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    SEBI Role and Functions Presentation

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    SEBI is India's securities market regulator that was established to protect investors, develop and regulate the securities market. Its key functions include regulating stock exchanges, registration and regulation of intermediaries like brokers and merchant bankers, regulating mutual funds and collective investment schemes, prohibiting fraudulent practices, regulating substantial acquisitions and takeovers, and conducting research. SEBI vets public issues, has the power to inspect records and conduct search and seizure operations, regulates corporate governance compliance, and sets guidelines for delisting and initial public offerings. While SEBI has strengthened disclosure requirements, there is still room for improvement in ensuring all relevant information is easily accessible to investors. SEBI also needs to better utilize its existing enforcement powers.

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    SEBI Role and Functions Presentation

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    dustinlark
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    SEBI is India's securities market regulator that was established to protect investors, develop and regulate the securities market. Its key functions include regulating stock exchanges, registration and regulation of intermediaries like brokers and merchant bankers, regulating mutual funds and collective investment schemes, prohibiting fraudulent practices, regulating substantial acquisitions and takeovers, and conducting research. SEBI vets public issues, has the power to inspect records and conduct search and seizure operations, regulates corporate governance compliance, and sets guidelines for delisting and initial public offerings. While SEBI has strengthened disclosure requirements, there is still room for improvement in ensuring all relevant information is easily accessible to investors. SEBI also needs to better utilize its existing enforcement powers.

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    SEBI is India's securities market regulator that was established to protect investors, develop and regulate the securities market. Its key functions include regulating stock exchanges, registration and regulation of intermediaries like brokers and merchant bankers, regulating mutual funds and collective investment schemes, prohibiting fraudulent practices, regulating substantial acquisitions and takeovers, and conducting research. SEBI vets public issues, has the power to inspect records and conduct search and seizure operations, regulates corporate governance compliance, and sets guidelines for delisting and initial public offerings. While SEBI has strengthened disclosure requirements, there is still room for improvement in ensuring all relevant information is easily accessible to investors. SEBI also needs to better utilize its existing enforcement powers.

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    8K views28 pages

    SEBI Role and Functions Presentation

    Uploaded by

    dustinlark
    SEBI is India's securities market regulator that was established to protect investors, develop and regulate the securities market. Its key functions include regulating stock exchanges, registration and regulation of intermediaries like brokers and merchant bankers, regulating mutual funds and collective investment schemes, prohibiting fraudulent practices, regulating substantial acquisitions and takeovers, and conducting research. SEBI vets public issues, has the power to inspect records and conduct search and seizure operations, regulates corporate governance compliance, and sets guidelines for delisting and initial public offerings. While SEBI has strengthened disclosure requirements, there is still room for improvement in ensuring all relevant information is easily accessible to investors. SEBI also needs to better utilize its existing enforcement powers.

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    SEBI – ROLE AND FUNCTIONS

    ROHIT TRIPATHI
    ADITYA CHOWDHARY
    K SRIDHAR
    Section - G MANISH AGARWAL
    KRITIKA SETH
    Group - 01 RIVA ARORA
    RAShI BAiD
    WHY DO WE NEED A REGULATORY BODY FOR INVESTOR
    PROTECTION IN INDIA?

     India is an ` informationally ' weak market

     Boosting capital market demands restoring the


    confidence of lay investors

     Progressively softening interest rates and an under


    performing economy have eroded investment options,
    and require enhanced investing skills.
    MISSION OF SEBI
     Securities & Exchange Board of India
     objective
     Protecting the interests of investors in securities

     Promoting the development

     Regulating, the securities market

    Focus being the greater investor protection, SEBI has


    become a vigilant watchdog
    -Times of India
    FUNCTIONS OF SEBI
     Section 11 of the Securities and Exchange Board of India
    Act.

