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INDEX








SR.NO SUBJECT PAGE NO
1 INTRODUCTION TO SEBI 1-2
2 FUNCTION OF SEBI 3-6
3 POWERS OF SEBI 7-14
4 OBJECTIVES OF SEBI 15-17
5 SEBI AS A REGULATOR 18-34
6 CONCLUSION 35
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CHAPTER I. INTRODUCTION
The capital market has witnessed tremendous growth in recent times characterized
particularly by the increasing participation of public. Investors confidence in the
capital market can be sustained largely by ensuring investor protection. With this
end in view, the government decided to vest SEBI immediately with statutory
powers required to do effectively with all matters relating to capital market.
It was felt by the government that by transferring the powers of the controller of
capital issues to an independent body it would enable it to effectively regulate,
promote and monitor the working of tock exchange in the country.
Earlier, the regulation of the securities market was being done through the office of
controller of capital issues under the capital issues (control) Act, 1947 which has
been since reapled.
Accordingly, SEBI has been set up under the SEBI Act, 1992. The CCI Act has
now ceased to have any application and stand withdrawn from the law w.e.f
246.5.1992. The Securities Exchange Board Of India Act was passed by the
parliament as Act No.15 of 1992 and received the assent of the President on 4th
April, 1992.
The Securities and Exchange Board of India Act, 1992 (the SEBI Act) was
amended in the years 1995, 1999 and 2002 to meet the requirements of changing
needs of the securities market and responding to the development in the securities
market.
Based on the Report of Joint Parliamentary Committee (JPC) dated December 2,
2002, the SEBI Act was amended to address certain shortcomings in its provisions.
The mission of SEBI is to make India as one of the best securities market of the
world and SEBI as one of the most respected regulator in the world. SEBI also
endeavors to achieve the standards of IOSCO/FSAP.
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In this background, the internal group constituted by SEBI consisting of its senior
officers had proposed certain amendments to the SEBI Act. The SEBI Board had
constituted an Expert Group under the Chairmanship of Mr Justice M. H .Kania
(Former Chief Justice of India) to consider the proposals. The report of the Expert
Group is placed for eliciting public comments on the recommendations. It may be
noted that the Report does not necessarily reflect the views of SEBI on the various
proposals and recommendations. SEBI would consider the comments received
from various sources before taking any final view on the recommendations.













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CHAPTER II. FUNCTIONS OF SEBI
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 -
i. regulating the business in stock exchanges and any other securities markets;
ii. registering and regulating the working of stock brokers, sub-brokers, share
transfer agents, bankers 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;
iii. 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;
iv. registering and regulating the working of [venture capital funds and
collective investment schemes],including mutual funds;
v. promoting and regulating self-regulatory organisations;
vi. prohibiting fraudulent and unfair trade practices relating to securities
markets;
vii. promoting investors' education and training of intermediaries of securities
markets; prohibiting insider trading in securities;
viii. regulating substantial acquisition of shares and take-over of companies;
ix. calling for information from, undertaking inspection, conducting inquiries
and audits of the stock exchanges, mutual funds, other persons associated
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with the securities market] intermediaries and self- regulatory organizations
in the securities market;
x. 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;
xi. performing such functions and exercising such powers under the provisions
of the Securities Contracts (Regulation) Act, 1956(42 of 1956), as may be
delegated to it by the Central Government;
xii. levying fees or other charges for carrying out the purposes of this section;
xiii. conducting research for the above purposes;
xiv. 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;
xv. performing such other functions as may be prescribed.
xvi. 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 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.
Notwithstanding anything contained in any other law for the time being in force
while exercising the powers under [clause (i) or clause (ia) of sub-section (2) or
subsection (2A)], the Board shall have the same powers as are vested in a civil
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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);
v. issuing commissions for the examination of witnesses or documents.
Without prejudice to the provisions contained in sub-sections (1), (2), (2A) and (3)
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:-
i. suspend the trading of any security in a recognized stock exchange;
ii. restrain persons from accessing the securities market and prohibit any
person associated with securities market to buy, sell or deal in
securities;
iii. suspend any office-bearer of any stock exchange or self- regulatory
organisation from holding such position;
iv. impound and retain the proceeds or securities in respect of any
transaction which is under investigation;
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v. 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 there
under: 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 there under shall be allowed to be attached;
vi. 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
subsection (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.


