{"id":8411,"date":"2021-09-13T07:19:26","date_gmt":"2021-09-13T07:19:26","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=8411"},"modified":"2021-09-13T07:19:28","modified_gmt":"2021-09-13T07:19:28","slug":"powers-of-sebi","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/powers-of-sebi\/","title":{"rendered":"A Complete Overview on the Powers of SEBI"},"content":{"rendered":"\n<p class=\"has-drop-cap\">SEBI (Securities and Exchange Board of India) came into existence on 30<sup>th<\/sup> January 1992 as a legal authority under a regulation. The regulation was consented by both Parliament houses on 1<sup>st<\/sup> April 1992; however, the regulation is said to have come into existence from the date when the ordinance was issued. In this blog, we will discuss the powers of SEBI.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a8fd6d28e9\" class=\"ez-toc-cssicon-toggle-label\"><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><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a8fd6d28e9\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/powers-of-sebi\/#What_is_SEBI\" title=\"What is SEBI?\">What is 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:\/\/swaritadvisors.com\/blog\/powers-of-sebi\/#Powers_of_SEBI_in_India\" title=\"Powers of SEBI in India\">Powers of SEBI in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/powers-of-sebi\/#Analysing_Powers_of_SEBI\" title=\"Analysing\nPowers of SEBI\">Analysing\nPowers of SEBI<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/powers-of-sebi\/#What_are_the_Functions_of_SEBI\" title=\"What are the\nFunctions of SEBI?\">What are the\nFunctions of 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:\/\/swaritadvisors.com\/blog\/powers-of-sebi\/#Powers_of_SEBI_with_Respect_to_Mutual_Funds_Regulations\" title=\"Powers of SEBI\nwith Respect to Mutual Funds Regulations\">Powers of SEBI\nwith Respect to Mutual Funds Regulations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/powers-of-sebi\/#Securities_Appellate_Tribunal\" title=\"Securities\nAppellate Tribunal\">Securities\nAppellate Tribunal<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/blog\/powers-of-sebi\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_SEBI\"><\/span>What is SEBI?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Before\nwe discuss the powers of SEBI, let\u2019s discuss the meaning of SEBI in India. SEBI\nis a legal body of the Government of India that was established in April 1992. SEBI\nwas introduced to boost transparency in the Indian Investment Market. Moreover,\nits headquarters in Mumbai, the establishment has various regional offices\nacross the country, comprising Ahmedabad, Chennai, New Delhi, and Kolkata.<\/p>\n\n\n\n<p>It\nis entrusted with the task to control the working of the Indian Capital Market.\nThe regulatory body sets focus on monitoring and regulating the securities\nmarket in India to protect the investors\u2019 interest and intend to inculcate a\nsafe investment environment by executing different rules &amp; regulations and\nby formulating investment-related guidelines.<\/p>\n\n\n\n<p>In India, SEBI follows a corporate structure. It has BoDs (Board of Directors), senior management, department head &amp; several crucial departments.\u00a0 To be precise, it includes more than 20 departments, all of which are observed by their relevant departments\u2019 heads, which in turn are regulated by a hierarchy in general.<\/p>\n\n\n\n<p>The\nhierarchical structure of the Securities and Exchange Board of India includes\nthe following designated officers:<\/p>\n\n\n\n<ol><li>One member belonging to the\nRBI;<\/li><li>Two members belonging to the\nUFM (Union Finance Ministry) of India;<\/li><li>The Chairman nominated by the\nUnion Government of India;<\/li><li>The other 5 members were\nappointed by the Union Government.<\/li><\/ol>\n\n\n\n<p><strong><em>Following\nis the list of some most vital departments of SEBI in India:<\/em><\/strong><\/p>\n\n\n\n<ol><li>The IT Department;<\/li><li>International Affairs Office;<\/li><li>HR Department;<\/li><li>The Foreign Portfolio Investors\n&amp; Custodians;<\/li><li>National Institute of\nSecurities Market;<\/li><li>Department of Investment\nManagement;<\/li><li>Commodity &amp; Derivative\nMarket Regulation Department.