Securities and Exchange Board of India
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.
SEBI is the regulator for the Securities Market in India. It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament. Chaired by C B Bhave, SEBI is headquartered in the popular business district of Bandra-Kurla complex in Mumbai, and has Northern, Eastern, Southern and Western regional offices in New Delhi, Kolkata, Chennai and Ahmedabad. Chandrasekhar Bhaskar Bhave is the sixth chairman of the Securities Market Regulator. Prior to taking charge as Chairman SEBI, he had been the chairman of NSDL (National Securities Depository Limited) ushering in paperless securities. Prior to his stint at NSDL, he had served SEBI as a Senior Executive Director. He is a former Indian Administrative Service officer of the 1975 batch.
Formed 1992
Jurisdiction India
Headquarters Mumbai, Maharashtra, India
Employees 525
Agency executive C B Bhave, Chairman
Name Designation As per
CB Bhave Chairman SEBI
CHAIRMAN (S.4(1)(a) of the SEBI Act, 1992)
KP Krishnan Joint Secretary, Ministry of Finance Member (S.4(1)(b) of the SEBI Act, 1992)
Anurag Goel Secretary, Ministry of Corporate Affairs Member (S.4(1)(b) of the SEBI Act, 1992)
Dr G Mohan Gopal Director, National Judicial Academy, Bhopal Member (S.4(1)(d) of the SEBI Act, 1992)
MS Sahoo Whole Time Member, SEBI
Member (S.4(1)(d) of the SEBI Act, 1992)
Dr KM Abraham Whole Time Member, SEBI
Member (S.4(1)(d) of the SEBI Act, 1992)
Mohandas Pai Director, Infosys Member (S.4(1)(d) of the SEBI Act, 1992)
PREAMBLE
The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as “…..to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto”
Functions and responsibilities
SEBI has to be responsive to the needs of three groups, which constitute the market:
• the issuers of securities
• the investors
• the market intermediaries.
SEBI has three functions rolled into one body quasi-legislative, quasi-judicial and quasi-executive. It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity.
Though this makes it very powerful, there is an appeals process to create accountability. There is a Securities Appellate Tribunal which is a three member tribunal and is presently headed by a former Chief Justice of a High court - Mr. Justice NK Sodhi. A second appeal lies directly to the Supreme Court.
SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and successively (e.g. the quick movement towards making the markets electronic and paperless rolling settlement on T+2 basis). SEBI has been active in setting up the regulations as required under law.
SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown and the Satyam fiasco.It had increased the extent and quantity of disclosures to be made by Indian corporate promoters. More recently, inlight of the global meltdown,it liberalised the takeover code to facilitate investments by removing regulatory strictures.
POWERS AND FUNCTIONS OF THE BOARD
Functions of Board.
Subject to the provisions of this Act, it shall be the duty of the Board to protect the interests of investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit.
Without prejudice to the generality of the foregoing provisions, the measures referred to therein may provide for -
(a) regulating the business in stock exchanges and any other securities markets;
(b) registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with securities markets in any manner; (ba) registering and regulating the working of the depositories, [participants,] custodians of securities, foreign institutional investors, credit rating agencies and such other intermediaries as the Board may, by notification, specify in this behalf;]
(c) registering and regulating the working of [15][venture capital funds and collective investment schemes],including mutual funds;
(d) promoting and regulating self-regulatory organisations;
(e) prohibiting fraudulent and unfair trade practices relating to securities markets;
(f) promoting investors' education and training of intermediaries of securities markets;
(g) prohibiting insider trading in securities;
(h) regulating substantial acquisition of shares and take-over of companies;
(i) calling for information from, undertaking inspection, conducting inquiries and audits of the [16][ stock exchanges, mutual funds, other persons associated with the securities market] intermediaries and self- regulatory organizations in the securities market; (ia) calling for information and record from any bank or any other authority or board or corporation established or constituted by or under any Central, State or Provincial Act in respect of any transaction in securities which is under investigation or inquiry by the Board;”]
(j) performing such functions and exercising such powers under the provisions of [18][...]the Securities Contracts (Regulation) Act, 1956(42 of 1956), as may be delegated to it by the Central Government;
(k) levying fees or other charges for carrying out the purposes of this section;
(l) conducting research for the above purposes; (la) calling from or furnishing to any such agencies, as may be specified by the Board, such information as may be considered necessary by it for the efficient discharge of its functions;”]
performing such other functions as may be prescribed.Without prejudice to the provisions contained in sub-section (2), the Board 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 (not being intermediaries referred to in section 12) which intends to get its securities listed on any recognised stock exchange where the Board has reasonable grounds to believe that such company has been indulging in insider trading or fraudulent and unfair trade practices relating to securities market.”]
Notwithstanding anything contained in any other law for the time being in force while exercising the powers under [22][clause (i) or clause (ia) of sub-section (2) or sub-section (2A)], the Board shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908),while trying a suit, in respect of the following matters, namely :
(i) the discovery and production of books of account and other documents, at such place and such time as may be specified by the Board;
(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 referred to in section 12, at any place;]
(iv) inspection of any book, or register, or other document or record of the company referred to in sub-section (2A);
issuing commissions for the examination of witnesses or documents.]
