FORMATION OF SEBI & ITS POWERS (SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992)
The Securities and Exchange Board of India (SEBI) is the very most essential governing body of the securities market in India. In 1988, it was formed as a non-statutory monitoring body although was not given the powers until January 30th, 1992. When the Indian Parliament passed the law, the SEBI came into existence and was given the statutory powers.
“The headquarters of SEBI is at the business district at BandraKurla Complex, Mumbai, although it also owns Western, Eastern, Northern and Southern regional branch offices in Ahmedabad, Chennai, Kolkata and New Delhi. Apart from this, SEBI has local branch offices in places such as Kochi, Jaipur, Patna, Guwahati, Bangalore, Chandigarh and Bhubaneswar.”
The Securities and Exchange Board of India (SEBI) is equivalent to the Securities and Exchange Commission (SEC) in the United States of America. It was formed to regulate the capital market and to protect the retail investors of the market. Undoubtedly, SEBI through its rules and regulations, legally promoted revelation of all essential information and has strengthened the safety to investors in the securities market of India.
FORMATION OF SEBI:
“The chairman of SEBI is elected by the Indian Parliament, one member from the Reserve Bank of India, two officers from the Union Finance Ministry, and five members who get elected by the Parliament along with the chairman.”
The SEBI Act entirely rules all the Stock Exchanges and the Securities Transactions done in India. It has been set up as a legal and self-governing monitoring body with independent powers and defined duties, to take care of both the development and regulation of the Indian capital market. The SEBI works under the guidance of Ministry of Finance.
The current Chairman of SEBI is Mr. Ajay Tyagi.
FUNCTIONS OF SEBI:
The functions of SEBI are carried out by a board of nine members including the chairman and eight members. Functioning of SEBI can be classified into three categories such as Quasi-Legislative, Quasi-Executive and Quasi-Judicial. In Quasi-Legislative, it forms rules and guidelines in its legislative capability. In Quasi-Executive, it manages investigation and enforcement actions, and in the Quasi-Judicial, it passes the rules and regulations in its judicial limits.
The main functions of the SEBI are mentioned below:
- To help the business in stock exchanges and other securities markets.
- Registration and regulation of the work of stock brokers, sub-brokers, bankers and share transfer agents to an issue, trustees of trust deeds, registrars to an issue, underwriters, merchant bankers, investment advisers and other mediators who may be connected with securities market in any manner.
- Drafting and working of the venture capital funds and collective investment policies including mutual funds.
- Governing and forming the works of the depositories, custodians, participants of securities, foreign institutional investors, credit rating companies and many other intermediaries like these as the Board may, through the notice, mention in this behalf.
- Promotion and regulation of self-governing organizations.
- Banning the frauds and unfair trade practices related to the securities markets.
- Promotion of the knowledge of investors and training of mediators of securities market.
- To stop the insider marketing in securities markets.
- Regulation of substantial acquirement of shares and takeover of companies.
- Conducting inquiries and audits of the stock exchange market, mutual funds and other people related with the securities market and intermediaries and self-ruling organizations in the securities market.
- Asking for the essential information and record from any bank or other authority or board set up or ruled by the any Central State or Provincial Act in respect of any transaction in securities market which is under the inquiry by the board.
- Conducting such functions and governing such powers under the provision of the Securities Contracts (Regulation) Act, 1956, as may be given to it by the Central Government of India.
- It has to promote the growth of the Securities Market and also governs the Securities Market.
- It has to look after the market operations and administrativestructure and control of exchange.
- To stop the unfair trade practices which take place in the Securities Market.
- To safeguard the interest of investor in the market.
- Registration and regulation of the working of the mediators.
- Promotion and regulation of self-governing organizations.
- To provide proper knowledge for the investors and to give complete training for the intermediaries.
- To regulate significant acquisition of shares and to take control over it.
RESPONSIBILITIES OF SEBI:
Along with the following, SEBI may also take trials to commence inspection of any book, register or other documents or records of any mentioned public company which aims to get its securities listed on any recognized stock exchange where the SEBI has reasonable grounds to take into account that such company has been involving in fraud trading related to the securities market.
Also, SEBI aims to provide a market platform to issuers where they can assuredly look forward to raise the required amount of funds in an easy and effective manner. For the investors, it aims to safeguard the right and interest of the investors by providing adequate, exact and authentic information on a regular basis. In order to allow the intermediaries, to provide better services to the investors and the issuers, SEBI hence provides a modest, professionalized and developing market having efficient and required infrastructure.
SEBI look forward to restore and protect the trust of investors, mainly the interest of small investors. This is gained by fulfilling the needs of the players connected with the securities market such as investors, the corporate sector and the mediators. It works for the formation of proper investment climate to allow corporate sector to drift industrial securities very easily, efficiently at a very low cost. Since the formation of the SEBI, it has always been focusing on the securities and is attending to the fulfillment of its purposes with admirable enthusiasm and profound skills. The improvements in the securities markets such as capitalization requirements, setting up of clearing corporations, margining, etc. has reduced the risk of credit.
SEBI through its rules and regulations and directions, has played a major role in the development and strengthening of the securities market. “More than three fourths of the sample investors feel happy and good about the capital market regulation in the country.” They have firm belief in the SEBI for stopping the occurrence of scams. The main motive is to form such an environment which simplifies efficient mobilization and distribution of resources through the securities market. This includes rules, regulations, guidelines policy framework, practices and infrastructures to meet the requirements of three groups which mainly set up the market, i.e. issuers of securities, the investors and the market mediators.
 Authored By: Ms. Natasha Jain, LL.B, Student at New Law College, Bharati Vidyapeeth Deemed University & Research Writer at Law Audience: Ms. Sakshi Sonker, 4th Year Student, Rajiv Gandhi National University of Law, Punjab & Assistant Editor at Law Audience.
 Section 3, The Securities and Exchange Board of India Act, 1992, No. 15, Acts of Parliament, 1992 (India).
 Section 4, The Securities and Exchange Board of India Act, 1992, No. 15, Acts of Parliament, 1992 (India).
 Section 11, The Securities and Exchange Board of India Act, 1992, No. 15, Acts of Parliament, 1992 (India).
 Section 11 C, The Securities and Exchange Board of India Act, 1992, No. 15, Acts of Parliament, 1992 (India).
 Section 11AA, The Securities and Exchange Board of India Act, 1992, No. 15, Acts of Parliament, 1992 (India).
Sunudha S, Essay on SEBI, Stock Exchange and Financial Management, (Oct. 01, 2018, 10:00 PM), http://www.businessmanagementideas.com/essays/sebi-essays/essay-on-sebi-stock-exchange-financial-management/15916.