SECURITIES AND EXCHANGE BOARD OF INDIA

➢ INTRODUCTION
The Securities and Exchange Board of India was established on April 12, 1992 in accordance with the
provisions of the Securities and Exchange Board of India Act, 1992. The first statutory regulatory body
that the Government of India set up post the reforms of 1991 was the Securities and Exchange Board
of India (SEBI). SEBI was first established as a non-statutory body on April 12, 1988, and then acquired statutory
powers on January 30, 1992, under the SEBI Act, 1992.
➢ OBJECTIVES OF SEBI
a. To protect the interests of investors in securities
b. The promote the development of Securities Market
c. To regulate the securities market and for matters connected therewith or incidental thereto
➢ SEBI ACT, 1992
Establishment and Incorporation of SEBI
Section 3 of the SEBI Act provides that there shall be a Board by the name of the Securities and
Exchange Board of India (SEBI) established as –
• a body corporate;
• having perpetual succession and a common seal;
• with power to acquire, hold and dispose of property, both movable and immovable; and
• to contract, and shall, by the said name, sue or be sued;
• the head office of the Board shall be at Mumbai.
• Further, the Board may establish offices at other places in India.
➢ MANAGEMENT OF THE SEBI
• Section 4(1) of the SEBI Act provides that the SEBI shall consist of the following members
(appointed by the Central Government), namely:
• Chairman
• Two members from amongst the officials of the Ministry of the Central Government dealing
with finance and administration of the Companies Act, 2013
• One member from amongst the officials of the Reserve bank
• Five other members of whom at least three shall
- be the whole-time members, to be appointed by
- the Central Government
• The general superintendence, direction and management of the affairs of the Board shall vest
in a Board of members, which may exercise all powers and do all acts and things which may
be exercised or done by the Board.
• The Chairman shall also have powers of general superintendence and direction of the affairs
of the Board and may also exercise all powers and do all acts and things which may be
exercised or done by that Board.
➢ The Chairman and the other members shall be persons of ability, integrity and standing who have
shown capacity in dealing with problems relating to securities market or have special knowledge or
experience of law, finance, economics, accountancy, administration or in any other discipline which,
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in the opinion of the Central Government, shall be useful to the Board.

➢ POWERS OF THE SEBI
Chapter IV of the SEBI Act, 1992 deals with the powers and functions of SEBI.
• Section 11 Functions of the SEBI
• Section 11A To Regulate or Prohibit issue of Prospectus, Offer Document or Advertisement
Soliciting Money for Issue of Securities
• Section 11AA To Regulate Collective Investment Schemes
• Section 118 Power to Issue Directions and Levy Penalty
• Section 11C Investigation
• Section 11D Cease and Desist Proceedings
➢ FUNCTIONS OF THE SEBI
Duty of the SEBI:
1. Regulate the securities market
2. Promote the development of securities market
3. Protect the interests of investors of securities
It shall be the duty of SEBI to protect the interests of the investors in securities and to promote the
development of, and to regulate the securities markets by such measures as it thinks fit.
➢ POWERS WITH RESPECT TO INSPECTION OF BOOKS AND DOCUMENTS
Section 11(2A) prescribes that SEBI 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 which intends
to get its securities listed on any recognised stock exchange where SEBI has reasonable grounds to
believe that such company has been indulging in insider trading or fraudulent and unfair trade
practices relating to securities market.
➢ SEBI IS VESTED WITH THE SAME POWER AS THAT OF CIVIL COURT
Section 11(3) of the SEBI Act provides that the SEBI has been vested with the same powers as are
available to a Civil Court under the Code of Civil Procedure, 1908 for trying a suit in respect of the
following matters:
i. the discovery and production of books of account and other documents at such place and such time
indicated by SEBI.
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 listed referred in section 12
of the Act at any place.
iv. inspection of any book or register or other document or record of any listed company or a public
company which intends to get its securities listed on any recognized stock exchange.
v. issuing commissions for the examination of witnesses or documents.
➢ ORDER BY SEBI
As per Section 11(4), the SEBI, may, by an order or for reasons to be recorded in writing, in the interest
of investors or securities market take any of the following measures either pending investigation or
inquiry or on completion of such investigation or enquiry namely:
a) suspend the trading of any security in a recognised stock exchange;
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b) restrain persons from accessing the securities market and prohibit any person associated with
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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, for a period not exceeding ninety days, bank accounts or other property 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.
However, the SEBI shall, within ninety days of the said attachment, obtain confirmation of the said
attachment from the Special Court, established under section 26A, having jurisdiction and on such
confirmation, such attachment shall continue during the pendency of the aforesaid proceedings and
on conclusion of the said proceedings, the provisions of section 28A shall apply.
Further, only property, 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.
The SEBI shall give an opportunity of hearing to such intermediaries or persons concerned either
before or after passing such orders.