Without prejudice to the provisions contained in sub-sections (1), (2), and section 11B, the Board may, by an order, for reasons to be recorded in writing, in the interests of investors or securities market, take any of the following measures, either pending investigation or inquiry or on completion of such investigation or inquiry, namely:-
(a) suspend the trading of any security in a recognized stock exchange;
(b) restrain persons from accessing the securities market and prohibit any person associated with securities market to buy, sell or deal in securities;
(c) suspend any office-bearer of any stock exchange or self- regulatory organization from holding such position;
(d)impound and retain the proceeds or securities in respect of any transaction which is under investigation;
(e)attach, after passing of an order on an application made for approval by the Judicial Magistrate of the first class having jurisdiction, for a period not exceeding one month, one or more bank account or accounts of any intermediary or any person associated with the securities market in any manner involved in violation of any of the provisions of this Act, or the rules or the regulations made thereunder:
Provided that only the bank account or accounts or any transaction entered therein, so far as it relates to the proceeds actually involved in violation of any of the provisions of this Act, or the rules or the regulations made thereunder shall be allowed to be attached;
(f)direct any intermediary or any person associated with the securities market in any manner not to dispose of or alienate an asset forming part of any transaction which is under investigation:
Provided that the Board may, without prejudice to the provisions contained in sub-section (2) or sub-section (2A), take any of the measures specified in clause (d) or clause (e) or clause (f), in respect of any listed public company or a public company (not being intermediaries referred to in section 12) which intends to get its securities listed on any recognized stock exchange where the Board has reasonable grounds to believe that such company has been indulging in insider trading or fraudulent and unfair trade practices relating to securities market:
Provided further that the Board shall, either before or after passing such orders, give an opportunity of hearing to such intermediaries or persons concerned.]
Board to regulate or prohibit issue of prospectus, offer document or advertisement soliciting money for issue of securities.
(1) Without prejudice to the provisions of the Companies Act, 1956(1 of 1956), the Board may, for the protection of investors, -
(a) specify, by regulations –
(i) the matters relating to issue of capital, transfer of securities and other matters incidental thereto; and
(ii) the manner in which such matters shall be disclosed by the companies;
(b) by general or special orders –
(i) prohibit any company from issuing prospectus, any offer document, or advertisement soliciting money from the public for the issue of securities;
(ii)specify the conditions subject to which the prospectus, such offer document or advertisement, if not prohibited, may be issued.
Without prejudice to the provisions of section 21 of the Securities Contracts (Regulation) Act, 1956(42 of 1956), the Board may specify the requirements for listing and transfer of securities and other matters incidental thereto."]
What is the role of SEBI in financial market?
The rules, regulations and procedures relating to public issues in India are governed by the Securities and Exchange Board of India (SEBI).
Any company going public in India should get approval from SEBI before opening its IPO.
Issuer company's lead managers submit the public issue prospectus to SEBI, provide clarification, make changes to the prospectus suggested by SEBI and get it approve.
In simple words SEBI validate the IPO prospectus and make sure all the declaration made in this document are correct and also make sure that document has enough information to help investors to take decision before applying shares in an IPO.
REGULATION
Sep 07, 2006 Central Government Notification rescinding 7 SEBI Intermediary Rules
Apr 11, 2005 Depositories(Procedure for Holding Inquiry and Imposing Penalties by Adjudication Officer) Rules 2005
Oct 06, 2003 Amendment to SCR Rules
Feb 18, 2000 Depositories (Appeal To Securities Appellate Tribunal) Rules, 2000
Sep 11, 1995 Securities and Exchange Board of India Appellate Tribunal (procedure) Rules 1995
Jul 10, 1995 Securities and Exchange Board of India (Procedure for holding inquiry and imposing penalties by adjudicating officer ) Rules, 1995.
Jul 14, 1994 Securities and Exchange Board of India (Bankers to an Issue) Rules, 1994 (Since Rescinded w.e.f. September 7, 2006)
Dec 29, 1993 The Securities and Exchange Board of India (Debenture Trustees) Rules, 1993 (Since Rescinded w.e.f. September 7, 2006)
Oct 08, 1993 Securities and Exchange Board of India (Underwriters ) Rules 1993 (Since Rescinded w.e.f. September 7, 2006)
May 31, 1993 Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Rules, 1993 (Since Rescinded w.e.f. September 7, 2006)
Apr 02, 1993 Securities and Exchange Board of India (Appeal to Central Government) Rules, 1993
Jan 07, 1993 Securities and Exchange Board of India (Portfolio Managers) Rules 1992 (Since Rescinded w.e.f. September 7, 2006)
Dec 22, 1992 Securities and Exchange Board of India (Merchant Bankers) Rules 1992 (Since Rescinded w.e.f. September 7, 2006)
Aug 20, 1992 Securities And Exchange Board Of India (Stock Brokers And Sub-Brokers) Rules, 1992 (Since Rescinded w.e.f. September 7, 2006)
Feb 21, 1957 The Securities Contract (Rules), 1957