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CHAPTER III. POWERS OF SEBI
BOARD TO REGULATE OR PROHIBIT ISSUE OF PROSPECTUS,
OFFER DOCUMENT OR ADVERTISEMENT SOLICITING MONEY FOR
ISSUE OF SECURITIES:-
Without prejudice to the provisions of the Companies Act, 1956(1 of 1956), the
Board may, for the protection of investors, -
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;
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."

COLLECTIVE INVESTMENT SCHEME:-
Any scheme or arrangement which satisfies the conditions referred to in subsection
(2) shall be a collective investment scheme.
Any scheme or arrangement made or offered by any company under which,
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a. the contributions, or payments made by the investors, by whatever
name called, are pooled and utilized solely for the purposes of the
scheme or arrangement

b. the contributions or payments are made to such scheme or
arrangement by the investors with a view to receive profits, income,
produce or property, whether movable or immovable from such
scheme or arrangement;
c. the property, contribution or investment forming part of scheme or
arrangement, whether identifiable or not, is managed on behalf of the
investors;
d. the investors do not have day to day control over the management and
operation of the scheme or arrangement.
Notwithstanding anything contained in sub-section (2), any scheme or arrangement
a. made or offered by a co-operative society registered under the
cooperative societies Act,1912(2 of 1912) or a society being a society
registered or deemed to be registered under any law relating to
cooperative societies for the time being in force in any state;
b. under which deposits are accepted by non-banking financial
companies as idefined in clause (f) of section 45-I of the Reserve
Bank of India Act, 1934(2 of 1934);
c. being a contract of insurance to which the Insurance Act,1938(4 of
1938), applies;
d. providing for any scheme, Pension Scheme or the Insurance Scheme
framed under the Employees Provident Fund and Miscellaneous
Provisions Act, 1952(19 of 1952);
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e. under which deposits are accepted under section 58A of the
Companies Act, 1956(1 of 1956);
f. under which deposits are accepted by a company declared as a Nidhi
or a mutual benefit society under section 620A of the Companies Act,
1956(1 of 1956);
g. falling within the meaning of Chit business as defined in clause (d) of
section 2 of the Chit Fund Act, 1982(40 of 1982);

h. under which contributions made are in the nature of subscription to a
mutual fund; shall not be a collective investment scheme.

POWER TO ISSUE DIRECTIONS:-
Save as otherwise provided in section 11, if after making or causing to be made an
enquiry, the Board is satisfied that it is necessary,-
a. In the interest of investors, or orderly development of securities market; or
b. to prevent the affairs of any intermediary or other persons referred to in
section 12 being conducted in a manner detrimental to the interest of
investors or securities market; or
c. to secure the proper management of any such intermediary or person, it may
issue such directions,-
d. to any person or class of persons referred to in section 12, or associated with
the securities market; or
e. to any company in respect of matters specified in section 11A, as may be
appropriate in the interests of investors in securities and the securities market

