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Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
Sebi a critic
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Sebi a critic

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  • Disclosure and flow of information fall into three categories,namely, disclosure at the time of a public offering,on-going or periodic disclosure after listing ofsecurities and transaction-related disclosures. SEBI enhancedthe disclosures required of a company at the timeof a public offering by building on the requirements inthe Companies Act, 19566 . The increase in disclosureswas necessitated by “the quantitative growth of themarket and the freedom to price issues had also raisedquestions about the quality of issues entering the market.”(SEBI, 1996). SEBI’s disclosure standards are notlimited to accounting information presented in the prospectus.It extends to other issue-related communicationssuch as advertisements. As a result, the disclosurerequirements relating to an issue and currently in vogueare a far cry from the relatively rudimentary requirementsspecified in the Companies Act.The continuing disclosure regime under the CompaniesAct that was in force prior to the establishment of SEBIsuffered from three principal shortcomings (i) low frequency,at once a year (ii) insufficient and poorly administereddeterrents against non compliance; and (iii)a common set of disclosure obligations for companieswith limited as well as widely distributed ownership.In order to improve the frequency of disclosure, SEBIconstituted a committee in 1996 to examine the questionof continuing disclosure7
  • Transcript

    • 1. Swapnil Amin……………………..01Junaid Bhat………………………..04 Sagar Chiplunkar………………..05Jatin Kagole……………………….20Sumit Nayak……………………….30 2Roshni Shah……………………….42
    • 2. SEBI Bhavan, Mumbai headquarters Agency overviewFormed 12 April 1992 GovernmentJurisdiction of India Mumbai,Headquarters MaharashtraEmployees 525 (2009)Agency U. K. Sinha,executive Chairman Website 3 www.sebi.gov.in
    • 3.  Since the empowerment of (SEBI) through an Act of Parliament in1992, it has taken initiatives that have transformed the marketfundamentally • Market capitalization • Number of listed firms • Trading volumes and turnover both in the spot and futures markets. The fastest growing and well-developed asset managementbusinesses in the world. SEBI was established to strengthen the oversight of the securitiesmarket in India in the wake of a securities scam that surfaced in 1992. 4
    • 4. ROLE OF SEBI IN PRIMARY MARKET 3 main Objectives of SEBI Entry Norms Track record of dividend payment for minimum 3 yrs preceding the issue Already listed companies – when post issue net worth becomes more than 5 times the pre-issue net worth For manufacturing company not having such track record- appraise project by a public financial institution or a schedule commercial bank For corporate body – 5 public shareholders for every Rs. 1lac of the net capital offer made to the public Banks - 2 yrs of profitability for issue above par 5
    • 5.  Promoters’ Contribution Should not be less than 20% of issued capital Receiving of promoters’ contribution Lock in period as per SEBI Cases of non-under written public issues Book building SEBI recommends two-tier under writing system One of the modes of public issues through prospectus role of syndicate members and book runner Minimum 30 centers 6
    • 6.  Allocation of shares Minimum application of shares Reservation for small investors Allotment of securities Market Intermediaries Licensing of merchant bankers Licensing of underwriters, registrars, transfer agent etc.. Merchant bankers net worth – Rs. 5 cr Segregate fund based from fee based activities 7
    • 7. ISSUANCE OF SECURITIES 8
    • 8. THREE CATEGORIES OF DISCLOSURE Disclosure at the time of a public offering, On-going or periodic disclosure after listing of securities. Transaction-related disclosures. SEBI enhanced the disclosures required of a company at the time of a public offering by building on the requirements in the Companies Act, 19566 . 9
    • 9. DISCLOSURE SEBI suffered from three principal shortcomings.1. Low frequency, at once a year2. Insufficient and poorly administered deterrents against non compliance.3. A common set of disclosure obligations for companies with limited as well as widely distributed ownership. 10
    • 10. CORPORATE GOVERNANCE Improved standards of corporate governance in India among the listed companies Role of the Board of Directors and directors individually have been dealt under the Companies Act 1956 SEBI’s initiatives starting with the deliberations of two Committees in succession culminated in the introduction of Clause 49 11
    • 11. ITEMS COVERED UNDER CLAUSE 49  Ensuring independence of the Board and disclosure of their compensation  Ensuring correctness, sufficiency, and credibility of disclosures  Requirement of financial literacy among members of the audit committee and expertise in accounting management among them  Whistle-blower policy  Requirement of a formal risk management policy  Certification of financial and cash flow statements by the CEO/CFO to the Board  Quarterly reporting to the stock exchanges on compliance with the requirements of every provision of Clause 12
    • 12. MARKET FOR CORPORATE CONTROL Takeover Code Criticisms :1. Poor drafting2. Not favourable to hostile acquisitions 13
    • 13. TRADING MECHANISMS Indian stock exchanges adopted an electronic trading system1. Reduced manipulation of prices2. Ensured that investors received time-based priority and correct prices for their trades; and3. Faster Operations of NSE and The Stock Exchange. 14
    • 14. CRITICISMS TO THE TRADING MECHANISM Prior to NSE and BSE going national, the operations of stock exchanges were limited to geographical regions. As a result the share of trade on regional stock exchanges dropped steadily from 57 per cent in 1994-95 to 4 per cent in 2002-03. The fact that SEBI had to exert pressure on some of the exchanges to switch to electronic trading 15
    • 15. DEMATERIALISATION FIIs started in 1992 and setting up of Mutual Funds in the privatesector in 1994.And after that SEBI started with Dematerialization in Jan 1998.SEBI announced a compulsory of Dematerialization for all issuerand IPOs by September 2011 16
    • 16. BENEFITS OF DEMATERIALIZATION Greater liquidity due to the withdrawal of the requirement of minimumtrading lot sizes and reduced “no-delivery” period . No loss or risk on account of mutilation or loss of list.Shorter periods of book closure for corporate actions such as dividendspayments, rights or bonus issues. Eliminated delays in transfer that were intended to withhold transfers so asto create an artificial shortage of list in the market. 17
    • 17. MARKET INTEGRITY AND INSIDERTRADING It is essential those who possess an informational advantage do not exploit the same to derive pecuniary gains for themselves. SEBI’s first enactment to curb insider trading , 992 did not make muchprogress due to poor enforcement. Requiring listed companies, intermediaries, and advisors to set up internal systems for preventing insider trading and reporting oncompliance or otherwise to SEBI. Manipulative practices are usually resort to: 1. Create a false market 2. Push the price of the securities down to unwarrantedly low levels“insider trading has utterly no place in any fair-minded 18law abiding economy.” --Mr. Arthur Levitt
    • 18. CONCLUSIONAdequately empowered and independent regulator.All-round improvement in the institutional framework.Important processes have been regulated such as takeoveractivities, insider trading, manipulative practices, issuance of employeeshare options and so on.SEBI has mandated an enormous increase in the flow of informationat the time of listing, after listing and relating to the trade. 19
    • 19. 20
    • 20. FOR MORE INFORMATION PLEASE VISIT THE WEBSITE. THANK YOU 21

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