CENTRAL UNIVERSITY OF SOUTH BIHAR

PROJECT
Of
INVESTMENT LAW
Topic: powers and function of SEBI

Submitted to: Mr. Mani Pratap

Submitted by: Kumari Anjali Sinha
Enroll. Id: CUSB1613125026
Program: B.A.LL.B (Hons.)
Semester: 7thsemester
Paper: investment law (LAW407)

Acknowledgment

1
I would like to express my special thanks of gratitude to my
Mr. Mani Pratap, who gave me the golden opportunity to do
this wonderful project of Investment Law on the topic “power
and function of SEBI,” who has helped me in completing my
assignment. I came to know about so many new things I am
really thankful to them. Secondly I would also like to thank
my parents and friends who helped me a lot in finalizing this
project within the limited time frame.

Kumari Anjali Sinha

B.A.LL.B, 7th Semester

Table of Contents
2
Sr.no Contents Page no.
1. Introduction 04
2. History 05
3. Objective 06
4. Structure of SEBI 06 - 07
5. Bare provision 07 - 15
6. Functions of SEBI 16 -18
7. Powers of sebi 19 - 20
8. Conclusion 21
9. Bibliography 22

Introduction
The Securities and Exchange Board of India was officially appointed as the authority for
regulating the financial markets in India on 12th April 1988. It was initially established as a
non-statutory body, i.e. it had no control over anything but later in 1992, it was declared an

3
autonomous body with statutory powers. SEBI plays an important role in regulating the
securities market of India. Thereby it is important to know the purpose and objective of
SEBI.

Securities and Exchange Board of India (SEBI) is a statutory regulatory body entrusted with
the responsibility to regulate the Indian capital markets. It monitors and regulates the
securities market and protects the interests of the investors by enforcing certain rules and
regulations. SEBI, just like any corporate firm has a hierarchical structure and consists of
numerous departments headed by their respective heads like Foreign Portfolio Investors and
Custodians, Human Resources Department, Information Technology, Investment
Management Department, Office of International Affairs, Commodity and Derivative Market
Regulation Department, National Institute of Securities Market etc. Apart from the department
heads, the senior management of SEBI consists of a Board of Directors who is appointed as follows: 1
chairman nominated by the Union Government of India , 2 members from the Union Finance
Ministry of India, 1 member from the Reserve Bank of India (RBI) , 5 members nominated by
the Union Government of India.

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 appeal process to create
accountability. There is a Securities Appellate Tribunal which is a three-member tribunal.

History
During 1980s, there was tremendous growth in the capital market due to increasing
participation of public. This led to many malpractices like Rigging of prices, unofficial

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premium on new issues, violation of rules and regulations of stock exchanges and listing
requirements, delay in delivery of shares etc. by the brokers, merchant bankers, companies,
investment consultants and others involved in the securities market. This resulted in many
investor grievances. Because of lack of proper penal provision and legislation, the
government and the stock i exchanges were not able to redress these grievances of the
investors. This (necessitated a need for a separate regulatory body, and hence Securities and
Exchange Board of India was established1.

securities and exchange Board of India (SEBI) was first established in 1988 as a non-
statutory body for regulating the securities market. It became an autonomous body on 12
April 1992 and was accorded statutory powers with the passing of the SEBI Act 1992 by
the Indian Parliament. Soon SEBI was constituted as the regulator of capital markets in India
under a resolution of the Government of India. SEBI has its headquarters at the business
district of Bandra Kurla Complex in Mumbai, and has Northern, Eastern, Southern and
Western Regional Offices in New Delhi, Kolkata, Chennai and Ahmedabad respectively. It
has opened local offices.at Jaipur and Bangalore and has also opened office
at Guwahati, Bhubaneshwar, Patna, Kochi and Chandigarh in Financial Year 2013 – 2014
Controller of Capital Issues was the regulatory authority before SEBI came into existence; it
derived authority from the Capital Issues (Control) Act, 19472.

According to its charter, it is expected to be responsible for three main groups: the issuers of
securities, investors, and market intermediaries. The body has somewhat nebulous powers, as
it drafts regulations and statutes in its legislative capacity, passes rulings, and orders in its
judicial capacity, and conducts investigations and enforcement actions in its executive
capacity.

