The new market/activity was regulated by the Controller of capital Issues (CCIs) under the provisions of the Capital Issues (Control) Act. With the repeal of the Act and the consequent abolition of the office of the CCIs in 1992, the regulation/promotion of development of the market/activity is the responsibility of the SEBI. To tone up the operations of the new issues in the country, it has put in place rigorous measures. These cover both the major intermediaries as well as the procedures/activities. The SEBI framework regulating the intermediaries is comprehensively examined. They have to conform to the regulations prescribed by the SEBI. Lead mangers, underwriters, bankers, registrars and share transfer agents, debenture trustees and portfolio managers all have to abide by the regulations. While the fraudulent and unfair trade practices regulation is described.
Securities and Exchange Board of India (SEBI):
The SEBI was constituted in April 1988 under the overall administrative control of the Government of India (Ministry of finance) for the regulation and orderly functioning of the stock exchanges and the securities industry to fully protect the rights of the investors, to prevent trading malpractices and promote healthy growth of capital markets. It was given a statutory status in 1992 under the SEBI Act.
Powers/ Duties and Functions:
Under the SEBI Act the powers/duties of the SEBI are (1) to protect the interests of the investors in securities, (2) to promote the development of the securities market and, (3) to regulate the securities market. The Act also entrusts with the SEBI the following specific functions in order to exercise its power /discharge its duties:
(a) Regulating the business in stock exchanges and any other securities markets;
(b) Registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with the securities markets in any manner:
Registering and regulating the working of the depositories, custodians of securities, foreign institutional investors, credit ratings agencies and such other intermediaries as the SEBI may notify in this behalf;
(c) Registering and regulating the working of venture capital funds, collective investment schemes including mutual funds;
(d) Promoting and regulating self regulatory organizations;
(e) Prohibiting fraudulent and unfair trade practices relating to the securities markets;
(f) Promoting investors’ education and training of intermediaries of the securities markets;
(g) Prohibiting insider trading in securities.
(h) Regulating substantial of shares and takeover of companies;
(i) Calling for information, undertaking inspection, conducting inquires and adults of the stock exchanges, mutual funds, intermediaries and self regulatory organizations in the securities market. The SEBI has been given since 1995, the same powers as are vested in a civil court under the code of civil procedure, while trying a suit in respect of (1) the discovery and production of books of accounts and other documents at such place and time as may be specified by it (2) summoning and enforcing the attendance of persons and examining them on oath (3) inspection of books, registers/other document of any intermediary in the securities market.
(j) Performing such functions and exercising such powers under the provision of the Securities Contracts (Regulation) Act, 1956 as may be delegated to it by the central government;
(k) Levying fee/other charges for carrying out the functions/duties;
(l) Conducting research for discharging its functions;
Calling from, or furnishing to, any such agencies as may be specified by the SEBI such information as may be considered necessary by it for the efficient discharge of its functions; and
(m) Performing such other functions as may be prescribed.
In addition to the above powers/duties/ functions, the SEBI is empowered with effect from 1995, for the protection of investors to specify by regulations the matters relating to the issues of capital, transfer of securities am other related matter together with the manner in which such matters are to be disclosed by companies.
If on the basis of an enquiry, it is satisfied that in the interests of investors/orderly development of the securities market or to prevent the affairs of the securities market intermediary being conducted in manner detrimental to the interests of investors/securities market, to ensure the proper management of any such intermediary, the SEBI, since its inception has powers to issue appropriate directions.