Prepared By:- Dr. Rajanikant Verma

Sebi is the regulator for the
Security market in India.

In 1988 the Securities and Exchange
Board of India (SEBI) was
established by the Government of
India through an executive
resolution, and was subsequently
upgraded as a fully autonomous
body on April 12, 1992 the
Securities and Exchange Board Of
India was constituted. It was
constitute in accordance with the
provisions of the Securities and
Exchange Board Of India.
The basic functions of the Securities and Exchange
Board of India is
“…..to 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”

The primary objective of SEBI is to promote healthy and
orderly growth -of the securities market and secure
investor protection. The objectives of SEBI are as
follows:

To protect the interest of investors, so that, there is a
steady flow of savings into the capital market.

To regulate the securities market and ensure fair
practices.

To promote efficient services by brokers, merchant
bankers, and other intermediaries, so that, they become
competitive and professional.
The SEBI Act, 1992 has entrusted with two functions,
they are


Regulatory functions and
Developmental functions
•
Regulation of stock exchange and self regulatory organizations.
•
Registration and regulation of stock brokers, sub-brokers,
Registrars to all issues, merchant bankers, underwriters, portfolio
managers etc.
•
Registration and regulation of the working of collective investment
schemes including mutual funds.
•
Prohibition of fraudulent and unfair trade practices relating to
securities market.
•
Prohibition of insider trading.
•
Regulating substantial acquisition of shares and takeover of
companies.

Promoting investor’s education.

Training of intermediaries.

Conducting research and publishing information
useful to all market participants.

Promotion of fair practices.

Promotion of self regulatory organizations.
•
The SEBI Act provides for the establishment of a
Statutory Board consisting of six members. The
chairman and two members are to be appointed by the
Central Government, one member to be appointed by
the Reserve Bank and two members having experience
of securities market to be appointed by the Central
Government.
•
SEBI has divided the activities into four operational
departments. They are primary market department,
issue management and intermediary’s department,
secondary market department and institutional
department. Each department is headed by an Executive
Director.

Investors are the backbone of the securities market.

They determine the level of activity in the securities market and
the level of activity in the economy.

Many investors may not possess adequate expertise/knowledge to
take informed investment decisions.

May not be aware of the complete risk-return profile of the
different investment options. may not be fully aware of the
precautions they should take while dealing with market
intermediaries and dealing in different securities.

They may not be familiar with the market mechanism and the
practices as well as their rights and obligations.

Securities Scam – Harshad Mehta (1991-92).

Floating Companies Scam – C R Bhansali (1992-96) .

Satyam – Ramalinga Raju (2009) – Around 12,000 Crores.

Fake Stamp Fraud – Abdul Karim Telgi - Around 30,000
Crores .

DSQ Software – Dinesh Dalmiya (2001) - Around 600 Crores .

Security Market Awareness Campaign(SMAC) was
started with a motto “An educated investor is a
Protected investor.”

Invest with Knowledge” was the message spread by
this campaign.

Workshops Advertisements Educative material All
India Radio – Information provided through AIR
Programs frequently.

Specify the manner in which the matters relating to issue of
capital, transfer of securities and other matters shall be disclosed
by the companies.

No company can make an issue of securities unless a draft
prospectus has been filed with SEBI.

The offer document, through which the securities are issued, is to
be prepared strictly as per the requirements of SEBI Guidelines.

No company shall make an issue of securities unless it has made
an application for listing of securities at a stock exchange.

No company can make public issue unless all existing shares must
be fully paid.
Name Of Grievances
Can be taken up with
In Case of Public issue:
Delay in refund amount
Interest on delayed amount
SEBI
Deptt. Of Company Affairs
In Case of Listed Debentures
Interest due
Redemption proceeds
Interest on delayed payment
SEBI
Deptt. Of Company Affairs
Debentures Trustees
In Case of Unlisted Debentures
Deptt. Of Company Affairs
In Case Of Units Of Mutual Funds
SEBI
In Case Of FD In banks and NBFCs
RBI
In Case Of FD in Companies
Deptt. Of Company Affairs

The Investor’s Education has also emerged as
a crucial part of SEBI’s efforts to protect the
interest of the investors in securities market.
Some of the main features of this education
program of SEBI may be summarized as
follows:

To receive the share certificates, on allotment or transfer as the case
may be, in due time.

To receive copies of the Director’s report, Balance Sheet and P&L A/c
and the Auditor’s report.

To participate and vote in General Meeting either personally or
through proxies.

To receive dividend in due time once approved in General Meeting.

To receive corporate benefits like rights, bonus, etc once approved.

To proceed against the company by way of civil or criminal
proceedings.
Besides the rights, the investors also have some
responsibilities to discharge as follows:

To remain informed.

To be vigilant.

To participate and vote in general meetings.

To exercise his rights on his own or as a group.

Refers to using the unpublished information about
the performance or other matters of a company, in
dealings with the securities of the company. If a
director, an officer or any other employee of a
company is having some information about the
plans of company, which is not known to the world
at large and uses that information with the intention
of making gain, then it is termed as a Insider
trading.

As a part of investor’s protection, SEBI has taken
necessary steps to prohibit insider trading by
checking and curbing unhealthy and
manipulative practices by persons who have
more access than others to the information
about the company.
With this objective in mind, SEBI issued the
SEBI(Prohibition and Insider Trading)
Regulations, 1992 immediately after its
corporation.