SEBI ACT

Securities & Exchange Board of

India

George V James

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Contents

IntroductionObjectives of SEBIPowers & Functions of SEBIStructure of SEBIVarious Departments under SEBIPowers of Central GovernmentAmendments

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Introduction Controller of Capital Issues was the regulatory authority before SEBI came into

existence; it derived authority from the Capital Issues (Control) Act, 1947. In April 12, 1988 the SEBI was constituted as the regulator of capital markets in

India under a resolution of the Government of India (as a non-statutory body). It was later made a statutory body on April 4,1992 and it came to be known as

the SEBI Act,1992. The mission of SEBI is to make India as one of the best securities market in the

world and SEBI as one of the most respected regulator in the world.  In the year of 1995, the SEBI was given additional statutory powers by the

Government of India through an amendment to the Securities and Exchange Board of India Act 1992.

It is the apex body to develop and regulate the stock market in India. It is known as the watchdog of Indian Capital Market.

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Objectives

To protect the interest of investors so that there is a steady flow of savings into the capital market.

To promote the development and to regulate the securities market .

Ensure fair practices by the issuers of securities so that they can raise resources at minimum cost.

To promote efficient services by brokers, merchant bankers and other intermediaries so that they become competitive and professional.

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POWERS of sebi1) Power to call periodical returns from recognized stock

exchange.2) Power to control and regulate stock exchange.3) Power to levy fees or other charges for carrying out the

purpose of regulation.

4) Power to direct enquiries to be made in relation to affairs of stock exchanges or their members.

5) Power to make or amend bye-laws of recognized stock exchanges.

6) Power to grant registration to market intermediaries.7) Power to declare applicability of section 17 of the

Securities Contract (Regulation) Act 1956 in any state or area to grant licenses to dealers.

8) Power to compel listing of securities by public companies.

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FUNCTIONS OF SEBI

Section 11 of the SEBI Act,1992 classifies the functions of SEBI under 2 heads:-

1) Regulatory Functions2) Developmental Functions.

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1. REGULATORY FUNCTIONS

i. Regulation of stock exchanges and self regulatory organizations.

ii. Registration and regulation of stock brokers , sub-brokers , registrars of all issues, merchant bankers, underwriters, portfolio managers etc.

iii. Registration and regulation of the working of collective investment schemes including mutual funds.

iv. Regulating substantial acquisitions of shares and take over of companies.

v. Prohibition of fraudulent and unfair trade practices relating to securities market.

vi. Prohibiting of insider trading.

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2.DEVELOPMENTAL FUNCTIONS

i. Promoting investors education.ii. Training of intermediaries.iii. Conducting research and publishing

information useful to all market participants.

iv. Promoting of fair practices.v. Promotion of self regulatory

organisations.

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STRUCTURE OF SEBI

The board shall consist of the following members :-ChairmanTwo members, one from amongst the officials of the Central government dealing with finance and another from the administration of Companies Act,1956.One member from amongst the officials of the Reserve Bank of India.Five other members of whom at three shall be the whole time members to be appointed by the Central Government.

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VARIOUS DEPARTMENTS UNDER SEBI

The Primary Market.The Issue Management and Intermediaries

Department.The Secondary Market.Institutional Investment Department (MF and FII),

Mergers and Acquisition.Legal Department (all legal matters).Investigation Department (carry out inspection and

investigation).

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POWERS OF CENTRAL GOVERNMENT

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The Central Government has power to issue directions to SEBI Board, supersede the Board, if necessary and to call for returns and reports as and when necessary.

The Central Government has also power to give any guideline(s) or to make regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT The activities of SEBI are financed by grants from Central Government, in

addition to fees, charges etc. collected by SEBI. The fund called SEBI General Fund is set up, to which, all fees, charges and

grants are credited. This fund is used to meet the expenses of the Board and to pay salary of

staff and members of the body.

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AMMENDMENTS SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet

the requirements of changing needs of the securities market.

SEBI AMENDMENT BILL, 1995:- Mainly focussed on Foreign Institutional Investors (FII). Given additional statutory powers.

SEBI AMENDMENT BILL, 1999:- Included derivates & instruments of collective investment schemes

under the definition of securities. Enable RBI to regulate the transactions in government securities &

other related instruments as may be specified by the Government.

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SEBI AMENDMENT BILL, 2002:- Gave more teeth to SEBI to punish market offenders through Serious

Fraud Office (SFO). Power to search & seize books, registers & documents of

intermediaries or any other persons associated with the securities market.

Fine of 25 crores for insider trading. Board strength increased from six to nine.

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SEBI AMENDMENT BILL, 2013:- Passed by the Rajya Sabha on 5th September. Widen the area for eligible candidates for the post of Presiding Officer at

the Securities Appellate Tribunal (SAT). The Bill extends eligibility criteria for SAT Presiding Officer’s role &

includes sitting or retired Judges of a High Court with a minimum service of 7 years.

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REGIONAL OFFICES1. New Delhi2. Kolkata3. Chennai4. Ahmadabad

1. Jaipur2. Bangalore3. Guwahati4. Bhubaneswar5. Patna6. Kochi7. Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla Complex)

Local Offices

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Upendra Kumar Sinha(Present SEBI Chairman)February 2011-till date

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REFERANCES

• www.wikipedia.org

• www.sebi.gov.in

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