12-06-2013, 04:18 PM
SEBI – ROLE AND FUNCTIONS
SEBI.ppt (Size: 510 KB / Downloads: 52)
Why do we need a regulatory body for Investor protection in India?
India is an ` informationally ' weak market
Boosting capital market demands restoring the confidence of lay investors who have been beaten down by repeated scams
Progressively softening interest rates and an under performing economy have eroded investment options, and require enhanced investing skills.
Mission of SEBI
Securities & Exchange Board of India (SEBI) formed under the SEBI Act, 1992 with the prime objective of
Protecting the interests of investors in securities,
Promoting the development of, and
Regulating, the securities market and for matters connected therewith or incidental thereto.’
FUNCTIONS OF SEBI
Section 11 of the Securities and Exchange Board of India Act.
Regulation Of Business In The Stock Exchanges
A review of the market operations, organizational structure and administrative control of the exchange
All stock exchanges are required to be Body Corporates
The exchange provides a fair, equitable and growing market to investors.
The exchange’s organisation, systems and practices are in accordance with the Securities Contracts (Regulation) Act (SC® Act), 1956
VETTING BY SEBI
A company cannot come out with public issue unless Draft Prospectus is filed with SEBI. Prospectus is a document by way of which the investor gets all the information pertaining to the company in which they are going to invest. It gives the detailed information about the Company, Promoter / Directors, group companies, Capital Structure, Terms of the present issue etc.
A company cannot file prospectus directly with SEBI. It has to be filed through a merchant banker. After the preparation of prospectus, the merchant banker along with the due diligence certificates and other compliances and sends the same to SEBI for Vetting.
SEBI on receiving the same scrutinizes it and may suggest changes within 21 days of receipt of prospectus
The company can come out with a public issue any time within 180 days from the date of the letter from SEBI or if no letter is received from SEBI, within 180 days from the date of expiry of 21 days of submission of prospectus with SEBI
If the issue size is upto Rs. 20 crores then the merchant bankers are required to file prospectus with the regional office of SEBI falling under the jurisdiction in which registered office of the company is situated.
Search And Seizure
To impose penalties of up to Rs 25 crore or three times the amount involved in the violation of a norm, whichever is higher.
In the cases of some offences, including defaults by brokers, a failure to furnish returns and information by corporates and brokers and other lapses, the market regulator can impose a higher penalty of Rs 1 lakhs a day or a maximum fine of Rs 1 crore, whichever is lower.
At present, the offences carry penalties ranging between Rs 5,000 and Rs 5 lakhs.
Delisting
The exit price to be determined in accordance with the book building process (known as reverse book building) through an electronically-linked transparent facility.
The offer price shall have a floor price, which will be the average of 26 weeks traded price preceding the date of the public announcement. The final offer price shall be determined as the price at which maximum number of shares has been offered.
After the final price is determined based on the book-building process, the promoter or the acquirer will have to make a public announcement of the final price and communicate to the exchanges from which the delisting is sought to be made within two working days.
Further, the number of bidding centres shall not be less than 30, including all the stock exchange centres, which should have at least one electronically-linked computer terminal each.
In case the promoter does not accept the above price, he should not make an application to the exchange for delisting of the securities, as per the guidelines. Instead, he shall ensure that the public shareholding is brought up to the minimum limits specified under the listing conditions within six months.
Strict norms for compulsory delisting by stock exchanges