Security Exchange Board of India (SEBI) was established as the regulator for the Stock and Security market in India under the Securities and Exchange Board of India Act 1992. The main object of SEBI is to protect the interests of investors in securities and promotes the development of the securities market through appropriate regulations.
The following agencies, organizations, and entities involved in stock markets and security markets are coming under the regulatory purview of SEBI.
1. Registration and working of Stockbrokers, sub-brokers, share transfer agents, merchant bankers, and all those who are associated with the stock exchange in any manner.
2. Bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers
3. Investment advisers and such other intermediaries who may be associated with securities markets in any manner,
4. Depositories [Depository participants,] custodians of securities,
5. Registration and working of Mutual Funds, working of venture capital funds and collective investment schemes
6. Regulate the substantial acquisition of shares and take over of companies
7. Foreign institutional investors,
8. Credit rating agencies and such other intermediaries as notified by SEBI.
SEBI is vested with the following powers as a regulator, if it thinks necessary, to protect the interest of the investor.
1. May suspend the trading of any security in recognized stock exchange; restrain persons from accessing the securities market
2. Prohibit any person associated with securities market to buy, sell or deal in securities;
3. Suspend any office-bearer of any stock exchange or self- regulatory organization from holding such a position;
4. Impound and retain the proceeds or securities in respect of any transaction which is under investigation;
5. Attach bank account/s or any transactions entered therein if such proceeds involved in a violation of the act and regulations made thereunder ( Attachment is subject to the approval of the order by a first-class Judicial Magistrate).
The other important roles of SEBI are:
To promote and regulate self-regulatory organizations, To prohibit fraudulent and unfair trade practices relating to securities markets, To promote investors ‘education and training of intermediaries of securities markets, To prohibit insider trading in securities, To conducting research for efficient working and development of securities market, etc. are the other important functions of SEBI.
Appellate Authority:
Securities Appellate Tribunal is a statutory body established under the provisions of Section 15K of the Securities and Exchange Board of India Act, 1992. It hears and disposes of appeals against orders passed by the Securities and Exchange Board of India or by an adjudicating officer under the Act. Exercise jurisdiction, powers and authority conferred on the Tribunal by or under this Act or any other law for the time being in force.
Clause 49 amendment to the listing agreement of SEBI is an important amendment to SEBI regulations. The amendment is a part of a global trend in strengthening corporate governance. In terms of amendment in the regulations, the company’s board should comprise at least 50% independent non-executive directors. Those independent directors cannot be relatives; senior management staff or those who have financial relationships with the company. Failure to comply above clause would attract punitive action by SEBI which includes a hefty fine up to Rs.1 crore or delisting from the Stock exchanges. The CEO or Company Secretary has to personally certify the authenticity of various declarations made to the board and to the shareholders.
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