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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.
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” .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 regulate the securities market. To protect the interest of the investors in securities. . To promote the development of securities market .
Registering and regulating the workings of intermediaries associated with securities market . Regulating the business in stock exchange and any other securities market . Promoting and regulating self-regulatory organizations. Registering and regulating the working of collective investment schemes including mutual funds. Prohibiting fraudulent and unfair trade practices in the securities market. .
Calling for information. Promoting investors education and training of intermediaries in securities market . Regulating substantial acquisition of shares and take-over of companies . intermediaries and self-regulatory organizations in the securities market. undertaking inspection. conducting enquiries and audits of the stock exchanges. Prohibiting insiders trading in securities. .
dept Institutional Invt.Primary Mkt. & Intermediaries Dept Secondary Mkt. dept DEPARTMENTS Issue Mgt. Advisory Committees .
SEBI REGULATES SEBI REGULATES PRIMARY MARKET SECONDARY MARKET MUTUAL FUNDS FOREIGN INSTITUTIONAL INVESTMENT .
MEASURES UNDERTAKEN BY SEBI Entry norms Promoters contribution Disclosure Book building Allocation of shares Market intermediaries .
For Manufacturing company not having such track record – appraise project by a public financial institution or a scheduled commercial bank. For corporate body – 5 public shareholders for every Rs. . Track record of dividend payment for minimum 3 yrs preceding the issue.1 lakh of the net capital offer made to the public.when post-issue networth becomes more than 5 times the pre-issue networth. Already listed companies .
3. Receiving of promoters’ contribution. Cases of non-under written public issues.DISCLOSURE Draft prospectus Un audited financial result . Lock in period as per SEBI. 3. Should not be less than 20% of the issued capital.
Role of syndicate members and book runners. ‣ Reservation for small investors. ‣ Allotment of securities. SEBI recommends two-tier under writing system. One of the mode of public issue thru prospectus.ALLOCATION OF SHARES ‣ Minimum application of shares. 5. Minimum 30 centers. .
registrars. Licensing of underwriters. etc. . Merchant bankers net worth – Rs. transfer agents.. Licensing of merchant bankers.5 crores Segregate fund based from fee based activities.
REFORMS IN THE SECONDARY MARKET: Governing board Infrastructure Settlement & clearing Debt market Price stabilization Delisting Brokers Insider Trading .
60% of brokers in arbitration. For trading members 40% representation. 2. Brokers and non-brokers representation made 50:50. disciplinary & default committees.INFRASTRUCTURE ‣ On-line screen based trading terminals. .
Advice to set up clearing houses. Weekly settlements. . Auctions for non-delivered shares within 80 days of settlement. Warehousing facilities permitted by SEBI. clearing corporation or settlement guarantee fund.
Range for FOREIGN INSTITUTIONAL INVESTORS. Invt. Listing of debt instruments. Dual rating for above Rs.500 million. Regulates thru SEBI (depository & participants) regulation Act 1996. .
Circuit breaker system and other monitoring restrictions could be applied. Division to monitor the unusual movements in prices. Imposing of special margins of 25% on purchase in addition to regular margin. Price filters. Monitor prices of newly listed scrip from the first day of trading. . Price bands.
On voluntary de-listing from regional stock exchanges – buy offer to all share holders. Promoters to buy or arrange buyers for the securities. 3 yrs listing fees from companies and be kept in Escrow A/c with the stock exchange. .
and Persons of Indian Origin (PIOs) to enter into both Primary & Secondary market in India through the portfolio investment scheme (PIS). . FIIs/NRIs can acquire shares/debentures of Indian companies through the stock exchanges in India. under Liberalized policy regime.Union Govt. Under this scheme. Implications:- Affects the sensex movements Determines the market indications Guidelines announced in 1992 In 1993. 439 FIIs were registered Can trade in securities of listed companies including OTCEI. allowedForeign Institutional Investors (FIIs) . 12 FIIs got registered At the end of 1996-97. Non-Resident Indians (NRIs).
.The ceiling for overall investment for FIIs: 24% of the paid up capital of the Indian company 10% for NRIs/PIOs. subject to the approval of the board and the general body of the company passing a special resolution to that effect. including the State Bank of India. 20% of the paid up capital in the case of public sector banks. Modifications in ceilings:The ceiling of 24 % for FII investment can be raised up to sectoral cap/statutory ceiling. The ceiling of 10 % for NRIs/PIOs can be raised to 24% subject to the approval of the general body of the company passing a resolution to that effect.
. For effective monitoring of foreign investment ceiling limits. the Reserve Bank has fixed cut-off points that are two percentage points lower than the actual ceilings.Monitoring Foreign Investments: The Reserve Bank of India monitors the ceilings on FII/NRI/PIO investments in Indian companies on a daily basis.
SEBI guidelines for FIIs:. financial soundness. Permission under the provisions of FERA Act 1973. To grant the certificate the applicant should – 1. Regulated by an appropriate foreign regulatory authority.2006). general reputation of fairness and integrity. Have track record. .: According to the 1995 regulations. 2. professional & competence record. FIIs should hold certificate granted by SEBI to trade in Indian stock market.(FEMA . Valid up to 5 yrs. 3.
Custodians : •Is an agency •appointment of the custodian •Maintenance of accounts •Submission of semi-annual reports (SEBI & RBI) •Inspection of accounts SEBI Guidelines:Foreign brokers can operate only on behalf of registered FIIs. Execution of orders for sale and purchase of securities are done by a member of an Indian stock exchange . . Time stipulation for transaction b/w custodian & member of ISE is 48 hrs.
.Preferential allotment To boost up the financial resources : Regulation:Under mutual consent of the shareholders As per the ceilings Allotment on the highest price (26 weeks) Permitted up to 15% of the equity within the ceiling Holdings of a single FII – increased from 5% to 10% of the equity of a company.
Allowed to invest up to 100% in debt instruments. Mandatory to settle transactions thru dematerialized mode for FIIs having securities more than Rs. Allowed to invest in unlisted stocks of any company.10 cr .Recent developments in FIIs : Exemption from attaching copy of RBI approval with each market lots.
Capital adequacy 7.Special watch 6.Badla trade 5.Settlement 4.Disclosures 2.Critical review of SEBI : 1.Stricter registration of brokers .Dissemination process 3.Single authority 8.
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