Faculty of Management Studies, Maharshi Dayanand Saraswati University, Ajmer roles & functions of SEBI Presented in class of:- Dr.Ashish Pareek भारतीय प्रतिभूति एवं विनिमय बोर्ड Presented by:- Anubhav Jain Gunjan Bhardwaj MalkhanMeena RadhaMeena Rohit Sharma VarshaSahu www.sebi.gov.in
Establishment In 1988 the Securities and Exchange Board of India (SEBI) was established by the Government of India through an executive resolution, and was subsequently upgraded as a fully autonomous body (a statutory Board) in the year 1992 with the passing of the Securities and Exchange Board of India Act (SEBI Act) on 30th January 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” 3
Organization’s Structure Management of the Board The Board shall consist of the following members, namely:- a Chairman Two members, One from amongst the officials of the Ministry of the Central Government dealing with Finance and second from administration of the Companies Act, 1956. One member from amongst the officials of the Reserve Bank of India. Five other members of whom at least three shall be the whole-time members to be appointed by the central Government . 4
Current board members 5
Current board members continue.. 6
Current board members continue.. 7
Objectives of SEBI The primary objective of SEBI is to promote healthy and orderly growth -of the securities market and secure investor protection. The objectives of SEBI are as follows: To protect the interest of investors, so that, there is a steady flow of savings into the capital market. To regulate the securities market and ensure fair practices. To promote efficient services by brokers, merchant bankers, and other intermediaries, so that, they become competitive and professional. 8
Functions of SEBI The SEBI Act, 1992 has entrusted with two functions, they are Regulatory functions And Developmental functions 9
Regulatory Functions Regulation of stock exchange and self regulatory organizations. Registration and regulation of stock brokers, sub-brokers, Registrars to all issues, merchant bankers, underwriters, portfolio managers etc. Registration and regulation of the working of collective investment schemes including mutual funds. Prohibition of fraudulent and unfair trade practices relating to securities market. Prohibition of insider trading Regulating substantial acquisition of shares and takeover of companies. 10
Developmental Functions Promoting investor’s education Training of intermediaries Conducting research and publishing information useful to all market participants. Promotion of fair practices Promotion of self regulatory organizations 11
Powers of SEBI Power to call periodical returns from recognized stock exchanges. Power to compel listing of securities by public companies. Power to levy fees or other charges for carrying out the purposes of regulation. Power to call information or explanation from recognized stock exchanges or their members. Power to grant approval to bye-laws of recognized stock exchanges. 12
Powers of SEBI continue.. Power to control and regulate stock exchanges. Power to direct enquiries to be made in relation to affairs of stock exchanges or their members. Power to make or amend bye-laws of recognized stock exchanges. Power to grant registration to market intermediaries. Power to declare applicability of Section 17 of the Securities Contract (Regulation) Act 1956, in any State or area, to grant licenses to dealers in securities. 13
Various departments under SEBI 14
Various departments under SEBI continue… 15
SEBI & Central Govt. 16
The Central Government has power to issue directions to SEBI Board, supersede the Board, if necessary and to call for returns and reports as and when necessary. The Central Government has also power to give any guideline or to make regulations and rules for SEBI and its operations.
The activities of SEBI are financed by grants from Central Government, in addition to fees, charges etc. collected by SEBI. The fund called SEBI General Fund is set up, to which, all fees, charges and grants are credited. This fund is used to meet the expenses of the Board and to pay salary of staff and members of the body.
Regulation by SEBI: Recent Cases VEDANTA-CAIRN ISSUE
SEBI has not yet cleared Vedanta group's open offer for Cairn India, a mandatory requirement for conclusion of London-based mining group's $9.6 billion acquisition to foray into oil sector.
London-listed Vedanta had in August last year agreed to buy up to 51 per cent stake in Cairn India from Cairn Energy Plc. Following the acquisition, its group firm Sesa Goa was to make an open offer for buying an additional 20 per cent in the company that owns India's largest on land oil field.
But the company could not make the open offer following an oil ministry intervention with SEBI. The ministry said the deal was contingent upon government approval, which is still under process.
SEBI is holding back the approval for the open offer as the government is yet to give its go ahead.
Regulation by SEBI: Recent Cases DECCAN-CHRONICLE HOLDINGS Ltd. ISSUE
Sebi allowed the Deccan Chronicle Holdings Ltd to buy-back 3.45 crore shares or 14.17 per cent equity from the market at an estimated cost of Rs 270 crore.
This will be the second time the Deccan Chronicle would come out with an offer to buy-back its shares, following which the equity of the promoters in the company could go up to 73.83 per cent from 63.37 per cent currently.
SEBI, while exempting Deccan Chronicle from making the mandatory public announcement before coming out with the buy-back offer, has, however, asked the company "not of seek any further exemption pursuant to any further buy-back".
Referring to the general issue of companies buying back their own shares, Sebi order said, "repeated buy-back offers by a company is not something that Sebi, as a regulator, would like to encourage, given the fact that it would be misused by entities to consolidate their holding at the expense of the company.