➢ POWER TO ISSUE DIRECTIONS AND LEVY PENALTY
Issue of Directions
Section 11B of the Act provides that if the SEBI is satisfied, after making or causing to be made an
enquiry that it is necessary:
SEBI may issue such directions:
- to any person or class of persons referred to in section 12, or associated with the securities
market; or
- to any company in respect of matters relating to issue of capital, transfer of securities and
other matter incidental thereto. as may be appropriate in the interests of investors in
securities and the securities market.
1. in the interest of investors, or orderly development of securities market; or
2. to prevent the affairs of any intermediary or other persons referred to in section 12 being
conducted in a manner detrimental to the interests of investors or securities market; or
3. to secure the proper management of any such intermediary or person
➢ SEBI (INFORMAL GUIDANCE) SCHEME, 2003
In the interests of better regulation of and orderly development of the Securities market, SEBI has
issued SEBI (Informal Guidance) Scheme 2003 w.e.f. 24.06.2003. The following persons may make a
request for informal Guidance under the scheme:
a) any intermediary registered with the SEBI.
b) any listed company.
c) any company which intends to get any of its securities listed and which has filed either a listing
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application with any stock exchange or a draft offer document with the SEBI or the Central Listing
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authority.
d) any mutual fund trustee company or asset management company.
e) any acquirer or prospective acquirer under the SEBI (Substantial Acquisition of Shares & Takeovers)
Regulations, 1997. (Now the SEBI Takeover Regulation, 2011)
The Guidance Scheme, further deals with various aspects such as the nature of request, fees to be
accompanied along with request letter, disposal of requests, the SEBI’s discretion not to respond
certain types of requests and confidentiality of requests etc.
The informal guidance may be sought for and given in two forms:
• No-action letters: The SEBI indicates that the Department would or would not recommend
any action under any Act, Rules, Regulations, Guidelines, Circulars or other legal provisions
administered by SEBI to the Board if the proposed transaction described in a request made
under para 6 is consummated.
• Interpretive letters: The SEBI provides an interpretation of a specific provision of any Act,
Rules, Regulations, Guidelines, Circulars or other legal provision being administered by the
SEBI in the context of a proposed transaction in securities or a specific factual situation.
The request seeking informal guidance should state that it is being made under this scheme and also
state whether it is a request for a no-action letter or an interpretive letter and should be accompanied
with prescribed fees and addressed to the concerned Department of the SEBI.
It should also describe the request, disclose and analyse all material facts and circumstances involved
and mention all applicable legal provisions. The SEBI may dispose off the request as early as possible
and, in any case, not later than 60 days after the receipt of the request.
The Department may give a hearing or conduct an interview if it feels necessary to do so. The request
or shall be entitled only to the reply. The internal records or views of the SEBI shall be confidential.
The SEBI may not respond to the following types of requests:
a) those which are general and those which do not completely and sufficiently describe the factual
situation;
b) those which involve hypothetical situations;
c) those requests in which the requestor has no direct or proximate interest;
d) where the applicable legal provisions are not cited;
e) where a no-action or interpretive letter has already been issued by that or any other Department
on a substantially similar question involving substantially similar facts, as that to which the request
relates;
f) those cases in which investigation, enquiry or other enforcement action has already been initiated;
g) those cases where connected issues are pending before any Tribunal or Court and on issues which
are subjudice;
and
h) those cases where policy concerns require that the Department does not respond.
Where a request is rejected for non-compliance, the fee, if any, paid by the requestor shall be
refunded to him after deducting therefrom a sum of Rs. 5,000/- towards processing charges. However,
SEBI is not be under any obligation to respond to a request for guidance made under this scheme,
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and shall not be liable to disclose the reasons for declining to reply the request.
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➢ CONFIDENTIALITY OF REQUEST
• Any person submitting a letter or written communication under this scheme may request that
it receive confidential treatment for a specified period of time not exceeding 90 days from the
date of the Department’s response.
• The request shall include a statement of the basis for confidential treatment.
• If the Department determines to grant the request, the letter or written communication will
not be available to the public until the expiration of the specified period.
• If it appears to the Department that the request for confidential treatment should be denied,
the requestor will be so advised and such person may withdraw the letter or written
communication within 30 days of receipt of the advise, in which case the fee, if any, paid by
him would be refunded to him. l In case a request has been withdrawn under clause (c), no
response will be given and the letter or written communication will remain with the SEBI but
will not be made available to the public.
• If the letter or written communication is not withdrawn, it shall be available to the public
together with any written staff response.
A no-action letter or an interpretive letter issued by a Department constitutes the view of the
Department but will not be binding on the SEBI, though the SEBI may generally act in accordance with
such a letter. The letter issued by a Department under this scheme should not be construed as a
conclusive decision or determination of any question of law or fact by the SEBI. Such a letter cannot
be construed as an order of the SEBI under Section 15T of the Act and shall not be appealable. Where
a no action letter is issued by a Department affirmatively, it means that the Department will not
recommend enforcement action to the SEBI, subject to other provisions of this scheme.