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Powers_of_SEBI_in_India\"><\/span>Powers of SEBI in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>SEBI has various powers to fulfil the purposes of the SEBI Act, 1992. Securities and Exchange Board of India can take preventive action &amp; disciplinary actions to safeguard the investors &amp; encourage the securities market. Such measures can be in the form of circulars, press releases, etc. Moreover, the measures can also be taken if it is exercised in maintenance &amp; consonance of the specified objectives. Following are the powers of SEBI:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/09\/Powers-of-SEBI-in-India.png\" alt=\"Powers of SEBI in India\" class=\"wp-image-8413\" width=\"499\" height=\"495\" srcset=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/09\/Powers-of-SEBI-in-India.png 998w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/09\/Powers-of-SEBI-in-India-150x150.png 150w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/09\/Powers-of-SEBI-in-India-300x297.png 300w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/09\/Powers-of-SEBI-in-India-768x761.png 768w\" sizes=\"(max-width: 499px) 100vw, 499px\" \/><\/figure><\/div>\n\n\n\n<ol><li><strong><em>Registration &amp; Regulation of Securities Market Intermediaries<\/em><\/strong>: Securities and Exchange Board of India has the power to issue regulations or rules for Registration &amp; can deliver for the eligibility criteria, rules for capital adequacy, code of conduct tec. Unless the Registration Certificate is provided by the Securities and Exchange Board of India, no individual can involve in activities that a SEBI registered mediator undertakes.<\/li><li><strong><em>Rule of the Self-Regulatory Organisations: <\/em><\/strong>These organisations are given the responsibilities of being the 1<sup>st<\/sup> level regulator for a segment of mediators in the securities market being its members. SEBI issued recognitions to self-regulatory organisations &amp; looks after the activities of such organisations, and help them in maintaining ethical benchmarks. It aids in maintaining accountability, fairness, and transparency to investors.<\/li><li><strong><em>Regulation of Substantial Shares Acquisition and Companies Takeover:<\/em><\/strong> SEBI mandates open offer &amp; needs disclosure to be made by the acquirer and the person acting in concert with such acquirer. It offers who would be an acquirer, Target Company, etc. What it does is makes sure the Takeover process is transparent and fair. SEBI also mandates enough disclosures from the promoters &amp; acquirers of the listed companies. Among the powers of SEBI, it can make regulations under Section 30(2) of the SEBI Act. Regulations have been offered for securities market intermediaries, <strong><a href=\"https:\/\/swaritadvisors.com\/alternative-investment-fund-registration\" class=\"text-primary\">AIF (Alternative Investment Funds)<\/a><\/strong>, Foreign Portfolio Investors (FPI), mutual funds, insider trading, takeovers and matters concerning securities matters. But, it may be noted that rules if SEBI is governmental in nature and legal in character.<\/li><li><strong><em>Regulation of Other Securities Market and Stock Exchange Business: <\/em><\/strong>Securities and Exchange Board of India concentrates on maintaining integrity, clarity, and proper working of the stock exchanges via different methods such as Broker Registration, addressing investor complaints, rising trading hours, etc. Securities and Exchange Board of India also has the power under Securities Contract (Regulation) Act, 1956 to grant identification to stock exchanges, supersede business of stock exchange, withdrawal of acknowledgement, etc. These powers have been delegated by the Central Government of India.<\/li><li><strong><em>Regulation &amp; Registration of the working of Collective Investment Schemes, Venture Capital Fund:<\/em><\/strong> Previously, the Mutual Funds were regulated by the RBI (Reserve Bank of India) guidelines, which was appropriate to Mutual Funds supported by Banks. Securities and Exchange Board of India gives Registration Certificate to the Mutual Fund. It also regulates the structure &amp; the constitution of the fund, its AMCs, Trust Deed Registration and has the power to control various schemes and businesses of mutual funds.<\/li><li><strong><em>Power to ban Fraudulent and Unfair Trade Practices in Securities Market: <\/em><\/strong>Securities and Exchange Board of India informed the <strong><em>SEBI (Prohibition of Fraudulent &amp; Unfair Trade Relating to Securities Market) Regulations 2003<\/em><\/strong>. Fake transactions &amp; unfair trade practices recognised by SEBI comprise price rigging, circular trading, inflating, variable securities price, publishing any false statement or misguiding advertisement, among others.