SEBI

Securities Exchange Board of
India Act, 1992

Simplified By :-
Arvind Kohli FCS, FICA
199/7 Urban Estate, Gurgaon 122001
Tel:- 91 (95124) 2325184; 9811026619
e-mail: [email protected]
HISTORY
 SEBI was set up by MOF on 12th April 1988
on basis of Patel Committee’s Report, which
recommended to set up apex body for regulating
the activities of SE’s on lines of SEC of USA and
Securities and Investment Board of UK.
 SEBI ordinance, 1992 was promulgated on
21st Jan, 1992. SEBI Bill, 1992 was passed by both
houses of Parliament and President’s assent was
granted on 4th April, 1992 deemed to have come into
force w.e.f. 31st Jan, 1992.
OBJECTIVES OF THE ACT
Establishment of Board
--To protect the interests of investors in securities;
--To promote the development of securities market;
--To regulate the securities market; and
--The matters connected therewith or incidental
thereto.
SECURITIES MARKET
- CONSTITUENTS THEREOF
The issuers of securities
The investors
The intermediaries for e.g. Stock Exchanges,
Portfolio Manager, Mutual Funds, Underwriters,
Registrar to an issue and STA, Debenture Trustee,
Bankers to an Issue, Stock Brokers and Sub-

Brokers, FIIs, Depositories and Participants,
Custodian of Securities, Credit Rating Agencies,
Collective Investment Scheme, Venture Capital
Funds
BROAD SCHEME OF THE ACT
1. Establishment of the SEBI
2. Powers and functions of the Board (SEBI)
3. Registration certificate
4. Finance, Accounts, Audit
5. Penalties and Adjudications
6. Establishment, jurisdiction, Authority and Procedure of
Appellate Tribunal
7. Miscellaneous
1. ESTABLISHMENT OF SEBI
A. SECTION 3 ESTABLISMENT OF SECURITIES AND

EXCHANGE BOARD OF INDIA
B. SECTION 4 MANAGEMENT OF THE BOARD
C. SECTION 5 TERMS OF OFFICE AND OTHER
CONDITIONS
D. SECTION 6 REMOVAL OF MEMBER
E. SECTION 7 MEETINGS
F. SECTION 7A MEMBERS INTERESTED
G. SECTION 8 VACANCIES ETC. NOT TO
INVALIDATE PROCEEDINGS
2. POWERS AND FUNCTIONS OF SEBI
Section 11
1. Regulating the business in Stock Exchanges and other
securities market.
2. Registration and regulation of the working of
intermediaries, depositories, participants, custodians
of securities, FII’s, credit rating agencies, venture
capital fund, collective investment schemes including
mutual funds.
3. Promoting and regulating self-regulatory organizations
Contd………
4. Prohibiting of fraudulent, unfair trade
practices and insider trading relating to securities
market
5. Providing investor education and training of
intermediaries of securities market
6. Prohibiting in securities
7. regulating substantial acquisitions of shares
and takeover of companies
For accomplishing each of the above functions, SEBI
has framed Rules.
POWERS AND FUNCTIONS OF SEBI Contd.
Sec. 11(A) Board to regulate or prohibit issue of prospectus,

offer document or advertisement soliciting money
for issue of securities

Sec. 11B Power to issue directions
Sec. 11C Investigation
Sec. 11D Cease and desist proceedings
Sec. 12A Prohibition of manipulative and deceptive
devices, insider trading and substantial
acquisition of securities or control.
WIDEST POWERS IN RELATION TO
SECURITIES MARKET
The following measures either pending investigation
or an inquiry or on completion of such investigation
or inquiry-
1. suspend trading of any security on any recognized
stock exchange
2. restraint persons from accessing securities market
i.e. to buy sell or deal in securities.
3. suspend any office bearer of any stock exchange.
impound and retain the proceeds of
securities in respect of any transaction,
which is under investigation.
attach bank accounts of an intermediary or
any person.
direct intermediary or any person
associated with the securities market not to
dispose of or alienate an asset.
5. PENALTIES AND ADJUDICATION
PENALTIES FOR
 Failure to furnish information, return
 Failure of any person to enter into any
agreement with client
 Failure to redress investor grievance
 Defaults in case of mutual funds
 Failure to observes R&R by AMC
Quantum 1Cr. – 25 Cr.
 Default in case of Stock Brokers
 For Insider Trading
 For non disclosure of Acquisitions and
takeovers
 For Fraudulent and Unfair Trade Practices
SECURITIES APPELLATE TRIBUNAL
ONLY ORDERS PASSED BY SEBI AFTER
AMENDMENT ACT OF 1999
WITH IN 45 DAYS
ENTRUSTED WITH POWERS OF CIVIL COURT
RIGHT TO LEGAL REPRESENTATION
ORDERS APPEALABLE TO SUPREME COURT
SEBI: Various Rules and Regulations
relating to Intermediaries
Merchant Bankers
Portfolio Manager
Mutual Funds
Underwriters
Registrar to an issue and STA
Debenture Trustee
Bankers to an Issue
Stock Brokers and Sub-Brokers
FIIs
Depositories and Participants
Custodian of Securities
Credit Rating Agencies
Collective Investment Scheme
Venture Capital Funds
SEBI: Various Rules and Regulations
relating to specific actions
Disclosure and Investor Protection Guidelines,2000
(Rules abolished and new Rules ISSUE OF CAPITAL
AND DISCLOSURE REGULATIONS 2009 WERE
implemented.)
Since there are Specialised institutions for the same, it
is outside the scope of present discussions .
Employees Stock Option Scheme and Employees Stock
Purchase Scheme
Substantial Acquisition of Shares and Takeover
Reulations,1997 - 75% of SEBI FUNCTION ARE BASED
ON THIS AREA ONLY
Prohibition of Insider Trading Regulations
SEBI: SUBSTANTIAL ACQUISITION AND
TAKEOVER REGULATIONS – MAIN PROVISIONS
Reg. 3 Applicability of the Regulation –

Exemptions from the applicability of Regulations 10-
12.
Reg. 6 Transitional provision
Reg. 7 Acquisition of 5% and more shares of a
company
Reg. 8 Continual disclosures - 10, 14, 55 & 74%
Reg. 10 Acquisition of 15% or more shares or
voting rights of any company.
Reg. 11 Consolidation of holdings
Reg. 12 Acquisition of control over a company .

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Securities Exchange Board of

India Act, 1992

Bankers to an Issue, Stock Brokers and Sub-

A. SECTION 3 ESTABLISMENT OF SECURITIES AND

Sec. 11(A) Board to regulate or prohibit issue of prospectus,

for issue of securities

Reg. 3 Applicability of the Regulation –

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