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INVESTIGATION:-
Where the Board has reasonable ground to believe that
a. the transactions in securities are being dealt with in a manner
detrimental to the investors or the securities market; or
b. any intermediary or any person associated with the securities market
has violated any of the provisions of this Act or the rules or the
regulations made or directions issued by the Board there under, It
may, at any time by order in writing, direct any person (hereafter in
this section referred to as the Investigating Authority) specified in the
order to investigate the affairs of such intermediary or persons
associated with the securities market and to report thereon to the
Board.
Without prejudice to the provisions of sections 235 to 241 of the Companies Act,
1956(1 of 1956), it shall be the duty of every manager, managing director, officer
and other employee of the company and every intermediary referred to in section
12 or every person associated with the securities market to preserve and to produce
to the Investigating Authority or any person authorised by it in this behalf, all the
books, registers, other documents and record of, or relating to, the company or, as
the case may be, of or relating to, the intermediary or such person, which are in
their custody or power.
The Investigating Authority may require any intermediary or any person associated
with securities market in any manner to furnish such information to, or produce
such books, or registers, or other documents, or record before it or any person
authorised by it in this behalf as it may consider necessary if the furnishing of such
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information or the production of such books, or registers, or other documents, or
record is relevant or necessary for the purposes of its investigation.
The Investigating Authority may keep in its custody any books, registers, other
documents and record produced under sub-section (2) or sub-section (3) for six
months and thereafter shall return the same to any intermediary or any person
associated with securities market by whom or on whose behalf the books, registers,
other documents and record are produced: Provided that the Investigating
Authority may call for any book, register, other document and record if they are
needed again: Provided further that if the person on whose behalf the books,
registers, other documents and record are produced requires certified copies of the
books, registers, other documents and record produced before the Investigating
Authority, it shall give certified copies of such books, registers, other documents
and record to such person or on whose behalf the books, registers, other documents
and record were produced.
Any person, directed to make an investigation under sub-section (1), may examine
on oath, any manager, managing director, officer and other employee of any
intermediary or any person associated with securities market in any manner, in
relation to the affairs of his business and may administer an oath accordingly and
for that purpose may require any of those persons to appear before it personally.
If any person fails without reasonable cause or refuses
a. to produce to the Investigating Authority or any person authorised by
it in this behalf any book, register, other document and record which
is his duty under sub-section (2) or sub-section (3) to produce; or
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b. to furnish any information which is his duty under sub-section (3) to
furnish; or
c. to appear before the Investigating Authority personally when required
to do so under sub-section (5) or to answer any question which is put
to him by the Investigating Authority in pursuance of that sub-section;
or
d. to sign the notes of any examination referred to in sub-section (7), he
shall be punishable with imprisonment for a term which may extend
to one year, or with fine, which may extend to one crore rupees, or
with both, and also with a further fine which may extend to five lakh
rupees for every day after the first during which the failure or refusal
continues.
Notes of any examination under sub-section (5) shall be taken down in writing and
shall be read over to, or by, and signed by, the person examined, and may
thereafter be used in evidence against him.
Where in the course of investigation, the Investigating Authority has reasonable
ground to believe that the books, registers, other documents and record of, or
relating to, any intermediary or any person associated with securities market in any
manner, may be destroyed, mutilated, altered, falsified or secreted, the
Investigating Authority may make an application to the Judicial Magistrate of the
first class having jurisdiction for an order for the seizure of such books, registers,
other documents and record.
After considering the application and hearing the Investigating Authority, if
necessary, the Magistrate may, by order, authorize the Investigating Authority
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a. to enter, with such assistance, as may be required, the place or places
where such books, registers, other documents and record are kept;
b. to search that place or those places in the manner specified in the
order; and
c. to seize books, registers, other documents and record, it considers
necessary for the purposes of the investigation
Provided that the Magistrate shall not authorise seizure of books, registers, other
documents and record, of any listed public company or a public company (not
being the intermediaries specified under section 12) which intends to get its
securities listed on any recognised stock exchange unless such company indulges
in insider trading or market manipulation.
The Investigating Authority shall keep in its custody the books, registers, other
documents and record seized under this section for such period not later than the
conclusion of the investigation as it considers necessary and thereafter shall return
the same to the company or the other body corporate, or, as the case may be, to the
managing director or the manager or any other person, from whose custody or
power they were seized and inform the Magistrate of such return: Provided that the
Investigating Authority may, before returning such books, registers, other
documents and record as aforesaid, place identification marks on them or any part
thereof.
Save as otherwise provided in this section, every search or seizure made under this
section shall be carried out in accordance with the provisions of the Code of
Criminal Procedure, 1973(2 of 1974), relating to searches or seizures made under
that Code.
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CEASE AND DESIST PROCEEDINGS:-
If the Board finds, after causing an inquiry to be made, that any person has
violated, or is likely to violate, any provisions of this Act, or any rules or
regulations made there under, it may pass an order requiring such person to
cease and desist from committing or causing such violation: Provided that the
Board shall not pass such order in respect of any listed public company or a public
company (other than the intermediaries specified under section 12) which intends
to get its securities listed on any recognised stock exchange unless the Board has
reasonable grounds to believe that such company has indulged in insider trading
or market manipulation.
















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CHAPTER IV. OBJECTIVES OF SEBI
In 1988 the Securities and Exchange Board of India (SEBI) was established by the
Government of India through an executive resolution, and was subsequently
upgraded as a fully autonomous body (a statutory Board) in the year 1992 with the
passing of the Securities and Exchange Board of India Act (SEBI Act) on 30th
January 1992. In place of Government Control, a statutory and autonomous
regulatory board with defined responsibilities, to cover both development &
regulation of the market, and independent powers have been set up. Paradoxically
this is a positive outcome of the Securities Scam of 1990-91. The basic objectives
of the Board were identified as:
To protect the interests of investors in securities;
To promote the development of Securities Market;
To regulate the securities market and
For matters connected therewith or incidental there to.

