{"id":962,"date":"2019-11-06T13:33:04","date_gmt":"2019-11-06T13:33:04","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=962"},"modified":"2021-03-23T11:28:50","modified_gmt":"2021-03-23T05:58:50","slug":"powers-of-sebi-and-its-functions","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/powers-of-sebi-and-its-functions\/","title":{"rendered":"What is SEBI? \u2013 Know Its Powers and Functions"},"content":{"rendered":"\n<p class=\"has-drop-cap\">At present, there are sixteen stock exchanges in the world with a market capitalization of over US$ 1 Trillion. While the NYSE (New York Stock Exchange) takes the first spot in the world based on the parameter\u00a0Market Capitalization,\u00a0the Indian Capital market is also one of the biggest Capital Markets in the world. SENSEX (Stock Exchange Sensitive Index), also known as BSE-30, is the oldest and the main stock exchange of India, which plays a significant role in the global market. Everything requires a particular body for its governance, to control and monitor this Capital Market, the government of India formed the\u00a0<strong>SEBI\u00a0(Securities and Exchange Board of India<\/strong><sup><a href=\"https:\/\/www.sebi.gov.in\/\"><strong>[1]<\/strong><\/a><\/sup><strong>). <\/strong>Here, in this article, we will go through the Powers of SEBI.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/powers-of-sebi-and-its-functions\/#Some_Major_Highlights_of_SEBI\" >Some Major Highlights of SEBI<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/powers-of-sebi-and-its-functions\/#Structure_of_SEBI\" >Structure of SEBI<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/powers-of-sebi-and-its-functions\/#Board_of_Directors\" >Board of Directors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/powers-of-sebi-and-its-functions\/#Functions_of_SEBI\" >Functions\nof SEBI:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/powers-of-sebi-and-its-functions\/#What_are_the_Powers_of_SEBI\" >What are the Powers of SEBI?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/powers-of-sebi-and-its-functions\/#What_are_the_Mutual_Fund_Regulations_by_SEBI\" >What are the Mutual Fund Regulations by SEBI?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/powers-of-sebi-and-its-functions\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Some_Major_Highlights_of_SEBI\"><\/span>Some Major Highlights of SEBI<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>SEBI is a\nregulatory body of the government of India established on 12 April 1992 under\nthe SEBI Act, 1992. It is headquartered at the Bandra Kurla Complex in Mumbai\nwith the regional offices in New Delhi, Kolkata, Chennai, and Ahmadabad.<\/p>\n\n\n\n<p>The main objective of SEBI is to control and regulate the Capital market and ensure that the Indian capital market works systematically. This will provide investors with a transparent environment and promote the development of the capital markets.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Structure_of_SEBI\"><\/span>Structure of SEBI<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>SEBI has a\nhierarchical structure which comprises of various departments which are managed\nby their respective department head. The list of some of the departments of\nSEBI is:<\/p>\n\n\n\n<ul><li>Corporation finance<\/li><li>Economic and Policy Analysis<\/li><li>Debt and Hybrid Securities.<\/li><li>Human resources<\/li><li>Investment&nbsp;Management<\/li><li>Commodity Derivatives market<\/li><li>International Affairs<\/li><li>National Institute of Securities Market.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Board_of_Directors\"><\/span>Board of Directors<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>&nbsp;The senior management of SEBI consists of a Board of Directors who\nare appointed by different government organizations.<\/em><\/strong><\/p>\n\n\n\n<ul><li>The Union government of India nominates the Chairman of Securities and Exchange Board of India.<\/li><li>Two officers from the Union Finance Ministry.<\/li><li>A member will be appointed from the RBI (Reserve Bank of India).<\/li><li>The Union government will appoint another five members.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">What Are the Major Role of SEBI?<\/h3>\n\n\n\n<p>The main\naim behind the formation of SEBI is to protect the interests of investors in\nthe Securities Market. It means that the money which the public is investing is\nsafe because the investors invest their hard-earned money in the hope of\ngetting a better return.&nbsp;<\/p>\n\n\n\n<ul><li><strong>SEBI act as the Issuer of the Securities:<\/strong><\/li><\/ul>\n\n\n\n<p>The Security\nand Exchange Board of India ensures that the issuance of the IPO (initial\npublic offering) and FPO (Follow-Up Public Offering) takes place in a healthy\nand transparent manner. IPO is the fresh issuance of shares of a company in the\nStock market, whereas FPO is the issuance of the additional shares after an\nInitial Public Offering.<\/p>\n\n\n\n<ul><li><strong>SEBI acts as the Protector for both the Traders and Investors<\/strong><\/li><\/ul>\n\n\n\n<p>It is the\nresponsibility of SEBI to safeguard the interest of the investors and ensure\nthat the investors do not become a victim in the hands of any stock market\nfraud.<\/p>\n\n\n\n<ul><li><strong>SEBI acts as Financial Intermediaries<\/strong><\/li><\/ul>\n\n\n\n<p>The body acts as an intermediate in the stock market to ensure that all the market transactions take place smoothly. It also monitors the activities of the financial intermediaries such as the broker, sub-broker,<strong>&nbsp;<\/strong><a href=\"https:\/\/corpbiz.io\/nbfc-registration\"><strong>NBFC<\/strong><\/a>, etc.<\/p>\n\n\n\n<ul><li>SEBI acts as the prohibition of the inner trade in securities and controls the unfair trade practices related to the Securities market.