BACKGROUND

• Importance of financial markets for the development of an economy.

• Importance of regulation to the functioning of securities markets.
• SEBI’s role as a regulator of the Security Markets, Stock Exchanges, Commodities
Markets etc in India.
• SEBI was formed in 1988 as a non-statutory body.
• It was made an Autonomous and Independent Regulatory body after the passing of the
Securities and Exchange Board of India Act, 1992 by the Indian Parliament.
• SEBI functions under the Ministry of Finance.
• SEBI now has Statutory powers with regards to regulation of the Securities and
Commodities market in India.
• The main objective of SEBI is to facilitate the growth and development of the capital
markets and to ensure that the interests of investors are protected.
• The Head office of SEBI is in Mumbai and regional offices at Kolkata (East),
Ahmedabad (West), New Delhi (North) and Chennai (South).
• It also has local offices in almost all major cities of the country
 PREAMBLE
a. to protect the interest of investor in securities market and
b. to promote the development of and to regulate the securities
market

• SEBI can:
a. can specify the matters to be disclosed and the standards of
disclosure
b. can issue directions to all intermediaries and other persons
associated with the securities market
c. can conduct enquiries, audits and inspection of all concerned and
adjudicate offences under the Act
 ESTABLISHMENT
•Section 3 of the SEBI Act:
a. a body corporate;
b. having perpetual succession and a common seal;
c. with power to acquire, hold and dispose of property, both
movable and immovable; and
d. to contract, and shall, by the said name, sue or be sued.
 COMPOSITION (SECTION 4(1))
(a) a Chairman;

(b) two members from amongst the officials of the Ministry of the
Central Government dealing with Finance and administration of the
Companies Act, 2013;

(c) one member from amongst the officials of the Reserve Bank;

(d) five other members of whom at least three shall be the whole-time
members, to be appointed by the Central Government.
 POWERS AND FUNCTIONS
• Quasi-Executive Powers
• Quasi-Legislative Powers
• Quasi-Judicial Powers

Other Important Functions:

a. regulating the business in stock exchanges
b. registering and regulating the working of Intermediaries
c. registering and regulating the working of venture capital funds and collective investment
schemes, including mutual funds
d. promoting and regulating self-regulatory organizations
e. promoting investors’ education and training of intermediaries
f. prohibiting insider trading in securities
g. regulating substantial acquisition of shares and take-over of companies
h. undertaking inspection, conducting inquiries and audits
• Power of Civil court-Section 11 (3)
• Powers to suspend and restrain-Section 11 (4)
• Powers to regulate or prohibit issue of prospectus, offer document or
advertisement soliciting money for issue of securities-section 11A (1)
• Power to issue directions-Section 11(B)
• Power to investigate-section 11 (C)
• Power to issue Cease and desists proceeding-Section 11 D
• Regulation of Intermediaries-Section 12 (1)
• Power to Cancel Certificate-Section 12 (3)
• Powers to Prohibit the Manipulative and Deceptive Devices, Insider Trading
and Substantial Acquisition of Securities or Control-Section 12 A
• Powers to impose Penalties and Adjudication-Section 15A to Section 15 JA
• Power to Adjudicate-Section 15 I
• Power To Make Regulations-Section 30
 MAJOR ROLE PLAYED IN
a. Primary market, market access and intermediaries
b. Disclosure requirements
c. Corporate Governance
d. Market for corporate control
e. Trading Mechanisms
f. Settlement systems
g. Dematerialization
h. Institutionalization of Trading and Ownership of Securities
i. Market Integrity and Insider Trading
j. Ownership and Governance of stock exchanges
k. Compliance Enforcement
 INVESTIGATION
• Grounds of Investigation (Section 11C)
a. detrimental to the investors or the securities market
b. violated any of the provisions of this Act or the rules or the regulations

SEBI MAY DIRECT ANY PERSON TO INVESTIGATE THE AFFAIRS

• Powers of Investigating Authority

• to furnish such information to, or produce such books, or registers, or other documents, or record before
him

• Examination on oath
• May examine on Oath

• Seizure of Records
• Investigating Authority has reasonable ground to believe that records may be destroyed, mutilated,
altered or falsified.
• may make an application to the Magistrate or Judge of such designated Court
 Relevant Provisions Of Adjudication

•Section 15-I & J

•Factors to be taken into Consideration while Adjudication:

a. SEBI appoints any of its officers not below the rank of Division Chief
to be an adjudicating officer for holding an inquiry
b. the adjudicating officer has powers to summon and enforce the
attendance of any person
c. SEBI may call for and examine the record of any proceedings
 PENALTIES UNDER SEBI ACT FOR VARIOUS
NON-COMPLIANCES
• Chapter VIA of SEBI Act
• Section 15A: Penalty for failure to furnish information, return, etc.
• Section 15B: Penalty for failure by any person to enter into agreement with clients
• Section 15C: Penalty for failure to redress investors’ grievances
• Section 15D: Penalties for Default
• Section 15E: Penalty for failure to observe rules and regulations by an asset
management company
• Section 15F: Penalties for default in case of stock brokers
• Section 15G: Penalty for Insider Trading
• Section 15H: Penalty for Non-Disclosure of Acquisition of Shares and Takeovers
• Section 15HA: Penalty for fraudulent and unfair trade practices
• Section 15HB: Penalty for contravention where no separate penalty has been provided
 SAT

Objectives and Purpose

• to consider appeals against SEBI’s orders, of penalties

Composition
• a Presiding Officer and two other members to be appointed by the Central Government
by notification

Appeal Procedure
• By aggrieved Person
• appeal shall be filed within a period of 45 days
• An opportunity of being heard
• It may confirm, modify or set aside the order appealed against
• It is not bound by the procedure laid down by the Code of Civil Procedure, 1908, but
shall be guided by the principles of natural justice
 Powers of SAT

• To summon and enforce the attendance of any person and examine him on oath
• the discovery and production of documents
• To receive evidence on affidavits
• To issue commissions for the examination of witnesses or documents
• To review its decisions
• To dismissing an application for default or deciding it ex-parte
• To set aside any order of dismissal of any application for default or any order
passed by it ex-parte
• any other matter which may be prescribed.