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Project Report On SEBI
Project Report On SEBI
About SEBI
ESTABLISHMENT OF SEBI
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.
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"
SEBI-
These Guidelines have been issued by the Securities and Exchange Board of
India under Section 11 of the Securities and Exchange Board of India Act,
1992.
(a) These Guidelines may be called the Securities and Exchange Board of
India (Disclosure and Investor Protection) Guidelines, 2000.
(b) These Guidelines shall come into force from the date specified by the
Board.
Functions & Responsibilities-
SEBI has to be responsive to the needs of three groups, which constitute the
market:
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
N.K.Sodhi. A second appeal lies directly to the Supreme Court.SEBI has
enjoyed success as a regulator by pushing systemic reforms aggressively
and successively. 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, in light of the global melt down, it
liberalised the takeover code to facilitate investments by removing regulatory
structures. In one such move, SEBI has increased the application limit for
retail investors to Rs 2 lakh, from Rs 1 lakh at present.
Powers
For the discharge of its functions efficiently, SEBI has been invested with
the necessary powers which are:
It had come to the notice of the SEBI that certain persons were engaging in
trading in securities outside the purview of the stock exchanges (‘illegal
trading in securities’). Such trading particularly in Gujarat has come to be
known as ‘DABBA’ trading. There were also reports in the media regarding
illegal use of terminals provided to the brokers by the National Stock
Exchange in Kolkata and other places. Media had also reported Kerb trading
in the cities of Kanpur, Kolkata, Mathura, Ahmedabad, Rajkot and Mumbai.
Since these activities are illegal and pose a systemic risk besides luring
common investors into the net the Board tool immediate action by sending t
eams to some cities of Gujarat viz . Ahmedabad, Vadodara and
Rajkot to conduct surprise inspections. Since it is not possible to identify
the persons who carry on these activities the Chief Ministers of all the States
were requested through letters and reminders to use the local police force to
check these illegal activities. NSE, BSE and other Stock Exchanges were
altered to verify involvement of their members and take coercive action. The
public were also cautioned through a notice issued in the newspapers in
English, Hindi and major regional languages about the illegal activities and
educating them about the perils of such illegal trades.
2.Registration And Regulation Of The Working Of
Intermediaries:-
I. Primary Market
Brokers are one of the most important links between the investors and the
market. Their association with the stock exchanges and investors dates
back to as early as nineteenth century.
Entities are allowed to obtain membership at more than one stock exchange.
The multiple memberships ranges between two to six. It may be seen that
854 entities. have membership at two exchanges while 3 entities have
membership at 6 exchanges. About ten per cent of the total brokers have
multiple memberships.
Sub-Broker Registration
Sub-brokers are intermediaries between the broker and the investor. SEBI
Requirements include registration of sub-brokers through the stock
exchanges at which the broker is a member.
II. Mutual Funds Registered with SEBI during the year, registration was
granted to two new mutual funds in the private sector viz HSBC Mutual
Fund and Deutsche Mutual Fund. With the enactment of the UTI
(Repealment Ordinance), the UTI was divided into the UTI-I and UTI-II. UTI-
II known as UTI Mutual Fund was registered with SEBI on January 14,
2003. During the year 2002-03, the certificate of registration granted to two
mutual funds was cancelled viz JF Mutual Fund (formerly known as Jardine
Fleming Mutual Fund) and Pioneer ITI Mutual Fund (formerly known as
Kothari Pioneer Mutual Fund). In case of JF Mutual Fund, the schemes were
taken over by Sun F&C Mutual Fund whereas the schemes of Pioneer ITI
Mutual Fund were merged with Templeton Mutual Fund.
SEBI took up investigations in 122 cases in 2002-03 bringing the total cases
taken up for investigation till end of this financial year to 654 cases. Of
these 122 cases, investigation into 102 cases has been completed during
2002-2003.
47(An offer for sale shall not be made of equity shares of a company or any
other security which may be converted into or exchanged with equity shares
of the company at a later date, unless the conditions laid down in clause
2.2.1 or 2.2.2, as the case may be and in clause 2.2.2A, are satisfied.)
2.2.4 Offer for sale can also be made if provisions of clause 2.2.2 are
complied at the time of submission of offer document with Board.
2.3 Public Issue by Listed Companies
2.3.1 48(A listed company shall be eligible to make a public issue of equity
shares or any other security which may be converted into or exchanged with
equity shares at a later date:
Provided that the aggregate of the proposed issue and all previous issues
made in the same financial year in terms of size (i.e., offer through offer
document + firm allotment + promoters’ contribution through the offer
document), issue size does not exceed 5 times its pre-issue networth as per
the audited balance sheet of the last financial year.
Provided 49(further) that in case there is a change in the name of the
issuer company within the last 1 year (reckoned from the date of filing of the
offer document), the revenue accounted for by the activity suggested by the
new name is not less than 50% of its total revenue in the preceding 1 full-
year period.)
2.3.2 50(A listed company which does not fulfill the conditions given in the
provisos to Clause 2.3.1 above shall be eligible to make a public issue,
subject to complying with the conditions specified in clause 2.2.2.) 2.3.3
51(Deleted)
11A.5 Listing
11A.5.1 516(The company may apply for listing of its securities on an
exchange
other than the exchange through which it offers its securities to public
through the on-line system.)