Since its inception SEBI has been working targeting the securities and is attending
to the fulfillment of its objectives with commendable zeal and dexterity. The
improvements in the securities markets like capitalization requirements, margining,
establishment of clearing corporations etc. reduced the risk of credit and also
reduced the market. SEBI has introduced the comprehensive regulatory measures,
prescribed registration norms, the eligibility criteria, the code of obligations and
the code of conduct for different intermediaries like, bankers to issue, merchant
bankers, brokers and sub-brokers, registrars, portfolio managers, credit rating
agencies, underwriters and others. It has framed bye-laws, risk identification and
risk management systems for Clearing houses of stock exchanges, surveillance
system etc. which has made dealing in securities both safe and transparent to the
end investor.
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Another significant event is the approval of trading in stock indices (like S&P
CNX Nifty & Sensex) in 2000. A market Index is a convenient and effective
product because of the following reasons:
It acts as a barometer for market behavior;
It is used to benchmark portfolio performance;
It is used in derivative instruments like index futures and index options;
It can be used for passive fund management as in case of Index Funds.
Two broad approaches of SEBI is to integrate the securities market at the national
level, and also 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 in 2000 AD is a real landmark. SEBI appointed the L. C. Gupta
Committee in 1998 to recommend the regulatory framework for derivatives trading
and suggest bye-laws for Regulation and Control of Trading and Settlement of
Derivatives Contracts. The Board of SEBI in its meeting held on May 11, 1998
accepted the recommendations of the committee and approved the phased
introduction of derivatives trading in India beginning with Stock Index Futures.
The Board also approved the "Suggestive Bye-laws" as recommended by the Dr
LC Gupta Committee for Regulation and Control of Trading and Settlement of
Derivatives Contracts. SEBI then appointed the J. R. Verma Committee to
recommend Risk Containment Measures (RCM) in the Indian Stock Index Futures
Market. However the Securities Contracts (Regulation) Act, 1956 (SCRA) required
amendment to include "derivatives" in the definition of securities to enable SEBI to
introduce trading in derivatives. The necessary amendment was then carried out by
the Government in 1999. The Securities Laws (Amendment) Bill, 1999 was
introduced. In December 1999 the new framework was approved.
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Derivatives have been accorded the status of `Securities'. The ban imposed on
trading in derivatives in 1969 under a notification issued by the Central
Government was revoked. Thereafter SEBI formulated the necessary
regulations/bye-laws and intimated the Stock Exchanges in the year 2000. The
derivative trading started in India at NSE in 2000 and BSE started trading in the
year 2001.




















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CHAPTER V. SEBI AS A REGULATOR





