<\/li><li><strong><em>Barring Insider Trading in Securities: <\/em><\/strong>Securities and Exchange Board of India has taken measures for barring Insider Trading by the participants in the securities market. Securities and Exchange Board of India framed the <strong><em>1<sup>st<\/sup> Prohibition of Insider Trading Regulations in the year 1992<\/em><\/strong>, after that replaced it with the <strong><em>Prohibition of Insider Trading Regulations, 2015, <\/em><\/strong>furnishing for the insider meaning, unpublished price sensitive details, trading, etc. Securities and Exchange Board of India establish various committees with a purpose of strengthening the market integrity and to boost the confidence of investor.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Analysing_Powers_of_SEBI\"><\/span>Analysing\nPowers of SEBI<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Quasi-judicial\nfunctions of the Securities and Exchange Board of India and its ruling are\nsubject to appeal, and the responsibilities of the Securities and Exchange\nBoard of India fall to the other side in the case of the doctrine of power\nseparation. The Board uses its legislative powers y making rules &amp;\nregulations, executive powers by administering regulations made by it and\ntaking some measures against the company that breaks the rules and legal power\nby adjudication clashes in the execution. Such power should obey the\nconstitution and the SEBI Act and shouldn\u2019t contradict it.<\/p>\n\n\n\n<p>The\nSEBI has the power to order for investigation if it has a reason to believe\nthat a transaction in securities is harmful to the securities market or\ninvestors or if anyone infringes the provisions of the Act. Securities and\nExchange Board of India also has the control of a civil court where it can\nsummon and order for the person\u2019s presence, inspect them, and examine books of\naccounts.<\/p>\n\n\n\n<p>Moreover,\nas a part of the powers of SEBI, it can contain an individual or ban a person\nfrom accessing the securities market. Such order or decision can be made by the\nSecurities and Exchange Board of India even on the suspense of investigation.\nFurther, the SEBI (Securities and Exchange Board of India) can recover illegal\ngains made by an individual via unauthorised conduct by issuing a disgorgement\norder.<\/p>\n\n\n\n<p>Securities\nand Exchange Board of India can also take actions on unauthorised schemes\nintroduced by entities to make money from retail investors, refrain an\nindividual acting as mediator like Investment Advisor, Research Analyst, etc.,\nnot to solicit or undertake an activity in securities either\nindirectly\/directly.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Functions_of_SEBI\"><\/span>What are the\nFunctions of SEBI?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>After discussing the powers of SEBI, let&#8217;s discuss the functions of SEBI. <strong>SEBI<\/strong><sup><a href=\"https:\/\/www.sebi.gov.in\/\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup> has three different functions:<\/p>\n\n\n\n<ul><li><strong><em>Regulatory Functions<\/em><\/strong>: The intention behind executing these functions is to keep a check on the business of the financial markets work function. These functions shall comprise:<ol><li>Conduct the audit of inquiries and exchanges;<\/li><li>Fee levying;<\/li><li>Practising powers &amp; implementing powers;<\/li><li>Regulate the companies takeover;<\/li><li>Registration of Merchant Bankers, brokers, etc.;<\/li><li>Register &amp; regulate the Credit rating Agency;<\/li><li>Framing the Code of Conduct &amp; guidelines for the proper role of the financial intermediaries. <\/li><\/ol><\/li><li><strong><em>Development Functions<\/em><\/strong>: These functions are performed by the Securities and Exchange Board of India comprises but are not limited to:<ol><li>Encourage fair trading &amp; decrease malpractices;<\/li><li>Support of the self-operating enterprises;<\/li><li>Selling &amp; buying of Mutual Funds from <strong><a href=\"https:\/\/swaritadvisors.com\/asset-management-company\" class=\"text-primary\">Asset Management Company<\/a><\/strong> through a broker;<\/li><li>Assigning training to mediators;<\/li><li>Carrying of the research work;<\/li><\/ol><\/li><li><strong><em>Protective Functions<\/em><\/strong>: These functions are laid out by the Securities and Exchange Board of India to safeguard the interest of investors and other financial participants like encouraging fair practices, check price rigging, to create consciousness among the investors &amp; ban fake activities &amp; unfair trade practices.