Basics of SEBI

What is SEBI?

Securities and Exchange Board of India (SEBI) is a statutory regulatory body for regulating the listed companies. It was founded on April 12, 1992, under the SEBI Act, 1992. It is responsible for monitoring and regulating the Indian capital/securities markets. It is also entrusted to protect the interests of the investors by enforcing relevant rules and regulations.

Objective of SEBI:

To prevent malpractices in the capital market of India and promote its development. SEBI protects the interests of investors in securities; and regulates, and promotes the development of the securities market.

Functions of SEBI:

The functions of SEBI as listed in The SEBI Act, 1992 are as follows:

  1. To ensure that the issuance of Initial Public Offerings (IPOs) and Follow-up Public Offers (FPOs) take place in a healthy and transparent manner.
  2. To safeguard the interests of the investors and ensure that they do not become victims of any stock market fraud or manipulation.
  3. To act as a mediator in the stock market and ensure that all the market transactions take place in a secure and smooth manner.
  4. To monitor every activity of the financial intermediaries, such as broker, sub-broker, Non-Banking Financial Companies (NBFCs), etc.

Powers of SEBI:

  1. Quasi-Judicial – To conduct hearings and pass rulings in cases of unethical and fraudulent trade practices.
  2. Quasi-Legislative – To draft rules and regulations for the protection of the interests of the investor and consolidate and streamline the provisions of existing listing agreements for several segments of the financial market like equity shares. E.g.: SEBI Listing Obligation and Disclosure Requirements (LODR) was a regulation laid down by SEBI.
  3. Quasi-Executive – To file a case against anyone who violates its rules and regulation. SEBI is also empowered to inspect account books and other documents, if it detects traces of any suspicious activities.

The content of this article is intended to provide general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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