Objective
The main objectives of SEBI are:

(1) Regulation of Stock Exchanges:

1
www.legalserviceindia.comon article SEBI under investment law, last visited on 24 th october 2019.
2
www.legalbite.com// paper on SEBI, last visited on 05 th October 2019.

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The first objective of SEBI is to regulate stock exchanges so that efficient services may be
provided to all the parties operating there.

(2) Protection to the Investors:

The capital market is meaningless in the absence of the investors. Therefore, it is important to
protect the interests of the investors.

The protection of the interests of the investors means protecting them from the wrong
information given by the companies in their prospectus, reducing the risk of delivery and
payment, etc. Hence, the foremost objective of the SEBI is to provide security to the
investors.

3) Checking the Insider Trading:

Insider trading means the buying and selling of securities by those people’s directors
Promoters, etc. who have some secret information about the company and who wish to take
advantage of this secret information.

This hurts the interests of the general investors. It was very essential to check this tendency.
Many steps have been taken to check inside trading through the medium of the SEBI.

(4) Control over Brokers:

It is important to keep an eye on the activities of the brokers and other middlemen in order to
control the capital market. To have a control over them, it was necessary to establish the
SEBI.

Structure of SEBI
SEBI comprises of five departments, each department headed by an executive director. It also
has two advisory committees to deal with primary and secondary markets, which consists
of market players, investors associations, and eminent persons.

The board consists of nine members:

 A chairman appointed by union government of India.

 Two official members from union finance ministry.

 One official member from reserve bank of India.

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  Five other members who are also appointed by union government of India.3

Bare Provision
Functions of  Board.

 11. (1) 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. 

   (2) 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;]

3
Dr. Myneni. S. R, law of investment and securities, asian law house, pg 99

7
(c) Registering and regulating the working of  [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 [ 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  [...] 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;”]

(m) Performing such other functions as may be prescribed.

[“(2A) 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.”]

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    [(3) 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 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);

(v) Issuing commissions for the examination of witnesses or documents.]

[(4) 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:-

(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 there under:

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 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; 

  (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.

11A (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.

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(2) 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.

11AA (1) Any scheme or arrangement which satisfies the conditions referred to in sub-
section (2) shall be a collective investment scheme. 

   (2) Any scheme or arrangement made or offered by any company under which,---   

(i)     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; 

(ii)    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 of arrangement; 

(iii) The property, contribution, or investment forming part of scheme or arrangement,

whether identifiable or not, is managed on behalf of the investors; 

(iv) The investors do not have day to day control over the management and operation of the
scheme of arrangement. 

   (3) Notwithstanding anything contained in sub-section (2), any scheme or arrangement

–  (i)      made or offered by a co-operative society registered under the co-operative 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; 

(ii)under which deposits are accepted by non-banking financial companies as defined in

clause (f) of section 45-I of the Reserve Bank of India Act, 1934(2 of 1934); 

(iii) Being a contract of insurance to which the Insurance Act, 1938(4 of 1938), applies; 

(iv)providing for any scheme, Pension Scheme or the Insurance Scheme framed under the
Employees Provident Fund and Miscellaneous Provisions Act, 1952(19 of 1952); 

(v) Under which deposits are accepted under section 58A of the Companies Act, 1956(1 of
1956); 

(vi) 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); 
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(vii)falling within the meaning of Chit business as defined in clause (d) of section 2 of the
Chit Fund Act, 1982(40 of 1982); 

(viii) 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.

 11B. 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,- 

(i) In the interest of investors, or orderly development of securities market; or 

(ii) 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 

(iii) To secure the proper management of any such intermediary or person, it may issue such
directions,- 

(a) To any person or class of persons referred to in section 12, or associated with the
securities market; or 

(b) 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]

 [Investigation.

11C. (1) 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.

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 (2) 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. 

(3) 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 authorized by it in this behalf
as it may consider necessary if the furnishing of such information or the production of such
books, or registers, or other documents, or record is relevant or necessary for the purposes of
its investigation.

(4) 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.

(5) 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.

(6) If any person fails without reasonable cause or refuses – 

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(a) to produce to the Investigating Authority or any person authorised by it in this behalf any
book, register, other document and record which it is his duty under sub-section (2) or sub-
section (3) to produce; or

(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.

