Sebi

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Sebi

  1. 1. Securities and Exchange Board Of India Securities :  Investment in a company or in government debt, which can be traded on the financial markets and which produces an income for the investor. Securities include government bonds which pay interest and company shares which pay dividends
  2. 2. Essentials Established April 12,1988 as a non statutory body to promote growth of securities and provide investor protection Was accorded statutory recognition in 1992  Legislations Companies Act 1956 (sets the code of conduct for corporate sector in relation to issues, allotment and transfer of securities) Securities and Exchange Board of India Act 1992(to protect interests of investors and develop and regulate securities market) Securities Contracts regulation Act 1956 (regulates transactions in securities through control over stock exchange) Depositories Act 1996 (provides for electronic maintenance and transfer of ownership of dematerialzed securities)
  3. 3. Objectives Promote fair dealings by the issuers of securities and ensure marketplace where they can raise funds at a relatively low cost Safe guard the rights and interests of investors. To develop and regulate a code of conduct and fair practices among intermediaries like brokers, merchant bankers etc.
  4. 4. Regulatory Role Companies Act 1956 (sets the code of conduct for corporate sector in relation to issues, allotment and transfer of securities) Securities and Exchange Board of India Act 1992 (to protect interests of investors and develop and regulate securities market) Securities Contracts regulation Act 1956 (regulates transactions in securities through control over stock exchange) SEBI (disclosure and investor protection) Guidelines 2000 ( protects investors interests) Depositories Act 1996 (provides for electronic maintenance and transfer of ownership of dematerialzed securities) SEBI (mutual funds) regulations in 1993 (to regulate the functioning of private sector mutual funds like Stanley Morgan, Kothari) continued ………..
  5. 5. FIBP (Foreign Investment promotion board : approves joint ventures) Credit rating agencies (to protect interests of investors) CRSIL ICRA CARE  The recognition of OTCEI (over the counter exchange of India) ISE (Inter Connected Stock Exchange) which gave clarity and transparency to transaction over the stock exchanges)
  6. 6. Securities market reforms All companies which access the capitals market are free to price their issues subject to certain conditions Restrictions on rights and bonus issues have been removed The use of “Stock Invest “ by individuals and mutual funds to mitigate the locking in of funds SEBI’s direction regarding proportional allotment system in case of over subscription Indian development financial institutions and mutual funds can be allotted up to 75% of the issue amount Investment of FII’s NRI etc is up to a maximum of 24% extendable to 30% on the approval of RBI Advertisement codes have been issued with regard to public and rights issue Number of collection centers have been reduced to 30 Capital gains through investment in new issues are exempted from taxes Underwriting of issues has been made optional
  7. 7. Salient features of the SEBI ACT 1992 Shall be a body corporate with perpetual succession an common seal with power to acquire hold and dospose off property HO will be in Mumbai may establish offices at other places in India Chairman and members of board are appointed by the central government Government can prescribe terms of office and other conditions of service of the board and chairman Primary duty of the board to protect the interest of the investors Amendments Can undertake inspection of any books Issue commissions for the examination of witness of documents Sweeping powers to suspend trading of any security in a recognized stock exchange Power to regulate or prohibit issues of prospectus Power to prohibit manipulative and deceptive devices Penalties levied under the act have been enhanced
  8. 8. Regulation of Stock Exchange  24 recognized stock exchanges 3 National level National Stock Exchange Inter connected Stock Exchange of India Over the Counter Exchange of India Rest are referred to as Regional Stock Exchanges The ministry of finance has the power to nominate President Vice president Executive Chiefs SEBI has the power to call for annual and periodic and annual returns Powers of licensing and suspending dealers in recognized stock exchange Grant recognition of stock exchange Amend regulations of voting rights of members Hearing appeals of companies against Stock Exchange
  9. 9. Important points Stock Exchange other than recognized Stock Exchanges are prohibited Depositories: Depositories ACT 1996 allows establishment of a depository in India the main function of this is to dematerialize securities and enable their transaction in a book entry form. Registration and certificate to commence business has to be obtained from SEBI

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