     Regulation Of Business In The Stock Exchanges

    A. Review of the market operations, organizational structure


    and administrative control of the exchange

     All stock exchanges are required to be Body Corporates


     Fair, equitable and growing market to investors.
     The Securities Contracts (Regulation) Act (SC(R) Act),
    1956
    FUNCTIONS OF SEBI
    B) Registration And Regulation Of The Working Of
    Intermediaries
    Primary Market Secondary Market

    Merchant Bankers Stock brokers


    Underwriters Sub- Brokers
    Portfolio Managers

    • Regulates the working of the depositories [participants], custodians of


    securities, foreign institutional investors, credit rating agencies and such
    other intermediaries
    FUNCTIONS OF SEBI
    C) Registration And Regulation Of Mutual Funds, Venture
    Capital Funds & Collective Investment Schemes

     AMFI-Self Regulatory Organization

     Every mutual fund must be registered with SEBI

     SEBI has the authority to inspect the books of accounts, records and
    documents of a mutual fund, its trustees, AMC and custodian where
    it deems it necessary

     NO provisions for the appointment of the trustees and their


    obligations
    FUNCTIONS OF SEBI
     Every new scheme launched by a mutual fund needs to be filed with SEBI.

     Regulations have been laid down regarding listing of funds, refund


    procedures, transfer procedures, disclosures, guaranteeing returns etc

     SEBI has also laid down advertisement code to be followed by a mutual


    fund

     SEBI has prescribed norms / restrictions for investment management with a


    view to minimize / reduce undue investment risks.

     SEBI also has the authority to initiate penal actions against an erring MF.

     In case of a change in the controlling interest of an asset management


    company, investors should be given at least 30 days time to exercise their
    exit option.
    FUNCTIONS OF SEBI
    D) Promoting & Regulating Self Regulatory Organizations

     In order for the SRO to effectively execute its


    responsibilities, it would be required to be structured,
    organized, managed and controlled such that it retains its
    independence, while continuing to perform a genuine
    market development role

    E) Prohibiting Fraudulent And Unfair Trade Practices In


    The Securities Market

     SEBI is vested with powers to take action against these


    practices relating to securities market manipulation and
    misleading statements to induce sale/purchase of securities.
    FUNCTIONS OF SEBI
    F] Prohibition Of Insider Trading

     Stock Watch System, which has been put in place,


    surveillance over insider trading would be further
    strengthened.
    G] Investor Education And The Training Of Intermediaries
     “A Quick Reference Guide for Investors”

     Series of advertisement /public notices in national as well as regional


    newspapers

     SEBI has also issued messages in the interest of investors on National


    Channel and Regional Stations on Doordarshan.
    FUNCTIONS OF SEBI
    H) Inspection And Inquiries

    I) Regulating Substantial Acquisition Of Shares And Take-overs

    J) Performing Such Functions And Exercising Such Powers


    Under The Provisions Of The Securities Contracts
    (Regulation) Act, 1956 As May Be Delegated To It By The
    Central Government;

    K) Levying Fees Or Other Charges For Carrying Out The


    Purposes Of This Section

    L) Conducting Research For The Above Purposes


    VETTING BY SEBI
     A company cannot come out with public issue unless Draft Prospectus is filed with
    SEBI.

     A company cannot file prospectus directly with SEBI.

     SEBI on receiving the same scrutinizes it and may suggest changes within 21 days
    of receipt of prospectus

     The company can come out with a public issue any time within 180 days from the
    date of the letter from SEBI

     If the issue size is upto Rs. 20 crores then the merchant bankers are required to file
    prospectus with the regional office of SEBI

     If the issue size is more than Rs. 20 crores, merchant bankers are required to file
    prospectus at SEBI, Mumbai office.
    BROKER’S CODE
     The four-part model, which was recommended by the M R Mayya
    committee

     The market regulator would hold the remote control on the management of
    the exchanges by approving nominations of 60 per cent non-broker
    members of an exchange board.

     Induction and removal of managing director would also be controlled by


    SEBI.

    Lead to increased control by the markets regulator and also impose


    restrictions on elected brokers without giving them any authority.
    SEARCH AND SEIZURE

     To impose penalties of up to Rs 25 crore or three times the


    amount involved in the violation of a norm, whichever is
    higher.

     The market regulator can impose a higher penalty of Rs 1


    lakhs a day or a maximum fine of Rs 1 crore, whichever is
    lower.

     At present, the offences carry penalties ranging between Rs


    5,000 and Rs 5 lakhs.
    CORPORATE GOVERNANCE
    The listing requirements, are ensured in two ways.

     Corporates are expected to submit compliance reports as


    per clause 49 of the listing agreement

     They are also required to provide details of the same in their


    annual reports.
    DELISTING
     The book building process (known as reverse book building) through an
    electronically-linked transparent facility.

