Escolar Documentos
Profissional Documentos
Cultura Documentos
By,
Rakesh Kumar Verma
THE SECURITIES AND
EXCHANGE BOARD
OF INDIA (SEBI)
Objectives of SEBI
3 12/07/21 SAPM
Functions of SEBI
Regulating the business in stock exchange and any
other securities market
Registering and regulating the workings of
intermediaries associated with securities market
Registering and regulating the working of collective
investment schemes including mutual funds
Promoting and regulating self-regulatory organizations
Prohibiting fraudulent and unfair trade practices in the
securities market
4 12/07/21 SAPM
Functions of SEBI
Promoting investors education and training of
intermediaries in securities market
Prohibiting insiders trading in securities
Regulating substantial acquisition of shares and
take-over of companies
Calling for information, undertaking inspection,
conducting enquiries and audits of the stock
exchanges, intermediaries and self-regulatory
organizations in the securities market
5 12/07/21 SAPM
Organization of SEBI
Primary Mkt. dept.
6 12/07/21 SAPM
SEBI Regulates……….
SEBI
regulates
Foreign
Primary Secondary Mutual
Institutional
Market Market Funds
Investment
7 12/07/21 SAPM
SEBI & Primary Market
Measures undertaken by SEBI:-
• Entry norms
• Promoters’ contribution
• Disclosure
• Book building
• Allocation of shares
• Market intermediaries
8 12/07/21 SAPM
Conti………..
1. Entry norms
a) Track record of dividend payment for minimum 3 yrs
preceding the issue.
b) Already listed companies - when post-issue networth
becomes more than 5 times the pre-issue networth
c) For Manufacturing company not having such track
record – appraise project by a public financial
institution or a scheduled commercial bank.
d) For corporate body – 5 public shareholders for every
Rs.1 lakh of the net capital offer made to the public
e) Banks – 2 yrs of profitability for issues above par.
Offer documents to companies.
9 12/07/21 SAPM
Conti………..
2. Promoters’ contribution
Should not be less than 20% of the issued capital.
Receiving of promoters’ contribution.
Lock in period as per SEBI.
Cases of non-under written public issues.
3. Disclosure
draft prospectus
Un audited financial results
10 12/07/21 SAPM
Conti………..
4. Book building
SEBI recommends two-tier under writing system
One of the mode of public issue thru prospectus.
Role of syndicate members and book runners.
Minimum 30 centers.
5. Allocation of shares
Minimum application of shares
Reservation for small investors
Allotment of securities
11 12/07/21 SAPM
Conti………..
6. Market intermediaries
Licensing of merchant bankers
Licensing of underwriters, registrars, transfer agents,
etc.,
Merchant bankers net worth – Rs.5 crores
Segregate fund based from fee based activities.
12 12/07/21 SAPM
SEBI & Secondary Market
Reforms in the secondary market:-
1. Governing board
2. Infrastructure
3. Settlement & clearing
4. Debt market
5. Price stabilization
6. Delisting
7. Brokers
8. Insider Trading
13 12/07/21 SAPM
Conti………..
1. Governing board
Brokers and non-brokers representation made 50:50
60% of brokers in arbitration, disciplinary & default
committees
For trading members 40% representation
2. Infrastructure
On-line screen based trading terminals
14 12/07/21 SAPM
Conti………..
15 12/07/21 SAPM
Conti………..
16 12/07/21 SAPM
Conti………..
5. Price stabilization
Division to monitor the unusual movements in prices.
Monitor prices of newly listed scrip from the first day of
trading.
Circuit breaker system and other monitoring restrictions
could be applied
Imposing of special margins of 25% on purchase in
addition to regular margin.
Price filters
Price bands
17 12/07/21 SAPM
Conti………..
6. Delisting
On voluntary de-listing from regional stock exchanges
– buy offer to all share holders
Promoters to buy or arrange buyers for the securities
3 yrs listing fees from companies and be kept in
Escrow A/c with the stock exchange.
18 12/07/21 SAPM
SEBI and the FIIs
Union Govt. allowed-
Foreign Institutional Investors (FIIs)
Non-Resident Indians (NRIs), and
Persons of Indian Origin (PIOs)
to enter into both Primary & Secondary market in India through the portfolio
investment scheme (PIS), under Liberalized policy regime. Under this scheme,
FIIs/NRIs can acquire shares/debentures of Indian companies through the stock
exchanges in India.
Implications:-
Affects the sensex movements
Determines the market indications
Guidelines announced in 1992
In 1993, 12 FIIs got registered
At the end of 1996-97, 439 FIIs were registered
Can trade in securities of listed companies including OTCEI .
The ceiling for overall investment for FIIs:-
Modifications in ceilings:-
Valid up to 5 yrs.
Custodians
Is an agency
appointment of the custodian
Maintenance of accounts
Submission of semi-annual reports (SEBI & RBI)
Inspection of accounts
SEBI Guidelines:-
12/07/21 SAPM 25
Recent developments in FIIs
12/07/21 SAPM 26
Critical review of SEBI
1. Disclosures
2. Dissemination process
3. Settlement
4. Badla trade
5. Special watch
6. Capital adequacy
7. Single authority
8. Stricter registration of brokers
12/07/21 SAPM 27