Security Exchange Board of India (SEBI)

Security Exchange Board of India (SEBI)

SEBI is a body corporate with head office at Bombay. The Chairman and the board members are appointed by the Central government. SEBI has two following major functions:

1. Regulatory and

2. Development

1. Regulatory

a). Registering the brokers and sub-brokers b). Registration of mutual funds c). Regulation of stock exchanges d). Prohibition of fraudulent and unfair trade practice e). Controlling insider-trading, take-over bids and imposing penalties.

2. Development a. Educating investors b. Training intermediaries in stock market transactions c.

Promoting fair transactions d. Undertaking research and publishing useful information to all

Objectives:

^Ø   To deal with development and regulation of stock market in India.

^Ø   To promote fair dealings by the issue of securities and ensure a market place where they can raise funds.

^Ø   To provide protection to the investors.

^Ø   Regulate and develop a code of conduct for brokers, merchant bankers, etc.

^Ø   To have check on preferential allotment to promoters at a very low price.

^Ø   To prevent deviations and violations of rules prescribed by stock exchange.

^Ø   To verify listing requirements, listing procedures, and ensure compliance of the same by the companies, so that only financially sound companies are listed.

^Ø   To prescribe required standards for merchant bankers.

^Ø   To promote healthy growth of security market for the development of capital market in

the country.

Powers of SEBI as per the Act, SEBI has powers

^Ø   To file complaints in a court

^Ø   To regulate companies in the issue and transfer of shares including bonus and rights shares.

^Ø   It can levy penalties on companies and on brokers for violating transactions.

^Ø   Power to summon any broker or intermediaries and call for documents.

^Ø   It can issue directions to all brokers for protecting the interests of investors.

In addition to the above powers:

^Ø   It can call for periodical returns from stock exchange.

^Ø   Seek any information from stock exchange.

^Ø   It can enquire into the functioning of stock exchange.

^Ø   It can grant permission for the change of bye-laws of any stock exchange.

^Ø   It can compel listing of securities of public company.

^Ø   It can control and regulate stock exchanges.

Ø     Granting registration to market intermediaries, prohibit insider-trading and prohibit Fraudulent and unfair trade practices.

Ø     Promoting investor-education, and trading of intermediaries in capital market.

^Ø   Regulating purchase of shares and take-over of companies.