SEBI- The Securities Market Regulator

SEBI has been formed under SEBI Act, 1992. SEBI Act, 1992 has come into force with effect from 30th January, 1992. SEBI is a body corporate having perpetual succession and common seal. Further, being a body corporate, it has its separate property, contractual rights, right to sue and be sued.

SEBI is an authority to regulate and develop the Indian capital market and protect the interest of investors in the capital market. SEBI has replaced the Controller of Capital Issues, an authority under Capital Issues (Control) Act, 1947.

Its regulatory jurisdiction extends over corporates in the issuance of capital and transfer of securities, in addition to all intermediaries and persons associated with securities market. It can conduct enquires, audit and inspection of all concerned and adjudicate offences under the Act. It has powers to register and regulate all market intermediaries and also to penalize them in case of violations of the provisions of the Act, Rules and Regulations made there under. SEBI has full autonomy and authority to regulate and develop an orderly securities market.

SEBI has its office at Mumbai and its other offices are located at Delhi, Kolkata and Chennai.

Management of SEBI (Section 4)

The general superintendence, direction and management of the affairs of SEBI vests in a Board of Members, which exercises all powers and do all acts and things which may be exercised or done by SEBI. Unless determined otherwise through regulations, the Chairman shall also have all these powers.

The Board of Members shall consist of following members, namely:

1. A Chairman, who shall be appointed by Central Government and he shall be a person of ability, integrity and standing in the field of securities market, law, finance, accountancy, economics, administration, etc.

2. Two members from amongst the officials of the Ministry of the Central Government dealing with Finance and administration of the Companies Law, who shall be nominated by the Central Government.

3. One member from amongst the officials of RBI, who shall be nominated by RBI.

4. Five other members out of which atleast three members shall be Whole-time members, who shall be appointed by Central Government and they shall be person of ability, integrity and standing in the field of securities market law, finance, accountancy, economics, administration, etc.

All questions which come up before any meeting of SEBI shall be decided by a majority votes of the members present and voting, and, in event of an equality votes, the chairman, or, in his absence, the person presiding, shall have a second vote or casting vote.

An interested party, like a company director, can be a member of SEBI. But if he has any, direct or indirect, pecuniary interest in any manner coming up for consideration at a meeting of SEBI he shall disclose the nature of his interest and shall not take part in deliberations or decision of SEBI in respect of that matter.

Board Members as on now:

Functions of SEBI(Section 11)

The principal functions of SEBI are:

1. Protecting the interest of investors in securities market.

2. Promoting the development of securities market.

3. Regulating the securities market.

The above functions, would inter-alia would include the following:

1. Regulating the business in Stock Exchanges.

2. Registration and regulating the work of various intermediaries such as Brokers, Sub-brokers, Registrar and Share Transfer Agents, Merchant Bankers, Underwriters, Portfolio Managers, etc.

3. Registration and regulating the work of Depositories and Depositories Participant.

4. Registration and regulating the work of Foreign Institutional Investors, Credit Rating Agencies, etc.

5. Registration and regulating the work of Venture Capital Funds, Mutual Funds, Collective Investment Schemes.

6. Promoting Investors’ education.

7. Prohibiting insider trading in securities.

8. Prohibiting fraudulent practices and unfair trading practices.

9. Regulating substantial acquisition of shares and takeover of companies

10. Undertaking inspection, conducting inquires and audits of the Stock Exchanges, Mutual Funds and other persons associated with the securities market.