SEBI
MUTUAL
FUND
CAPITAL
MARKET
VENTURE
CAPITAL
PRIMARY
MARKET
SECONDARY
MARKET
STOCK
EXCHANGE
GOVERNMENT
SECURITY
MARKET
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MUTUAL FUND
An investment vehicle that is made up of a pool of funds collected from many
investors for the purpose of investing in securities such as stocks, bonds, money
market instruments and similar assets. Mutual funds are operated by money
managers, who invest the fund's capital and attempt to produce capital gains and
income for the fund's investors. A mutual fund's portfolio is structured and
maintained to match the investment objectives stated in its prospectus.
securities and exchange board of India (mutual funds) (second amendment)
regulations, 2012. no. lad-nro/gn/2012-13/17/21502 - In exercise of the powers
conferred under section 30 of the Securities and Exchange Board of India Act,
1992 (15 of 1992), the Board hereby makes the following regulations to amend the
Securities and Exchange Board of India (Mutual Funds) Regulations, 1996,
namely:-
These regulations may be called the Securities and Exchange Board of India
(Mutual Funds) (Second Amendment) Regulations, 2012.
* These regulations shall come into force on the first day of October, 2012.
* In the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996
* In regulation 48, sub-regulation (2) and the proviso shall be substituted with the
following, namely -"(2) The Net Asset Value of the scheme shall be calculated on
daily basis and published in at least two daily newspapers having circulation all
over India.".
* After regulation 51, the following new regulation shall be inserted, namely-
Credit of exit load to scheme. 51A. the exit load charged, if any, after the
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commencement of the SEBI (Mutual Funds) (Second Amendment) Regulations,
2012, shall be credited to the scheme.
* In regulation 52,-
1. Sub- regulation (2) shall be substituted with the following, namely- (2) The
asset management company may charge the scheme with investment and advisory
fees which shall be fully disclosed in the offer document.
2. In sub-regulation (4), the words mutual fund shall be substituted with the word
scheme.
3. In sub-regulation (6),-
* For clause (a), the following shall be substituted, namely- (a) in case of a fund
of funds scheme, the total expenses of the scheme including weighted average of
charges levied by the underlying schemes shall not exceed 2.50 per cent of the
daily net assets of the scheme..
*In clause (b), the words weekly average shall be substituted with the words
daily.
* In clause (c), the words "or average weekly" and or weekly average wherever
appearing shall be omitted.
After sub-regulation (6), the following new sub-regulation shall be inserted,
namely-"(6A) In addition to the limits specified in sub-regulation (6), the following
costs or expenses may be charged to the scheme, namely-
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* Brokerage and transaction costs which are incurred for the purpose of execution
of trade and is included in the cost of investment, not exceeding 0.12 per cent in
case of cash market transactions and 0.05 per cent in case of derivatives
transactions;
* Expenses not exceeding of 0.30 per cent of daily net assets, if the new inflows
from such cities as specified by the Board from time to time are at least
(i) 30 per cent of gross new inflows in the scheme, or;
(ii) 15 per cent of the average assets under management (year to date) of the
scheme, whichever is higher:
Provided that if inflows from such cities is less than the higher of sub-clause (i) or
sub- clause (ii), such expenses on daily net assets of the scheme shall be charged
on proportionate basis: Provided further that expenses charged under this clause
shall be utilized for distribution expenses incurred for bringing inflows from such
cities:
Provided further that amount incurred as expense on account of inflows from such
cities shall be credited back to the scheme in case they said inflows are redeemed
within a period of one year from the date of investment;
* Additional expenses, incurred towards different heads mentioned under sub-
regulations (2) and (4), not exceeding 0.20 per cent of daily net assets of the
scheme.
* In sub-regulation (7), the words, symbols and number "sub-regulation (6)" shall
be substituted with the words, symbols and numbers "subregulations (6) and (6A)".
* For regulation 59, the following shall be substituted, namely-Half-yearly
Disclosures.
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1. A mutual fund and asset management company shall within one month from the
close of each half year, that is on 31stMarch and on 30thSeptember, host a soft
copy of its unaudited financial results on their website:
Provided that the half-yearly unaudited report referred to in this subregulation shall
contain details as specified in Twelfth Schedule and such other details as are
necessary for the purpose of providing a true and fair view of the operations of the
mutual fund.
2. A mutual fund and asset management company, shall publish an advertisement
disclosing the hosting of such financial results on their website, in atleast one
English daily newspaper having nationwide circulation and in a newspaper having
wide circulation published in the language of the region where the Head Office of
the mutual fund is situated..
* In Twelfth Schedule, in serial number 6.5, the words and symbols "daily/weekly
average" wherever appearing shall be substituted with the word "daily".