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Functions_of_SEBI\"><\/span>Functions\nof SEBI:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>SEBI primarily has three functions-<\/p>\n\n\n\n<ol><li>Protective Function<\/li><li>Regulatory Function<\/li><li>Development Function <\/li><\/ol>\n\n\n\n<p><strong>Protective Functions<\/strong><\/p>\n\n\n\n<p>As the name suggests, protective functions are\ncarried out by SEBI\nto protect the investor\u2019s\ninterest and other financial participants like check price rigging, promoting fair practices, to create consciousness among the investors and prohibit the fraudulent activities and unfair\ntrade practices<\/p>\n\n\n\n<p><strong>Regulatory Functions<\/strong><\/p>\n\n\n\n<p>The\nobjective behind performing these functions\nis to keep a check on the business of\nthe financial markets\nwork function. These functions shall include-<\/p>\n\n\n\n<ul><li>Framing the code of conduct and guidelines for the proper function of the corporate and financial intermediaries.<\/li><li>Regulate the takeover of companies.<\/li><li>Conduct the audit of exchanges and inquiries <\/li><li>Registration of the brokers, merchant bankers etc.<\/li><li>Fees Levying <\/li><li>Implementing and exercising powers<\/li><li>Regulate and register the credit rating agency<\/li><\/ul>\n\n\n\n<p><strong>Development Functions<\/strong><\/p>\n\n\n\n<p>The\ndevelopment functions performed by the SEBI\nincludes but are\nnot limited to-<\/p>\n\n\n\n<ul><li>Conveying training to intermediaries<\/li><li>Promote fair trading and reduce malpractices<\/li><li>Carrying of the research work<\/li><li>Encouragement of the self-operating enterprises<\/li><li>Buying and selling of mutual funds from AMC via broker.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Powers_of_SEBI\"><\/span>What are the Powers of SEBI?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>To\nfunction efficiently and keep an eye over the share market, SEBI has been\ngranted some powers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">&nbsp;Quasi-Judicial:<\/h3>\n\n\n\n<p>To ensure fairness, transparency, and accountability in the securities market, SEBI has the powers to deliver judgments related to any kind of fraud and other unethical practices in terms of the securities market. It includes the drafting of the legislature pertaining to the Capital Markets.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Quasi-Executive:<\/h3>\n\n\n\n<p>SEBI has the powers to implement the regulations and judgments and take legal actions against the violators. Also, this body is authorized to inspect books of accounts and other documents if it violates the regulations.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Quasi-Legislative:<\/h3>\n\n\n\n<p>SEBI has the right to frame the rules and regulations to protect the interest of the investors. It also consists of insider trading regulations, listing obligations, and disclosure requirements.<\/p>\n\n\n\n<div class=\"shadow1\"><strong>Note:<\/strong>&nbsp;Besides these powers, SEBI\u2019s functions and decisions need to go through the Securities Appellate Tribunal and the Supreme Court of India.<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Mutual_Fund_Regulations_by_SEBI\"><\/span>What are the Mutual Fund Regulations by SEBI?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>The regulations for Mutual Funds laid down by SEBI are:<\/em><\/strong><\/p>\n\n\n\n<ul><li>Any group company which includes the asset management company of a fund cannot hold 10% or more of the shareholding and voting rights in the asset management company.<\/li><li>This asset management company cannot have the representation on a board of any other mutual hand.<\/li><li>The cap of all the stock is limited to 25% for all the indices except the index for a Sectoral or thematic index. The cap cannot be more than 35% for these indexes.<\/li><li>The overall weight of the top three constituents of the index cannot be more than 65%.<\/li><li>The new funds must submit the status of their compliance to the SEBI before it is getting launched.<\/li><li>Investors of liquid schemes who exit the scheme within a period of seven days need to pay the exit penalty.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>SEBI (Securities and Exchange Board of India) is the body which is responsible for the efficient functioning of the share market of our country. Also, it is the role of SEBI to keep an eye on the investors who invest their hard-earned money in the share market does not go in waste. Besides this, the Powers of SEBI need to go through the Securities Appellate Tribunal and the Supreme Court of India.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/sebi-protecting-investors-right\/\">How SEBI Protects Investor Right?\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>At present, there are sixteen stock exchanges in the world with a market capitalization of over US$ 1 Trillion. While the NYSE (New York Stock Exchange) takes the first spot in the world based on the parameter\u00a0Market Capitalization,\u00a0the Indian Capital market is also one of the biggest Capital Markets in the world. SENSEX (Stock Exchange [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":989,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[160],"tags":[169],"acf":{"service_id":"227"},"authorName":"Shalini Singh","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2019\/09\/MEE.jpeg","authorDescription":"Shalini is a B.tech graduate but her keen interest in writing impelled her to continue as a content writer. Further, She has a rich experience in Companies Act and Ammendment related topics.","postViews":61935,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/962"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=962"}],"version-history":[{"count":31,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/962\/revisions"}],"predecessor-version":[{"id":27987,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/962\/revisions\/27987"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/989"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=962"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=962"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=962"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}