SEBI's Role and Powers

The Securities and Exchange Board of India (SEBI) was established in 1992 with the following statutory powers:

Objectives:

1. Protect investor's interests

2. Promote the development of the securities market

3. Regulate the securities market

Regulatory Jurisdiction:

• Corporates involved in:

  • Issue of capital

  • Transfer of securities

• All persons and intermediaries associated with the securities market

Powers:

• Conduct inquiries, audits, and inspections

• Adjudicate offenses under the Act

• Register and regulate all market intermediaries

• Penalize violations of the Act or Rules and Regulations

Autonomy:

• Complete autonomy and authority to regulate and develop the securities market

SEBI plays a vital role in ensuring the integrity and efficiency of India's financial ecosystem, and its powers enable it to effectively regulate and develop the securities market.

Securities Contracts (Regulation) Act, 1956

Objective:

Prevent undesirable transactions in securities by regulating the business of dealing in securities.

Provisions:

• Direct and indirect control over securities trading and stock exchange functioning

• Regulatory jurisdiction over:

  • Stock exchanges (through continuous supervision)

  • Securities contracts

  • Securities listing on stock exchanges

• Stock exchanges must comply with central government conditions for recognition

• Trading in securities occurs on recognized stock exchanges in an organized manner

• Stock exchanges have listing regulations and must conform to minimum listing criteria set out in Securities Contracts Rules

Depositories Act, 1996

Objective:

Ensure free transfer of securities with accuracy, security, and speed.

Provisions:

• Establishment of depositories

• Making securities freely transferable

• Dematerialization of securities in depository mode

• Maintenance of ownership records in book-entry form

• Electronic transfer of ownership by book entry

• Streamlining settlement process

Impact:

• Securities of all companies are freely transferable in depository mode

• Companies' discretion in transferring securities is restricted

• Transfer deed requirements in the Companies Act are no longer needed

Companies Act, 1956

Scope:

• Deals with issue, allotment, and transfer of securities

• Regulates various aspects of company management

Provisions:

• Standard of disclosure in public issues of capital

• Disclosure areas:

  • Company management

  • Projects

  • Other listed companies under the same management

  • Risk factors

• Regulation of:

  • Underwriting

  • Premium and discounts on issues

  • Bonus and rights issues

  • Dividend and interest payments

  • Annual reports and related information

Objective:

Protect investor interests and ensure transparency in company operations.