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CAPITAL MARKET
SEBI is regulator to control Indian capital market. Since its establishment in 1992,
it is doing hard work for protecting the interests of Indian investors. SEBI gets
education from past cheating with naive investors of India. Now, SEBI is stricter
with those who commit frauds in capital market. The role of security exchange
board of India (SEBI) in regulating Indian capital market is very important because
government of India can only open or take decision to open new stock exchange in
India after getting advice from SEBI. If SEBI thinks that it will be against its rules
and regulations, SEBI can ban on any stock exchange to trade in shares and
stocks. Now, we explain role of SEBI in regulating Indian Capital Market more
deeply with following points:
1. Power to make rules for controlling stock exchange :-
SEBI has power to make new rules for controlling stock exchange in India. For
example, SEBI fixed the time of trading 9 AM and 5 PM in stock market.
2. To provide license to dealers and brokers :-
SEBI has power to provide license to dealers and brokers of capital market. If
SEBI sees that any financial product is of capital nature, then SEBI can also
control to that product and its dealers. One of main example is ULIPs case. SEBI
said, "It is just like mutual funds and all banks and financial and insurance
companies who want to issue it, must take permission from SEBI."
3. To Stop fraud in Capital Market:-
SEBI has many powers for stopping fraud in capital market.
* It can ban on the trading of those brokers who are involved in fraudulent and
unfair trade practices relating to stock market.
* It can impose the penalties on capital market intermediaries if they involve in
insider trading.
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4. To Control the Merger, Acquisition and Takeover of companies:
Many big companies in India want to create monopoly in capital market. So, these
companies buy all other companies or deal of merging. SEBI sees whether this
merge or acquisition is for development of business or to harm capital market.
5. To audit the performance of stock market :
SEBI uses his powers to audit the performance of different Indian stock exchange
for bringing transparency in the working of stock exchanges.
6. To make new rules on carry - forward transactions :
* Share trading transactions carry forward can not exceed 25% of broker's total
transactions.
* 90 day limit for carry forward.
7. To create relationship with ICAI:-
ICAI is the authority for making new auditors of companies. SEBI creates good
relationship with ICAI for bringing more transparency in the auditing work of
company accounts because audited financial statements are mirror to see the real
face of company and after this investors can decide to invest or not to invest.
Moreover, investors of India can easily trust on audited financial reports. After
Satyam Scam, SEBI is investigating with ICAI, whether CAs are doing their duty
by ethical way or not.
8. Introduction of derivative contracts on Volatility Index:-
* For reducing the risk of investors, SEBI has now been decided to permit Stock
Exchanges to introduce derivative contracts on Volatility Index, subject to the
condition that;
* The underlying Volatility Index has a track record of at least one year.
* The Exchange has in place the appropriate risk management framework for such
derivative contracts.
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* Before introduction of such contracts, the Stock Exchanges shall submit the
following:
i. Contract specifications
ii. Position and Exercise Limits
iii. Margins
iv. The economic purpose it is intended to serve
v. Likely contribution to market development
vi. The safeguards and the risk protection mechanism adopted by the exchange
to ensure market integrity, protection of investors and smooth and orderly
trading.
vii. The infrastructure of the exchange and the surveillance system to effectively
monitor trading in such contracts, and
viii. Details of settlement procedures & systems
ix. Details of back testing of the margin calculation for a period of one year
considering a call and a put option on the underlying with a delta of 0.25 & -
0.25 respectively and actual value of the underlying.
9. To require report of Portfolio Management Activities:-
SEBI has also power to require report of portfolio management to check the capital
market performance. Recently, SEBI sent the letter to all Registered Portfolio
Managers of India for demanding report.
10 To educate the investors:-
Time to time, SEBI arranges scheduled workshops to educate the investors. On 22
may 2010 SEBI imposed workshop. If you are investor, you can get education
through SEBI leaders by getting update information on this page.