     The offer price shall have a floor price,.


     The promoter or the acquirer will have to make a public announcement of the final
    price and communicate to the exchanges.

     Further, the number of bidding centres shall not be less than 30,
     In case the promoter does not accept the above price, he should not make an
    application to the exchange for delisting of the securities, as per the guidelines.

     Strict norms for compulsory delisting by stock exchanges


    PUBLIC ISSUES
    An unlisted company has to satisfy the following criteria to be eligible to
    make a public issue

     Pre-issue networth of the co. should not be less than Rs.1 crore in last 3
    out of last 5 years.

     Track record of distributable profits for at least three (3) out of


    immediately preceding five (5) years

     The issue size shall not exceed five (5) times its pre-issue networth.

     In case an unlisted company does not satisfy any of the above


    criterions, it can come out with a public issue only through the Book-
    Building process
    INITIAL PUBLIC OFFER 
     In case of an Initial Public Offer (IPO) the promoters have to necessarily
    offer at least 20% of the post issue capital.

     In case of public issues by listed companies,

     The minimum contribution of promoters shall be locked in for a period of


    3 years, both for an IPO and Public Issue by listed companies.

     In case of an IPO, the required minimum contribution, such excess


    contribution shall also be locked in for a period of one year.

     In case of a public the required minimum percentage shall also be locked-


    in for a period of one year as per the lock-in provisions as specified in
    Guidelines on Preferential issue.
    INITIAL PUBLIC OFFER 
     Paid up share capital prior to IPO and shares shall be locked-in for a period
    of one year from the date of allotment in public issue.

     Over-subscription in a fixed price issue

     Book building issue

     7 working days of finalization of basis of allotment.


    RECOMMENDATIONS ON CORPORATE
    GOVERNANCE
     Appoint of a director on the board of a company, should be approved by
    the shareholders of the company.

     He will have the same responsibilities and same liabilities as any other
    director.

     companies should lay down a code of conduct for all the board members
    and the senior management of company.

     Mandatory review by audit committees of listed companies

     Companies raising money through a public issue should disclose to the


    audit committee.
    EVALUATION OF SEBI’ S PERFORMANCE

    Enhancing disclosures

     In most case only the minimum information required under the


    Companies Act is made available

     The manner in which the swap ratio is fixed and what the
    management thinks of the same is largely taken for granted.

     valuation reports are made available for inspection, but access


    is not easy for all investors.
    INABILITY TO UTILIZE THE EXISTING POWERS
    EFFECTIVELY

     SEBI could initiate prosecution proceedings on insider trading only in one


    case and seven cases on fraudulent and unfair practices.

     Only in seven of the 181 cases, SEBI resorted to cancellation of


    registration during the last four years.

     Though SEBI has the power to impose a penalty of Rs 1.50 lakhs every
    time a person fails to furnish the requisite information, but rarely has this
    power has been exercised by it .

     The provision for mandatory punishment of imprisonment in addition to


    award for penalty has scarcely has been used.
    QUALITY OF DECISIONS

     What is worrying is the poor rate of conviction in major cases.

    Accounting, audit quality


     The plethora of inter-corporate investments, intra-company
    and intra-group transactions, guarantees and contingent
    liabilities are areas where there is room for considerable
    concern.
    PRICE MANIPULATION — NO DENT:

     Price manipulation, informed trading and insider trading with key


    operators/investors is now routine.

    Enticing ads and investor risk


     Advertisement sans indication of performance by mutual funds has
    continued regardless of the SEBI guidelines on this.

     SEBI is being blamed for lack of alertness and poor risk-


    management measures
    FAILURES
    CHANGE IN MARKET

     The complete transformation of the trading, clearing and


    settlement infrastructure

     Dramatic transformation to a paperless market and transparent


    trading system.

     Cutting the settlement cycle and now going forward towards a


    T+1 settlement system

     SEBI has made the markets much safer for investors


    TAKEOVER CODE FAILURES

     The SEBI has not been given the sweeping powers to directly
    tackle the wrongdoers on the takeover front.

     The creeping acquisition limit will be applicable for the


    financial year

     SEBI has almost always been found lacking in the legal


    foundations of its action against defaulting corporate.
    THANK YOU!!!

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