in call money market. Contribution of banks in 1960-61 was 30.93 cr which increased to 36,093 cr. In 2002-03. SBI was a major contributor in the call money market (lender than a borrower) Setting of DFHI developed the call money market to a great extent in 1988. As per RBI policy LIC, UTI, GIC and NABARD were allowed to participate only as lenders but not borrowers.
Call Rates
?
? ? ?
?
?
?
Rate of interest paid on call loans is known as call rates Determined by the forces of demand and supply Varies from day to day and location to location Usually high in Kolkatta (demand is more supply is less)and low in Mumbai (supply is more as compared to demand) In 1973 call rate had reached a high level of 30% so RBI had to interfere to bring it down to reasonable limits. Indian Banks Association gave a ceiling rate of 15% in 1973 and 10% in 1980 At present call rates has been in the range of 4 to 5 %.
doc_424841258.pptx