26

VENTURE CAPITAL
Application for grant of certificate of registration as venture capital fund securities
and exchange board of India
1. This form is meant for use by the company or trust (hereinafter referred to as the
applicant) for application for grant of certificate of registration as venture capital
fund.
2. The applicant should complete this form, and submit it, along with all
supporting documents to the Board at its head office at Mumbai.
3. This application form should be filled in accordance with these regulations.
4. The application shall be considered by the Board provided it is complete in all
respects.
5. All answers must be legible.
6. Information which needs to be supplied in more detail may be given on separate
sheets which should be attached to the application form.
7. The application must be signed and all signatures must be original.
8. The application must be accompanied by an application fee as specified in the
Second Schedule to these regulations.
9. Name, address of the registered office, address for correspondence, telephone
number(s), fax number(s), telex number(s) of the applicant and the name of the
contact person.
10. Please indicate to which of the following categories the applicant belongs.
* A company established under the Companies Act, 1956 (1 of 1956)
* A trust set up under the Indian Trusts Act, 1882 (2 of 1882).
11. Date and place of incorporation or establishment and date of commencement of
business (enclose certificate of incorporation, memorandum and articles of
association or trust deed in terms of which incorporated or established).
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12. Details of members of the Board of Trustees or directors of the trustee
company, as the case may be, in case the applicant has been set up as a trust.
Details of members of the Board of Directors of the venture capital fund in case the
applicant has been set up as a company.
13. Please state whether the applicant, his partner, director or principal officer is
involved in any litigation connected with the securities market which has an
adverse bearing on the business of the applicant; or has at any time been convicted
for any moral turpitude or at any time has been found guilty of any economic
offence. In case the applicant is a trust, the above information should be provided
for the members of the Board of Trustees or of the abovementioned persons
connected with the trustee company. If yes, the details thereof.
14. Please also state whether there has been any instance of violation or non
adherence to the securities laws, code of ethics/conduct, code of business rules, for
which the applicant, or its parent or holding company or affiliate may have been
subject to economic, or criminal, liability, or suspended from carrying out its
operations, or the registration revoked temporarily.
15. Details of asset Management Company, if any (enclose copy of agreement with
the asset management company).
16. Declaration statement (to be given as below).We hereby agree and declare that
the information supplied in the application, including the attachment sheets, is
complete and true. And we further agree that, we shall notify the Securities and
Exchange Board of India immediately any change in the information provided in
the application. We further agree that we shall comply with, and be bound by the
Securities and Exchange Board of India Act, 1992, and the Securities and Exchange
Board of India (Venture Capital Funds) Regulations, 1996, and Government of
India guidelines/instructions as may be announced by the SEBI.
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PRIMARY MARKET
Review of certain policies in the primary market - Amendments to SEBI (Issue of
Capital and Disclosure Requirements) Regulations, 2009 / Equity Listing
Agreement
The Board considered the Memorandum and decided as under:
1. Public Announcement by Companies proposing to access the capital
market:-
While filing Draft Offer Document (DoD) with SEBI, the issuer company shall
make a public announcement about the filing, simultaneously but not later than one
day from the date of filing the (DoD) with SEBI.
2. Preferential issue of equity shares or convertible securities or warrants to
promoters and promoter group:-
In case of preferential issues, where any promoter or any member of the promoter
group has previously subscribed to the warrants of the company but failed to
exercise the warrants, the promoters and promoter group shall be ineligible for
issue of equity shares or convertible securities or warrants for a period of one year
from the date of expiry of the currency /cancellation of the warrants. Further, if any
member of the promoters/ promoter group has sold shares in the previous six
months, then the promoters/ promoter group would be ineligible for allotment on
preferential basis.
3. News reports appearing in the media after filing of Draft Offer Document
(DOD) with SEBI:-
The merchant bankers shall submit a compliance certificate as to whether the
contents of the news reports/ articles that appear after filing of DOD are supported
by disclosures in the offer document or not. This would apply in respect of news
reports/ articles appearing in newspapers stipulated in ICDR for issue
advertisements, major business magazines and also in the print and electronic
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media controlled by a media group where the media group has a private treaty/
shareholders agreement with the issuer company/ promoters of the issuer
company.
4. Uniform/ single payment option in rights issues:-
Only one payment option shall be given by the issuer to all the shareholders, i.e.,
either (i) part payment on application with balance money to be paid on calls, or
(ii) full payment on application. Where the issuer opts for part payment, it shall be
incumbent on the issuer to obtain approvals, if any, as may be necessary for the
purpose.
5. Minimum Promoters contribution in Further Public Offers (FPOs):-
The requirement of promoters contribution shall not be applicable to FPOs where
equity shares of the issuer are not infrequently traded in a recognised stock
exchange for three years and the issuer has a track record of dividend payment for
three years.
6. Allocation in public issues:-
Pursuant to recent amendments to SCRR, consequential amendments shall be made
in ICDR Regulations by deleting the second proviso to clause (c) of sub regulation
(2) of Regulation 43.
7. Extension of applicability of clause 5A of Equity Listing Agreement for
unclaimed equity shares in physical form:-
Clause 5A of the Equity Listing Agreement shall be amended to provide that the
unclaimed shares issued in physical form shall be dealt in the manner similar to the
unclaimed shares issued in demat form.




30

SECONDARY MARKET
The SEBI is the regulatory authority established under Section 3 of SEBI Act 1992
to protect the interests of the investors in securities and to promote the
development of, and to regulate, the securities market and for matters connected
therewith and incidental here to. Securities and Exchange Board of India
constituted under the Resolution of the Government of India in the Department of
Economic Affairs No.1 (44)SE/86, dated the12th day of April, 1988;
The Board shall consist of the following members, namely:-
1. Chairman
2. Two members from amongst the officials of the Ministry of the Central
Government dealing with Finance (and administration of the Companies Act,
1956;) 2 of 1934
3. One member from amongst the officials of [the Reserve Bank
4. Five other members of whom at least three shall be the whole-time members


