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Index
 Types of Financial Market
 Capital Market- Nature and Role
 Capital Market Reforms
 Recent Developments
 Refor...
Types of Financial Market
Financial
Market
Capital
Market
Primary
Market
Secondary
Market
Money
Market
Long term,
Governed...
The market where investment instruments like bonds,
equities and mortgages are traded is known as the capital
market.
Th...
NATURE and ROLE OF CAPITAL
MARKET
 It Has Two Segments
 It Deals In Long-Term Securities
 It Performs Trade-off Functio...
Creates investment opportunities for small investors
Government raises capital for development projects
Barometer for t...
Capital Market Reforms
 Objectives
 Improving Market Efficiency
 Enhancing Transparency
 Preventing Unfair Trade Pract...
Recent Developments in Capital
Markets in India
 The 1990s have witnessed the emergence of securities
market as a major s...
Capital Market-Reforms
 Each scam has brought in reforms - 1992 / 2001
 Screen based Trading through NSE, Jan 2003
 Cap...
 SEBI ACT,1992
 Protect-Promote-Regulate
 Disclosure and Investor Protection Guidelines (DIP)
 Access to International...
Contd.
 Reforms in Primary Market and Mutual Funds to bring more
transparency and accountability.
 Introduction of depos...
Commodity trading
 Multi Commodity Exchange
(MCX)
 Setting up of Clearing
Corporation of India Limited
(CCIL), Venture f...
Reforms Post 2000
 Corporatization of exchange memberships
 Banning of Badla / ALBM
 Introduction of Derivative product...
The Companies Act,2013
 The Companies Act 2013 is an Act of the Parliament of
India which regulates incorporation of a co...
The provisions of this Act shall
apply to:
 Companies incorporated under this Act or under any previous
company law
 Ins...
CONCEPTS
 FORMATION OF THE COMPANY
 REGISTERED OFFICE OF THE COMPANY
 ALTERATIONS
 RECTIFICATION OF NAME OF COMPANY
 ...
 OPC - Only 1 member (should be an Indian citizen
and resident) At least 1 Director
 Small Company -Not a public company...
HIGHLIGHTS-
 One Person Company (OPC)
 Woman Director
 Resident Director
 Accounting Year
 Loans to director
 Articl...
CHALLENGES
 TRANSITION OF COMPANIES TO COMPLY WITH
THE COMPANIES ACT
 LACK OF CLARITY IN CERTAIN PROVISIONS
(The Act pro...
268142
214
139373
29334
204
1022011
0
Summary Statistics of Indian Companies (March 31st, 2015)
COMPANIES CLOSED DORMANT C...
0
20000
40000
60000
80000
100000
120000
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Registration of Companies Limited ...
0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000
Northern Region
Eastern Region
Western Region
Southern Region
Re...
0
200000
400000
600000
800000
1000000
1200000
Active Companies 1956-57 to 2014-15
Total number of companies Column1 Column2
CONCLUSION
 There has been little progress outside the equity
market and the corporate bond market
1. because regulatory ...
REFERENCES
 http://www.sebi.gov.in/
 www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf
 www.finmin.nic.in/the_ministry/....
Submitted by-
Rashmie Parmour
(Roll No.8601)
Niyati Purandare
(Roll No.(8611)
Capital Market Reforms
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Capital Market Reforms

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Recent trends in Indian Capital Market and highlights of the new Companies Act, 2013

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Capital Market Reforms

  1. 1. Index  Types of Financial Market  Capital Market- Nature and Role  Capital Market Reforms  Recent Developments  Reforms Post 2000  The Companies Act, 2013- New rule of the game.  Conclusion  References
  2. 2. Types of Financial Market Financial Market Capital Market Primary Market Secondary Market Money Market Long term, Governed by SEBI Short term, Governed by RBI New Securities Issued Issued Security trade
  3. 3. The market where investment instruments like bonds, equities and mortgages are traded is known as the capital market. The primal role of this market is to make investment from investors who have surplus funds to the ones who are running a deficit Capital Market deals in long term capital securities (Equity or Debt) offered by private business companies or the govt. of India Governed and regulated by Securities and Exchange Board of India (SEBI).