(7) 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.

(8) 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.

(9) After considering the application and hearing the Investigating Authority, if necessary, the
Magistrate may, by order, authorise the Investigating Authority –

(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:

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Provided that the Magistrate shall not authorize 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.

(10) 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.

(11) 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.

Cease and desist proceedings.

 11D. 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 thereunder, 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 recognized stock exchange unless the Board has reasonable
grounds to believe that such company has indulged in insider trading or market
manipulation.]4
 

Function of SEBI
We can classify the functions of SEBI into three categories:-

4
Bare Act of SEBI Act 1988

15
 1. Protective functions

2. Developmental functions

3. Regulatory functions

Protective function

As the name suggests, the main focus of this function of SEBI is to protect the interest of
investor and security of their investment as protective functions SEBI performs following
functions

(i) SEBI checks Price Rigging:

Price Rigging means some people manipulate the prices of securities for inflation or
depressing the market price of securities. SEBI prohibits such practice to avoid fraud and
cheating which can happen to any investor.

(ii) SEBI prohibits Insider trading:

Any person which is connected with a company such as directors, promoters, workers etc is
called Insiders. Due to working in the company they have sensitive information which affects
the prices of the securities. Such information is not available to people at large but Insider
gets this key full knowledge by working in such company. Insider can use this information
for their personal benefits or make a profit from it, such process is known as Insider Trading.
For Example - Managers or Directors of a company may know that company will issue
Bonus shares to its shareholders at a particular time and they purchase shares from market to
make a profit with bonus issue.
SEBI always restricts these types of practices when Insiders are buying securities of the
company and take strict action to avoid this in future5.

(iii) SEBI prohibits fraudulent and Unfair Trade Practices:

SEBI always restricts the companies which make misleading statements which are likely to
induce the sale or purchase of securities by any other person.

(iv) SEBI sometimes educates the investors so that become able to evaluate the securities and
always invest in profitable securities.

5
Supra 3 at pg 101.

16
(v) SEBI issues guidelines to protect the interest of debenture holders.

(vi) SEBI is empowered to investigate cases of insider trading and has provision for stiff fine
and imprisonment.

(vii) SEBI has stopped the practice of allotment of preferential shares unrelated to market
prices.
(vii) SEBI has stopped the practice of making a preferential allotment of shares unrelated to
market prices6.

2. Developmental Functions:

Under developmental categories following functions are performed by SEBI:

(i) SEBI promotes training of intermediaries of the securities market.
(ii) SEBI tries to promote activities of stock exchange by adopting a flexible and adaptable
approach in following way:
(a) SEBI has permitted internet trading through registered stock brokers.
(b) SEBI has made underwriting optional to reduce the cost of issue.
(c) An Even initial public offer of primary market is permitted through the stock exchange.

3. Regulatory Functions:

These functions are performed by SEBI to regulate the business in stock exchange. To
regulate the activities of stock exchange following functions are performed:
(i) SEBI has framed rules and regulations and a code of conduct to regulate the intermediaries
such as merchant bankers, brokers, underwriters, etc.
(ii) These intermediaries have been brought under the regulatory purview and private
placement has been made more restrictive.
(iii) SEBI registers and regulates the working of stock brokers, sub-brokers, share transfer
agents, trustees, merchant bankers and all those who are associated with stock exchange in
any manner.
(iv) SEBI registers and regulates the working of mutual funds etc.
(v) SEBI regulates takeover of the companies.
(vi) SEBI conducts inquiries and audit of stock exchanges.

Other Functions

6
Singh Avtar, investment Law, Eastern Book Company, pg. 151.

17
 1. Registering and regulating the working of stock brokers, sub-brokers, share transfer
agents, bankers to issue, trustees of the trust deed, registrars to an issue, merchant
bankers, underwriters, portfolio managers, investment adviser and such other
intermediaries who may be associated with securities markets in any manner.
2. SEBI also performs the function of registering and regulating the working of
depositories, custodians of securities. Foreign Institutional Investors, credit rating
agencies etc.
3. Registering and regulating the working of Venture Capital Funds and collective
investments schemes including mutual funds.
4. Promoting and regulating self - regulatory organizations.
5. Calling for information form, undertaking inspection, conducting inquiries and
audits of the stock exchange, mutual funds and intermediaries and self - regulatory
organizations in the securities market.
6. Calling for information and record from any bank or any other authority or boars or
corporation established or constituted by or under any Central, State or Provincial Act
in respect of any transaction in securities which are under investigation or inquiry by
the Board.
7. Conduct research on any matter described if any.
8. Calling information from any agency, institution, banks etc7.

