What is SEBI ?
THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 passed by parliament of India. SEBI protect the interest of investors
An Act to provide for the establishment of a Board to protect the interests of
investors in securities and to promote the development of, and to regulate, the
securities market and for matters connected therewith or incidental thereto.
Be it enacted by Parliament in the Forty-third Year of the Republic of India
Functions of SEBI.
11. (1) Subject to the provisions of this Act, it shall be the duty of the Board to protect
the interests of investors in securities and to promote the development of, and to
regulate the securities market, by such measures as it thinks fit.
(2) Without prejudice to the generality of the foregoing provisions, the measures
referred to therein may provide for –
(a) regulating the business in stock exchanges and any other securities
markets;
(b) registering and regulating the working of stock brokers, sub-brokers,
share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an
issue, merchant bankers, underwriters, portfolio managers, investment advisers
and such other intermediaries who may be associated with securities markets in
any manner;
13[(ba) registering and regulating the working of the depositories,14
[participants,] custodians of securities, foreign institutional investors, credit
rating agencies and such other intermediaries as the Board may, by notification,
specify in this behalf;]
(c) registering and regulating the working of 15[venture capital funds and
collective investment schemes],including mutual funds;
(d) promoting and regulating self-regulatory organisations;
(e) prohibiting fraudulent and unfair trade practices relating to securities
markets;
(f) promoting investors’ education and training of intermediaries of
securities markets;
g) prohibiting insider trading in securities;
(h) regulating substantial acquisition of shares and take-over of
companies;
(i) calling for information from, undertaking inspection, conducting
inquiries and audits of the 16[ stock exchanges, mutual funds, other persons
associated with the securities market] intermediaries and self- regulatory
organisations in the securities market;
17[“(ia) calling for information and record from any bank or any other
authority or board or corporation established or constituted by or under any
Central, State or Provincial Act in respect of any transaction in securities which
is under investigation or inquiry by the Board;”]
(j) performing such functions and exercising such powers under the
provisions of 18[…]the Securities Contracts (Regulation) Act, 1956(42 of 1956),
as may be delegated to it by the Central Government;
(k) levying fees or other charges for carrying out the purposes of this
section;
(l) conducting research for the above purposes;
19[“(la) calling from or furnishing to any such agencies, as may be
specified by the Board, such information as may be considered necessary by it
for the efficient discharge of its functions;”]
(m) performing such other functions as may be prescribed.
20[“(2A) Without prejudice to the provisions contained in sub-section (2),
the Board may take measures to undertake inspection of any book, or register, or
other document or record of any listed public company or a public company (not
being intermediaries referred to in section 12) which intends to get its securities
listed on any recognised stock exchange where the Board has reasonable grounds
to believe that such company has been indulging in insider trading or fraudulent
and unfair trade practices relating to securities market.”]
21[(3) Notwithstanding anything contained in any other law for the time being in force
while exercising the powers under 22[clause (i) or clause (ia) of sub-section (2) or subsection (2A)], the Board shall have the same powers as are vested in a civil court under
the Code of Civil Procedure, 1908 (5 of 1908),while trying a suit, in respect of the
following matters, namely :
(i) the discovery and production of books of account and other
documents, at such place and such time as may be specified by the Board;
(ii) summoning and enforcing the attendance of persons and examining
them on oath;
(iii) inspection of any books, registers and other documents of any person
referred to in section 12, at any place;]
23[(iv) inspection of any book, or register, or other document or record of
the company referred to in sub-section (2A);
(v) issuing commissions for the examination of witnesses or documents.]
24[(4) Without prejudice to the provisions contained in sub-sections (1), (2), (2A)
and (3) and section 11B, the Board may, by an order, for reasons to be recorded in
writing, in the interests of investors or securities market, take any of the following
measures, either pending investigation or inquiry or on completion of such investigation
or inquiry, namely:-
(a) suspend the trading of any security in a recognized stock exchange;
(b) restrain persons from accessing the securities market and prohibit any
person associated with securities market to buy, sell or deal in securities;
(c) suspend any office-bearer of any stock exchange or self- regulatory
organisation from holding such position;
(d) impound and retain the proceeds or securities in respect of any
transaction which is under investigation;
(e) attach, after passing of an order on an application made for approval by
the Judicial Magistrate of the first class having jurisdiction, for a period not
exceeding one month, one or more bank account or accounts of any intermediary or
any person associated with the securities market in any manner involved in violation
of any of the provisions of this Act, or the rules or the regulations made thereunder:
Provided that only the bank account or accounts or any transaction entered
therein, so far as it relates to the proceeds actually involved in violation of any of the
provisions of this Act, or the rules or the regulations made thereunder shall be
allowed to be attached;
(f) direct any intermediary or any person associated with the securities
market in any manner not to dispose of or alienate an asset forming part of any
transaction which is under investigation:
Provided that the Board may, without prejudice to the provisions contained in subsection (2) or sub-section (2A), take any of the measures specified in clause (d) or
clause (e) or clause (f), in respect of any listed public company or a public company
(not being intermediaries referred to in section 12) which intends to get its securities
listed on any recognised stock exchange where the Board has reasonable grounds to
believe that such company has been indulging in insider trading or fraudulent and
unfair trade practices relating to securities market:
Provided further that the Board shall, either before or after passing such orders, give
an opportunity of hearing to such intermediaries or persons concerned.]
25[Board to regulate or prohibit issue of prospectus, offer document or
advertisement soliciting money for issue of securities.
11A (1) Without prejudice to the provisions of the Companies Act, 1956(1 of 1956), the
Board may, for the protection of investors, –
(a) specify, by regulations –
(i) the matters relating to issue of capital, transfer of securities and other matters
incidental thereto; and
(ii) the manner in which such matters shall be disclosed by the companies;
(b) by general or special orders –
(i) prohibit any company from issuing prospectus, any offer document, or
advertisement soliciting money from the public for the issue of securities;
(ii) specify the conditions subject to which the prospectus, such offer document or
advertisement, if not prohibited, may be issued.
(2) Without prejudice to the provisions of sect
