Securities and Exchnage Board of India, SEBI

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Watch Dog of Indian Stock Market

Securities and Exchange Board of India, popularly known as SEBI is the appex body of Indian Stock Market. It is the regulator, controller and promoter for securities market in India. SEBI was established on 12 April 1992, under the provisions of Securities and Exchange Board of India Act, 1992, headquartered in Mumbai.

Establishment of SEBI was one of the Greatest reform that took place in Indian Economy. It protects the interest of Investors and regulate the fuctioning of Indian Financial System.

PREAMBLE of SEBI (source

The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as " protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto"

Functions and Powers of SEBI

SEBI basically has only 3 responsibilities areas which are as follows:

  1. for the ISSUER of Securities
  2. for the INVESTORS of securities
  3. for the Market INTERMEDIARIES
  4. Functions of SEBI

    Subject to the provisions of this Act, it shall be the duty of the Board to protect the interests of investors, to promote the development of, and to regulate the securities market, by such measures as it thinks fit.

    1. regulating the business in stock exchanges and any other securities markets
    2. registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with securities markets in any manner
    3. registering and regulating the working of venture capital funds and collective investment schemes, including mutual funds
    4. promoting and regulating self-regulatory organisations
    5. prohibiting fraudulent and unfair trade practices relating to securities markets
    6. promoting investors' education and training of intermediaries of securities markets
    7. prohibiting insider trading in securities
    8. regulating substantial acquisition of shares and take-over of companies
    9. calling for information from, undertaking inspection, conducting inquiries and audits of the stock exchanges, mutual funds, other persons associated with the securities market
    10. levying fees or other charges for carrying out the purposes of this Act
    11. conducting research for the above purposes
    12. issuing commissions for the examination of witnesses or documents
    13. the discovery and production of books of account and other documents, at such place and such time as may be specified by the Board
    14. suspend the trading of any security in a recognized stock exchange
    15. restrain persons from accessing the securities market and prohibit any person associated with securities market to buy, sell or deal in securities
    16. to regulate or prohibit issue of prospectus, offer document or advertisement soliciting money for issue of securities

    Powers of SEBI

    1. Power to conduct Investigations, issue directions etc.
    2. Power to suspect company's Finances, Accounts AND Audit and conducting a check on the same
    3. Power for levying Penalities and Adjudication
    4. Power of Central Government to issue directions
    5. Power of Central Government to supersede the Board
    6. Power to grant immunity
    7. Power to exempt from tax on wealth and income or in any other manner as it thinks fit
    8. Power to make rules and regulations
    9. Power to lay Rules and regulations before Parliament

    Last Updated on 2/13/2012

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