Sebi Act - Indian Economy  

Under the Securities and Exchange Board of India Act, 1992 (SEBI Act), the Securities and Exchange Board of India (SEBI), which is owned by the Government of India, was established on April 12, 1992, with the mission of promoting and regulating the securities market while safeguarding the interests of investors in securities. Ahmedabad, Chennai, Delhi, and Kolkata are the locations of the four regional offices of the Securities and Exchange Board of India, which has its main headquarters in Mumbai. To control the securities market, SEBI was founded as a non-statutory organization in 1988. On January 30, 1992, SEBI attained statutory status. 

 

•    India's securities and exchange markets are governed by the Securities and Exchange Board of India Act, 1992 (SEBI Act).

 

•    The law becomes effective on January 30, 1992.

 

•    The Securities and Exchange Board of India (SEBI) was founded by the SEBI Act as a regulatory agency to protect the general public's investment in the securities market.

 

•    India's securities market is controlled by the SEBI Act of 1992, which has the jurisdiction to adopt laws and regulations.

 

•    The Capital Issues (Control) Act of 1947 gave the Controller of Capital Issues the power to regulate capital issues before SEBI was established.

 

•    At first, SEBI lacked any statutory jurisdiction and was a non-statutory organization.

 

There are 35 sections in the SEBI Act's 7 chapters. Details of which are provided below: 

Name Description of important sections

 

Section1: Preliminary

 

•    Sec 1: Title, extent and commencement

 

•    Sec 2: definitions

 

1 and 2Establishment of the Securities and Exchange Board of India

 

•    Sec 3: Establishment and incorporation of Board

 

•    Sec 5: Term of Office and conditions of service of Chairman and members of Board

 

•    Sec 6: Removal of member from office

 

3 - 93Transfer of Assets, Liabilities, etc., of the existing securities and exchange board to the board

 

•    Sec 10: Transfer of Assets, Liabilities, etc., of the existing securities and exchange board to the board

 

104Powers and functions of the board

 

•    Sec 11: Functions of the Board

 

•    Sec 11B: Power to issue directions

 

•    Sec 11C: Investigation

 

•    Sec 11D: Cease and desist proceedings

 

11 - 11D5Registration Certificate

 

•    Sec 12: Registration of stock brokers, sub-brokers, share transfer agents, etc.

 

125AProhibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control

 

•    Sec 12A: Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control

 

12A6Finance, Accounts and Audit

 

•    Sec 13: Grants by Central Government

 

•    Sec 14: Fund

 

•    Sec 15: Accounts and Audit

 

13 - 156APenalties and Adjudication

 

•    Sec 15A: Penalty for failure to furnish information, return, etc.

 

•    Sec 15F: Penalty for default in case of stockbrokers

 

•    Sec 15G: Penalty for insider trading

 

•    Sec 15 HA: Penalty for fraudulent and unfair trade practices

 

15A - 15JB6BEstablishment, Jurisdiction, Authority and Procedure of Appellate tribunal

 

•    Sec 15K: Establishment of Securities Appellate Tribunals

 

•    Sec 15L: Composition of Securities Appellate Tribunal

 

•    Sec 15-O: Salary and allowances and other terms and conditions of service of Presiding Officers

 

•    Sec 15Y: Civil Court not to have jurisdiction

 

•    Sec 15Z: Appeal to Supreme Court

 

15K - 15Z7Miscellaneous

 

•    Sec 16: Power of Central Government to issue directions

 

•    Sec 17: Power of Central Government to supersede the Board

 

•    Sec 26A: Establishment of Special Courts

 

16 - 35

 

The SEBI Act's Chapter 2 stipulates that the board of directors must consist of nine people. There are the following people on the Board:

 

•    One Chairman of the Board is chosen by the Indian Central Government.

 

•    The Central Bank, or RBI, appoints one member of the Board.

 

•    The Board has two representatives from the Union Ministry of Finance.

 

•    The five Board members are chosen by the Indian Central Government.

 

•    The Chairman of SEBI is in charge of the Communications, Vigilance, and Internal Inspection Department in addition to managing the Board.

 

•    Four full-time employees make up the organizational structure. A number of departments are given to the full-time staff to supervise. A separate executive director oversees each department. Specific full-time members are accountable to the executive directors.

 

•    Foreign Portfolio Investors and Custodians (FPI & C), Corporation Finance Department (CFD), Information Technology Department (ITD), Department of Economic and Policy Analysis (DEPA-I, II, & III), Investment Management Department, Legal Affairs Department, Treasury and Accounts Divisions (T&A), and National Institute of Securities Markets (NISM) are just a few of the more than 25 departments that make up SEBI's organizational structure.

 

•    Chapter 4 of the SEBI Act details the Board's authority and duties.

 

•    Protecting the interests of all parties involved in trading is SEBI's main objective.

 

•    It also controls how the stock market is run.

 

•    To monitor the operations on the stock exchange.

 

•    To safeguard investors' rights.

 

•    A balance between legislative rules and self-regulation must be preserved to counteract fraudulent practices.

 

•    To create an ethics code for brokers, underwriters, and other middlemen.

 

•    It keeps an eye on pricing manipulation.

 

•    Insider trading is not allowed.

 

•    Unfair and dishonest business practices are prohibited.

 

•    It promotes a moral code of behavior in the security sector.

 

•    Educating investors on how to more effectively evaluate investing possibilities requires time and effort.

 

•    It has created a code of conduct as well as laws and regulations to control brokers, underwriters, and other intermediaries.

 

•    Share transfer agents, stockbrokers, merchant bankers, trustees, and other professionals' activities are regulated and registered under it.

 

•    Additionally, it registers and controls mutual funds.

 

•    It carries out audits and investigations into the stock market.

 

•    Its objective is to boost stock exchange activities using a flexible and adaptable strategy.

 

•    In recent years, SEBI's function has grown more complex, and the capital markets regulator is at a turning point.

 

•    Regulation of market conduct is overemphasized, while prudential regulation receives little attention.

 

•    As it is equipped with much more authority to cause substantial economic injury, SEBI's statutory enforcement powers are larger than those of its counterparts in the United States and the United Kingdom.

 

•    Similar to preventative detention, it can impose significant limits on economic activity based on suspicion, leaving those who are affected to face the burden of proving the suspicion.

 

•    As a result of the SEBI Act's vast capacity to introduce supplemental laws, its legislative authority is almost unrestricted.

 

•    A method of reviewing regulations to evaluate if they have achieved their stated aim and the element of prior market engagement are conspicuously missing.

 

•    Regulation, whether it takes the shape of laws or their implementation, is far from ideal, particularly when it comes to topics like insider trading.

 

•    The lengthy Securities offering paperwork contain only formal compliance information rather than in-depth, high-quality disclosures. 

 

The stock market is one of the most crucial measures of a nation's economic health. Protecting the interests of investors and ensuring that there are no market abuses or investment fraud are a regulator's main responsibilities. The stock market started to improve and become more transparent once SEBI took authority. Unfair practices still happen on a sporadic basis on the Indian capital market nowadays.