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Powers_of_SEBI_with_Respect_to_Mutual_Funds_Regulations\"><\/span>Powers of SEBI\nwith Respect to Mutual Funds Regulations<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following\nare some regulations for Mutual Funds laid down by SEBI:<\/p>\n\n\n\n<ol><li>ASM (Asset Management Company)\ncannot have the depiction on a board of any other mutual hand;<\/li><li>The complete weight of the top\n3 constituents of the index cannot be more than 65%;<\/li><li>Investors of liquid schemes who\nexit the scheme within seven days need to pay the penalty for exit;<\/li><li>Any group company or entity\nwhich comprises the AMC of a fund cannot hold 10% or more of the voter rights\nand shareholding in the Asset Management Company;<\/li><li>The new funds must submit their\ncompliance status to the Securities and Exchange Board of India before it is\ngetting launched;<\/li><li>The limit of all stocks is\nlimited to 25% for all the indices except the index for a thematic\/sectoral\nindex. The cap cannot be more than 35% of these indexes.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Securities_Appellate_Tribunal\"><\/span>Securities\nAppellate Tribunal<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Every\nSEBI\u2019s order is appealable under <strong><em>Section 15T to Securities Appellate Tribunal<\/em><\/strong>.\nSecurities Appellate Tribunal is a professional body. It can exercise its\ndiscretionary jurisdiction in a similar manner as SEBI. Any order by SAT can be\nenforced in a similar way as if it was a decree done by a Civil Court in a suit\nbefore it. The Tribunal may send it for implementation to the Court within the\nlocal limits of whose jurisdiction the incorporated office of the company is\nlocated in case the order is against the company or where the individual or a\nperson voluntarily resides or carries on business, in the case is against any\nindividual.<\/p>\n\n\n\n<p>An\naggrieved person can appeal to the Supreme Court under <strong><em>Regulation 15Z <\/em><\/strong>only a law\nquestion arising out of any decision of Securities Appellate Tribunal. Remember\nthat even though a right of appeal to the Supreme Court is offered, a writ\npetition under <strong><em>Article 226 to High Court or under Article 32 to Supreme Court <\/em><\/strong>against\nthe SAT order continues to be maintainable, invoking for applying the\nfundamental rights.<\/p>\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>The powers of SEBI have been elevated time &amp; again by the Indian Parliament; this is because its role in the Financial System of India is crucial. It is secure to say that SEBI (Securities and Exchange Board of India) is one of the most substantial regulatory bodies in India. It has an immense role in avoiding huge financial scams or frauds by regulating the Indian Financial Market via its 20 departments.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/investigation-under-section-11c-of-the-sebi-act\/\">Investigation Under Section 11C of the SEBI Act \u2013 An Overview<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>SEBI (Securities and Exchange Board of India) came into existence on 30th January 1992 as a legal authority under a regulation. The regulation was consented by both Parliament houses on 1st April 1992; however, the regulation is said to have come into existence from the date when the ordinance was issued. In this blog, we [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":8412,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[64],"tags":[848],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/8411"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=8411"}],"version-history":[{"count":15,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/8411\/revisions"}],"predecessor-version":[{"id":8432,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/8411\/revisions\/8432"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/8412"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=8411"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=8411"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=8411"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}