SEBI – SECURITIES AND

EXCHANGE BOARD OF INDIA

 What is sebi ?
• SEBI : Securities and Exchange Board of
India
The Securities and Exchange Board of
India was established on April 12, 1992 in
accordance with the provisions of the
Securities and Exchange Board of India Act
, 1992.
 Organization Details

Headquarters Mumbai, India

Established 1992

Jurisdiction India

Head Chairman

Chairman CB Bhave

Term February 16, 2008

Total Staff 525

Official Website

Website www.sebi.gov.in
 Objectives of SEBI
• Securities & Exchange Board of India (SEBI) formed
under the SEBI Act, 1992 with the prime objective of
– Protecting the interests of investors in securities,
– Makes rules and regulations for the securities market.
– It tries to develop the securities market.
Focus being the greater investor protection, SEBI has
become a vigilant watchdog
 FUNCTIONS OF SEBI
A) 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
B) Registration And Regulation Of Mutual Funds, Venture
Capital Funds & Collective Investment Schemes

 Every mutual fund must be registered with SEBI and registration is

granted only where SEBI is satisfied with the background of the
fund.
 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
• Every new scheme launched by a mutual fund needs to be filed with SEBI
and SEBI reviews the document in regard to the disclosures contained in
such documents.

• 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 in making any publicity regarding a scheme and its performance

• 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
C) 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
D] Prohibition Of Insider Trading

– Stock Watch System, which has been put in place, surveillance over
insider trading would be further strengthened.

E] Investor Education And The Training Of Intermediaries

– SEBI distributed the booklet titled “A Quick Reference Guide for
Investors” to the investors
– SEBI also issued a series of advertisement /public notices in national as
well as regional newspapers to educate and caution the investors about
the risks associated with the investments in collective investment
schemes
– SEBI has also issued messages in the interest of investors on National
Channel and Regional Stations on Doordarshan.
 FUNCTIONS OF SEBI
F) Inspection And Inquiries

G) Regulating Acquisition Of Shares And Take-overs

H) Conducting Research For The Above Purposes

 Powers Of Sebi
• Can ask any intermediary or market participant
for information
• Inspect books of depository participants ,
issuers or beneficiary owners .
• Suspend or cancel registration issued to
foreign institutional investors
• Suspend or cancel the registration of errant
portfolio managers .
 VETTING BY SEBI
• A company cannot come out with public issue unless Draft Prospectus is filed
with SEBI. Prospectus is a document by way of which the investor gets all the
information pertaining to the company in which they are going to invest. It gives the
detailed information about the Company, Promoter / Directors, group companies,
Capital Structure, Terms of the present issue etc.
• A company cannot file prospectus directly with SEBI. It has to be filed through a
merchant banker. After the preparation of prospectus, the merchant banker along
with the due diligence certificates and other compliances and sends the same to
SEBI for Vetting.
• 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 or if no letter is received from SEBI, within 180 days
from the date of expiry of 21 days of submission of prospectus with 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 falling under the jurisdiction in which
registered office of the company is situated.

? If the issue size is more than Rs. 20 crores, merchant bankers are required to file
prospectus at SEBI, Mumbai office.
 SEBI Guidelines- FOR INVESTORS
• Guidelines for new issues made by new companies
• New issues made by Private Ltd Companies
• Public issues by existing listed companies
• Listing of shares on the O.T.C.
• Underwriting is optional if the issue is made to the
public and should not include reserved or preferential
quota or employee’s quota
• Composite issues
• New financial instruments
• Reservation in issues
• Deployment of issue proceeds
• Lock in period
 SEBI Guidelines- To Investors
• Deal with a registered member of the stock exchange
• Deals to be done in trading ring
• Give specific orders to buy or sell within fixed price
limits
• Contract notes to be passed
• Deal to be registered with the stock exchange in
Block Book
• Collect a settlement table from the stock
exchange
• Keep separate record of dealings
• Execute periodic settlements of dues and
delivery of shares
• Insist on delivery