Securities and Exchange Board of India: Neelam Tandon

SECURITIES AND EXCHANGE
BOARD OF INDIA
Neelam Tandon
SEBI - Introduction
 Established through an executive

solution in 1988.
 Upgraded as fully autonomous body on
30th Jan’1992.
 Setup to cover development and
regulation of the market.
Objectives of the Board
 To protect the interest of the investors in

securities.
 To promote the development of securities
market.
 To regulate the securities market.
Approaches of SEBI
 Integratethe securities market at the

national level.
 Diversify the trading products.

SEBI Administration
 Consist of one chairman and six members
 One each from the Department of Finance and
Law of Central Government.
 One from RBI
 Two other persons.
• Head office in Bombay
• Regional offices in Delhi, Calcutta and
Madras.
Powers of Board
• Issue Directions.
• Investigation.
• Cease and desist proceedings.
Functions of Board
• Protect the interest of the investors and

securities.
• Regulate the securities market.
• Prohibiting fraudulent and unfair trade
practices relating to securities market.
• Prohibiting insider trading in securities.
• Conducting enquiries and audits.
Cont…
• Regulating substantial acquisition of

shares and take over of companies.
• Calling for information from stock
exchanges, mutual funds, other
persons associated with the securities
market.
• Inspection of any books, registers and
other documents of any person.
SEBI – Investors know how
 Who is required to file with SEBI?

 Public Issue: Entry norms.
Entry norm I (EN I)
1. Net tangible assets of at least rupees three
crores for three full years.
2. Distributable profits in at least three years.
3. Net worth of rupees one Crore in three
years.
4. If change in name at least 50 %
revenue for proceeding one year
should be from the new activity.
5. The issue size does not exceed five
times the pre issue net worth.
Cont…
 Entry norm II (EN II)
1. Issues shell be through book building
root with at least 50 % to be mandatory
allotted to the qualified institutional
buyers (QIBs)
2. The minimum post issue face value
capital shell be rupees ten crores or
there shell be compulsory market
making for at least two years.
Cont…
 Entry norm III (EN III)
1. The “Project” is apprised and participated
to the extent of 15% by FIs/ scheduled
Commercial banks of which atleast10%
comes from the appraiser(s).
2. The minimum post issue face value capital
shell be rupees 10 crores or there shell be
a compulsory market making for at least
two years.
Exempted from EN’s
 Private sector banks.

 Public sector banks.
 Rights issue by listed companies.
Merchant Bankers
Bankers to Issue Brokers & sub-brokers
Code of Conduct
Portfolio Managers Underwriters

PORTFOLIO MANAGER
 Disclosures to the board.

 Producing various documents to the
inspecting authority of the board.
 Information about the contract with
clients.
BROKERS AND SUB BROKERS
 GENERAL
 Integrity.
 Compliance with statutory requirements.
 INVESTOR
 Execution of orders
 Issue of contract note
 Investment advice
UNDERWRITERS
 Not to derive any benefit from

underwriting the issue.
 Compliance with the rules and
regulations, notifications of agreement
for underwriting.
BANKERS TO ISSUE.
 To execute diligence, professional

dealings with clients.
 Not to indulge in unfair execution of its
services.
 Submission of all various reports to the
board.
INSIDER TRADING
 ‘Insider’means any person who is or

was connected with the company or is
deemed to have been connected wuth
the company and reasonably expected
to have access to unpublished price
sensitive information in respect of
securities of the company.
PRICE SENSITIVE INFORMATION:
 Periodical financial results of the

company.
 Intended declaration of the dividend.
 Amalgamation, mergers and takeovers.
 Significant changes in the policies, plans
or operations of the company.
 PROHIBITION
ON DEALING,
COMMUNICATING AND COUNSELLING.
CODE OF CONDUCT
 For prevention of the insider trading for

listed companies.
 Compliance officer.
 Limited access confidential information.
 Disclosure of interest of holding by
directors and officers.
VANISHING COMPANIES
 Companies which have not compiled
with listing requirements/ filing
requirements of stock exchange.
 No correspondence has been received
by the exchange from the company for a
long time.
 No office of the company is located at
the mentioned registered office address
at the time of stock exchange inspection.
Contd……
 SEBI has a separate section operating

under the primary market department,
which handles the complaints about the
vanishing companies and further action
against the companies and their
directors.

Securities and Exchange Board of India: Neelam Tandon

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SECURITIES AND EXCHANGE

 Established through an executive

 To protect the interest of the investors in

 Integratethe securities market at the

 Diversify the trading products.

• Protect the interest of the investors and

• Regulating substantial acquisition of

 Who is required to file with SEBI?

 Private sector banks.

Bankers to Issue Brokers & sub-brokers

Portfolio Managers Underwriters

 Disclosures to the board.

 Not to derive any benefit from

 To execute diligence, professional

 ‘Insider’means any person who is or

 Periodical financial results of the

 For prevention of the insider trading for

 SEBI has a separate section operating

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