Power of SEBI
The SEBI board has three main powers:

7
Khan. M. Y, Indian Financial System, Mc Gran Hill Education, pg 255.

18
i. Quasi-Judicial: SEBI has the authority to deliver judgments related to fraud and other
unethical practices in terms of the securities market. This helps to ensure fairness,
transparency, and accountability in the securities market.

ii. Quasi-Executive: SEBI is empowered to implement the regulations and judgments made

and to take legal action against the violators. It is also authorized to inspect Books of
accounts and other documents if it comes across any violation of the regulations.

iii. Quasi-Legislative: SEBI reserves the right to frame rules and regulations to protect the
interests of the investors. Some of its regulations consist of insider trading regulations, listing
obligation, and disclosure requirements. These have been formulated to keep malpractices at
bay8.

Despite the powers, the results of SEBI’s functions still have to go through the Securities
Appellate Tribunal and the Supreme Court of India.

The important powers of SEBI (Securities and Exchange Board of India) are:-

1. Powers relating to stock exchanges & intermediaries

SEBI has wide powers regarding the stock exchanges and intermediaries dealing in securities.
It can ask information from the stock exchanges and intermediaries regarding
their business transactions for inspection or scrutiny and other purpose.

2. Power to impose monetary penalties

SEBI has been empowered to impose monetary penalties on capital market intermediaries

and other participants for a range of violations. It can even impose suspension of their
registration for a short period.

3. Power to initiate actions in functions assigned

SEBI has a power to initiate actions in regard to functions assigned. For example, it can issue
guidelines to different intermediaries or can introduce specific rules for the protection of
interests of investors.

4. Power to regulate insider trading

SEBI has power to regulate insider trading or can regulate the functions of merchant bankers.
8
www.gktoday.com// SEBI 456 investment law, last visited on 25th October 2019.

19
5. Powers under Securities Contracts Act

For effective regulation of stock exchange, the Ministry of Finance issued a Notification on
13 September, 1994 delegating several of its powers under the Securities Contracts
(Regulations) Act to SEBI.

SEBI is also empowered by the Finance Ministry to nominate three members on the
Governing Body of every stock exchange.

6. Power to regulate business of stock exchanges

SEBI is also empowered to regulate the business of stock exchanges, intermediaries

associated with the securities market as well as mutual funds, fraudulent and unfair trade
practices relating to securities and regulation of acquisition of shares and takeovers of
companies.9

Conclusion
The Securities and Exchange Board of India is the regulatory body which deals in matters
related to the development and regulation of securities market in India. It was established on
12th of April in 1988 but it got statutory status in 1992 SEBI plays an important role in

9
Supra 6 at pg 155.

20
regulating all the players operating in the Indian capital markets. It attempts to protect the
interest of investors and aims at developing the capital markets by enforcing various rules and
regulations.EBI is a market regulator which tries to create a balance in the day to day stock
market activities and for this there are regulatory frameworks established by SEBI. There are
17 exchanges currently operational in India and all exchanges, including NSE and BSE are
regulated by SEBI guidelines

SEBI is managed by the six members-one chairman (nominated by the chairman), two
members from office of central ministries, one from RBI, and remaining to members are
nominated by the central government. All statutory powers for regulating Indian capital
market are vested with SEBI itself. SEBI releases its annual guidelines for the all participants
of the security market so that fair and smooth functioning of the security market can be
ensured.

Bibliography

BOOKS

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  Dr. Myneni. S. R., Law of Investment and Securities, Asian
Law House.
 Khan. M. Y., Indian Financial System, The Mc Gran Hill
Company.
 Singh Avtar, Investment law, Central Book Company.

Websits
 www.legalserviseindia.com
 www.legabite.com
 www.gktoday.com

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