Departments of SEBI regulating trading in the secondary market
1. Market Intermediaries Registration and Supervision department
(MIRSD):-
Registration, supervision, compliance monitoring and inspections of all market
intermediaries in respect of all segments of the markets viz. equity, equity
derivatives, debt and debt related derivatives.
2. Market Regulation Department (MRD):-
Formulating new policies and supervising the functioning and operations (except
relating to derivatives) of securities exchanges, their subsidiaries, and market
institutions such as Clearing and settlement organizations and Depositories
Collectively referred to as market SROs.
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3. Derivatives and New Products Departments (DNPD):-
Supervising trading at derivatives segments of stock exchanges, introducing new
products to be traded, and consequent policy changes
























32

STOCK EXCHANGES
Powers of SEBI in stock exchanges
1. Power to call for information:-
The Board may from time to time call for any information, documents or records
from the recognised stock exchange or the recognised clearing corporation, or their
governing board or any shareholder thereof.
2. Power of inspection:-
The Board may at any time undertake inspection, conduct inquiries and audit of
any recognized stock exchange or recognized clearing corporation, any associate of
such exchange or clearing corporation, any shareholder of such stock exchange or
clearing corporation or any associate and agent of such shareholder. Where an
inspection under sub-regulation (1) is undertaken by the Board, such recognized
stock exchange or recognized clearing corporation or shareholder or associate and
every manager, director, managing director, chairperson or officer and other
employee of such recognized stock exchange, recognized clearing corporation,
shareholder or associate shall co-operate with the Board.
3. Directions by the Board:-
Without prejudice to exercise of its powers under the provisions of the Act or the
Securities and Exchange Board of India Act, 1992 and rules and regulations made
there under, the Board may, either suomotu or on receipt of any information or
during pendency of any inspection, inquiry or investigation or on completion
thereof, in the interest of public or trade or investors or the securities market, issue
such directions as it deems fit, including but not limited to any or all of the
following:
* Directing a person holding equity shares or rights over equity shares in a
recognized stock exchange or recognized clearing corporation in contravention of
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these regulations to divest his holding, in such manner as may be specified in the
direction;
* Directing transfer of any proceeds or securities to the Investor Protection Fund of
a recognized stock exchange or Settlement Guarantee Fund of a recognized
clearing corporation;
* Debarring any recognized stock exchange or recognized clearing corporation,
any shareholder of such recognized stock exchange or recognized clearing
corporation, or any associate and agent of such shareholder, or any transferee of
shares from such shareholder, directors and key management personnel of
recognized stock exchange and recognized clearing corporation from accessing the
securities market or dealing in securities for such period as may be determined by
the Board.
4. Power to remove difficulties:-
In order to remove any difficulties in the interpretation or application of the
provisions of these regulations, the Board shall have the power to issue directions
through guidance notes or circulars.
5. Power to specify procedures, etc. and issue clarifications.
For the purposes of implementation of these regulations and matters incidental
thereto, the Board may specify norms, procedures, processes, manners or
guidelines as specified in 21 these regulations, by way of circulars to recognized
stock exchange(s) and recognized clearing corporation(s).
6. Repeal and savings:-
* On and from the commencement of these regulations, the Securities Contracts
(Regulation) (Manner of Increasing and Maintaining Public Shareholding in
Recognized Stock Exchanges) Regulations, 2006, shall stand repealed.
* Notwithstanding such repeal, anything done or any action taken or purported to
have been taken or contemplated under the repealed regulations before the
34

commencement of these regulations shall be deemed to have been done or taken or
commenced or contemplated under the corresponding provisions of these
regulations.
* After the repeal of the regulations referred to in sub-regulation (1), any reference
thereto in any regulation, guideline, circular or direction issued by the Board shall
be deemed to be a reference to the relevant provisions of these regulations





















35

CHAPTER VI. CONCLUSION
The enactment of the SEBI Act within the context of other statutes such as the
Companies Act and Depositories Act has provided a strong regulatory framework
for the Indian market. Subsequently much of the growth of the Indian market can
be attributed to the robust processes for issuance, pricing, allotment and listing of
securities enabled by SEBI. Strengthening SEBI's power in the investigative,
administrative and legal aspects of enforcement would enable it to speedily address
legal challenges such as those faced during dematerialization or disclosure
requirements. In the future, SEBI should adopt more transparency to gain higher
public confidence.
















36

BIBLIOGRAPHY:
Websites
www.wikipedia.com
www.investopedia.com

Books
Financial markets and services Gordon Natarajan