  4. 4. NATURE and ROLE OF CAPITAL MARKET  It Has Two Segments  It Deals In Long-Term Securities  It Performs Trade-off Function  It Creates Dispersion In Business Ownership  It Helps In Capital Formation  It Helps In Creating Liquidity
  5. 5. Creates investment opportunities for small investors Government raises capital for development projects Barometer for the economy
  6. 6. Capital Market Reforms  Objectives  Improving Market Efficiency  Enhancing Transparency  Preventing Unfair Trade Practices  Integration with International Markets  Actions  Liberalize  Regulate  Develop
  7. 7. Recent Developments in Capital Markets in India  The 1990s have witnessed the emergence of securities market as a major source of finance for trade and industry in India.  Thus the Govt. of India and SEBI has undertaken number of measures in order to improve the working of Indian stock market to make it more progressive and vibrant.
  8. 8. Capital Market-Reforms  Each scam has brought in reforms - 1992 / 2001  Screen based Trading through NSE, Jan 2003  Capital adequacy norms stipulated  Setting up of Private Mutual Funds  Dematerialization of Shares - risks of fraudulent paper eliminated  Entry of Foreign Investors  Investor awareness programs  Rolling settlements  Inter-action between banking and exchanges
  9. 9.  SEBI ACT,1992  Protect-Promote-Regulate  Disclosure and Investor Protection Guidelines (DIP)  Access to International Capital Markets: I. American Depository Receipts (ADRs), II. Global Depository Receipts (GDR), Foreign Currency Convertible Bonds (FCCBs) and External Commercial Borrowings (ECBs).  Free Pricing  Book Building  Screen Based Trading  Internet Trading-Mobile Trading  Establishment of Creditors Rating Agencies  Credit Rating Information Services of India Limited CRISIL (1988)  Investment Information and Credit Rating Agency of India Limited ICRA(1991) and Credit Analysis and Research Limited CARE were set up to assess the financial health of different financial institution.  Investor’s Education and Protection Fund (IEPF), 1991
  10. 10. Contd.  Reforms in Primary Market and Mutual Funds to bring more transparency and accountability.  Introduction of depository concept (Electronic Mode).  Stricter vigilance and market surveillance mechanism.  Introduction of buy-back of shares and its regulation.  Steps for practicing good corporate governance practice.  Trading in Options, Futures and Derivatives.  Rolling settlements at Stock Exchanges.  Empowerment of shareholders through legislative changes in Companies Act, 1956.  Better transparency and disclosure through Listing Agreement.  EDIFR - Electronic Data Filing and Retrieval System  Price Stabilization Fund
  11. 11. Commodity trading  Multi Commodity Exchange (MCX)  Setting up of Clearing Corporation of India Limited (CCIL), Venture funds etc. have resulted into tremendous growth of Indian Capital Market.  Delisting frameworks- The Securities Laws (Amendment) Act,2004 amended the SCRA that stock exchange may delist the securities after recording reasons
  12. 12. Reforms Post 2000  Corporatization of exchange memberships  Banning of Badla / ALBM  Introduction of Derivative products - Index / Stock Futures & Options  Reforms/Changes in the margining system  STP - electronic contracts  Margin Lending  Securities Lending
  13. 13. The Companies Act,2013  The Companies Act 2013 is an Act of the Parliament of India which regulates incorporation of a company, responsibilities of a company, directors, dissolution of a company  It is divided into 29 chapters containing 470 sections.  The Act has replaced The Companies Act, 1956 after receiving the assent of the President of India on 29 August 2013.  The Act came into force on 12 September 2013  A total of another 184 sections came into force from 1 April 2014.
