functional reports of sebi
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DETAIL REPORT OF PROJECT : Initially, SEBI was a nonstatutory body without any statutory power. However, in 1995, the SEBI was given additional statutory power by the Government of India through an amendment to the Securities and Exchange Board of India Act, 1992. ... The SEBI performs functions to meet its objectives.
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AIMS AND OBJECTIVES :
To understand how SEBI works.
The overall objectives of SEBI are to protect the interest of investors and to promote the development of stock exchange and to regulate the activities of the stock market. The objectives of SEBI are:
To regulate the activities of a stock exchange.To protect the rights of investors and ensuring safety to their investment.To prevent fraudulent and malpractices by having the balance between self-regulation of business and its statutory regulations.etc.
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DETAIL REPORT OF PROJECT :
Initially, SEBI was a nonstatutory body without any statutory power. However, in 1995, the SEBI was given additional statutory power by the Government of India through an amendment to the Securities and Exchange Board of India Act, 1992. In April 1988 the SEBI was constituted as the regulator of capital markets in India under a resolution of the Government of India.
The chairman who is nominated by Union Government of India.Two members, i.e., Officers from Union Finance Ministry.One member of the Reserve Bank of India.The remaining five members are nominated by Union Government of India, out of them at least three shall be whole-time members.
The SEBI performs functions to meet its objectives. To meet three objectives SEBI has three important functions. These are:
Protective functionsDevelopmental functionsRegulatory functions.
Protective Functions:
These functions are performed by SEBI to protect the interest of investor and provide safety of the investment.
As protective functions SEBI performs following functions:
(i) It Checks Price Rigging:
Price rigging refers to manipulating the prices of securities with the main objective of inflating or depressing the market price of securities. SEBI prohibits such practice because this can defraud and cheat the investors.
(ii) It Prohibits Insider trading:
Insider is any person connected with the company such as directors, promoters etc. These insiders have sensitive information which affects the prices of the securities. This information is not available to people at large but the insiders get this privileged information by working inside the company and if they use this information to make a profit, then it is known as insider trading, e.g., the directors of a company may know that company will issue Bonus shares to its shareholders at the end of the year and they purchase shares from market to make a profit with bonus issue. This is known as insider trading. SEBI keeps a strict check when insiders are buying securities of the company and takes strict action on insider trading.
(iii) SEBI prohibits fraudulent and Unfair Trade Practices:
SEBI does not allow the companies to make misleading statements which are likely to induce the sale or purchase of securities by any other person.
(iv) SEBI undertakes steps to educate investors so that they are able to evaluate the securities of various companies and select the most profitable securities.
(v) SEBI promotes fair practices and code of conduct in security market by taking following steps:
(a) SEBI has issued guidelines to protect the interest of debenture-holders wherein companies cannot change terms in a midterm.
(b) SEBI is empowered to investigate cases of insider trading and has provisions for stiff fine and imprisonment.
Developmental Functions:
Under developmental categories following functions are performed by SEBI:
(i) SEBI promotes training of intermediaries of the securities market.
(ii) SEBI tries to promote activities of stock exchange by adopting a flexible and adaptable approach in following way:
(a) SEBI has permitted internet trading through registered stock brokers.
(b) SEBI has made underwriting optional to reduce the cost of issue.
(c) The even initial public offer of primary market is permitted through the stock exchange.
Regulatory Functions:
These functions are performed by SEBI to regulate the business in stock exchange. To regulate the activities of stock exchange following functions are performed:
(i) SEBI has framed rules and regulations and a code of conduct to regulate the intermediaries such as merchant bankers, brokers, underwriters, etc
(ii) These intermediaries have been brought under the regulatory purview and private placement has been made more restrictive.
(iii) SEBI registers and regulates the working of stock brokers, sub-brokers, share transfer agents, trustees, merchant bankers and all those who are associated with stock exchange in any manner.
(iv) SEBI registers and regulates the working of mutual funds etc.
(v) SEBI regulates takeover of the companies.