  14. 14. The provisions of this Act shall apply to:  Companies incorporated under this Act or under any previous company law  Insurance companies, except in so far as the said provisions are inconsistent with the provisions of the Insurance Act, 1938 or the Insurance Regulatory and Development Authority Act, 1999  Banking companies, except in so far as the said provisions are inconsistent with the provisions of the Banking Regulation Act, 1949  Companies engaged in the generation or supply of electricity, except in so far as the said provisions are inconsistent with the provisions of the Electricity Act, 2003  Any other company governed by any special Act for the time being in force, except in so far as the said provisions are inconsistent with the provisions of such special Act
  15. 15. CONCEPTS  FORMATION OF THE COMPANY  REGISTERED OFFICE OF THE COMPANY  ALTERATIONS  RECTIFICATION OF NAME OF COMPANY  AUTHENTICATION OF DOCUMENTS, PROCEEDINGS AND CONTRACTS  EXECUTION OF BILLS OF EXCHANGE
  16. 16.  OPC - Only 1 member (should be an Indian citizen and resident) At least 1 Director  Small Company -Not a public company . Paid up capital not more than INR 5m and turnover according to latest P&L does not exceed INR20m  Private Limited - Company members (2 to 200), minimum two Directors .Restriction on transfer of shares  Public Company - Minimum 7 members, minimum 3 directors .Limits placed on remuneration paid to the Directors
  17. 17. HIGHLIGHTS-  One Person Company (OPC)  Woman Director  Resident Director  Accounting Year  Loans to director  Articles of Association  Financial year  Appointment of Statutory Auditors  Limit on a number of members  Share capital  CSR  Mergers and amalgamations  Revival and Rehabilitation of sick company
  18. 18. CHALLENGES  TRANSITION OF COMPANIES TO COMPLY WITH THE COMPANIES ACT  LACK OF CLARITY IN CERTAIN PROVISIONS (The Act provides that foreign companies in India need to furnish incorporation papers, among others, to the Registrar of Companies, display their names indicating country of origin, etc., but since the term “foreign company” is not defined clearly, it has created confusion leaving interpretation problems between former laws and the Act.)  THREATENING THE BASIC CONCEPT OF CSR
  19. 19. 268142 214 139373 29334 204 1022011 0 Summary Statistics of Indian Companies (March 31st, 2015) COMPANIES CLOSED DORMANT COMPANIES INACTIVE COMPANIES COMPANIES UNDER PROCESS FOR CLOSURE ACTIVE IN PROCESS ACTIVE COMPANIES
  20. 20. 0 20000 40000 60000 80000 100000 120000 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Registration of Companies Limited by Shares during Financial Year 2009-10 to 2014-15 No. of Companies Authorized Capital Column1
  21. 21. 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 Northern Region Eastern Region Western Region Southern Region Registration of New Companies during 2014-15 Column1 Column2 Series 1
  22. 22. 0 200000 400000 600000 800000 1000000 1200000 Active Companies 1956-57 to 2014-15 Total number of companies Column1 Column2
  23. 23. CONCLUSION  There has been little progress outside the equity market and the corporate bond market 1. because regulatory guidelines severely restrict the ability of banks and other financial institutions to invest in corporate bonds.  Volatility of the market has increased over the years.  Retail investors have been running away from not only the equity market, but also from mutual funds.  Only 3.5 million Indians – from a total working population of 321 million invest in stocks.
  24. 24. REFERENCES  http://www.sebi.gov.in/  www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf  www.finmin.nic.in/the_ministry/.../capital_market.  https://rbi.org.in/Scripts/PublicationsView.aspx?id=16167  www.finance.mapsofworld.com  www.articles.economictimes.indiatimes.com  www.economicsdiscussion.net/india/sebi/...and...capital-market-reforms/11075  http://www.igidr.ac.in/conf/money1/mfc-11/BhanuMurthy_KV_Amit.pdf  http://www.mondaq.com/india/x/306004/Corporate+Commercial+Law/Highlights+On+ New+Indian+Companies+Act+2013  http://www2.deloitte.com/content/dam/Deloitte/in/Documents/tax/thoughtpapers/in- tax-companies-act-2013-fresh-thinking-for-a-new-start-noexp.pdf  http://www.mhcolaw.com/admin/public/uploads/Highlights%20- %20Companies%20Act%202013.pdf 
  25. 25. Submitted by- Rashmie Parmour (Roll No.8601) Niyati Purandare (Roll No.(8611)

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