Where the Department finds that a letter issued by it under this scheme has been obtained by the
requestor by fraud or misrepresentation of facts, notwithstanding any legal action that the
Department may take, it may declare such letter to be non-est and thereupon the case of the
requestor will be dealt with as if such letter had never been issued.
Where the SEBI issues a letter under this scheme, it may post the letter, together with the incoming
request, on the SEBI website in accordance with the Guidance Scheme.
➢ SECURITIES APPELLATE TRIBUNAL (SAT)
In order to afford proper appellate remedies, Chapter VIB of the SEBI Act provides for the
establishment of the Securities Appellate Tribunals (SAT) to consider appeals against the SEBI’s orders,
or penalties.
• Establishment of Securities Appellate Tribunals
• As per Section 15K, the Central Government is empowered to establish a Tribunal by
notification, to be known as the Securities Appellate Tribunal to exercise the jurisdiction,
power and authorities conferred on it or under the Act or any other law for the time being in
force.
• The Central Government shall also specify in the notification the matters and places in relation
to which the Securities Appellate Tribunal may exercise jurisdiction.
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• Composition of Securities Appellate Tribunal

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 According to Section 15 L, the Securities Appellate Tribunal shall consist of a Presiding Officer and
such number of Judicial Members and Technical Members as the Central Government may determine,
by notification, to exercise the powers and discharge the functions conferred on the Securities
Appellate Tribunal under this Act or any other law for the time being in force. Subject to the provisions
of this Act,—
a) the jurisdiction of the Securities Appellate Tribunal may be exercised by Benches thereof;
b) a Bench may be constituted by the Presiding Officer of the Securities Appellate Tribunal with two
or more Judicial or Technical Members as he may deem fit; However, every Bench constituted shall
include at least one Judicial Member and one Technical Member;
c) the Benches of the Securities Appellate Tribunal shall ordinarily sit at Mumbai and may also sit at
such other places as the Central Government may, in consultation with the Presiding Officer, notify.
The Presiding Officer may transfer a Judicial Member or a Technical Member of the Securities
Appellate Tribunal from one Bench to another Bench.
➢ Appeal to the Securities Appellate Tribunal
Section 15T and 15U deal with the appeal procedure and powers of Securities Appellate Tribunal.
• Any person aggrieved by an order of the SEBI made or by an order made by an adjudicating
officer under this Act or by an order of the IRDA or the PFRDA may prefer an appeal to a SAT
having jurisdiction in the matter.
• Within a period of forty-five days from the date on which a copy of the order made by the
SEBI or the Adjudicating Officer or the IRDA or the PFRDA as the case may be, is received by
him and it shall be in such form and be accompanied by such fee as prescribed.
• On receipt of appeal and after giving the parties to opportunity of being heard SAT, pass order
as thinks fit, confirming, modifying or setting aside the order appealed against.
• The Securities Appellate Tribunal may entertain an appeal after the expiry of the said period
of forty-five days if it is satisfied that there was sufficient cause for not filing it within that
period
• SAT shall dispose of the appeal within 6 months.
• a memorandum of appeal shall be presented in the Form by any aggrieved person in the
registry of the Appellate Tribunal within whose jurisdiction his case falls or shall be sent by
registered post addressed to the Registrar. A memorandum of appeal sent by post shall be
deemed to have been presented in the registry on the day it was received in the registry.
• Every memorandum of appeal shall set forth concisely under distinct heads, the grounds of
such appeal without any argument or narrative, and such ground shall be typewritten,
cyclostyled or printed neatly, legibly and numbered consecutively.
➢ Procedure of SAT
Section 15U lays down that the Securities Appellate Tribunal shall not be bound by the procedure laid
down by the Code of Civil Procedure, 1908, but shall be guided by the principles of natural justice and
subject to the other provisions of this Act and of any rules, the Securities Appellate Tribunal shall have
powers to regulate their own procedure including the places at which they shall have their sittings.
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➢ Right to Legal Representation
As per Section 15V, the appellant may either appear in person or authorise one or more chartered
accountants or company secretaries or cost accountants or legal practitioners or any of its officers to
present his or its case before the Securities Appellate Tribunal.
➢ Limitation
As per the Section 15W, the provisions of the Limitations Act, 1963 shall apply to an appeal made to
Securities Appellate Tribunal.
➢ Jurisdiction of Civil Court
Section 15Y lays down that no civil court has jurisdiction to entertain any suit or proceeding in respect
of any matter which an Adjudicating Officer appointed under this Act or a Securities Appellate
Tribunal under this Act is empowered by or under this Act to determine and no injunction shall be
granted by any Court or other authority in respect of any action taken or to be taken in pursuance of
any power conferred by or under this Act.
➢ Appeal to Supreme Court
Section 15Z lays down that any person aggrieved by any decision or order of the Securities Appellate
Tribunal may file an appeal to the Supreme Court within 60 days from the date of communication of
the decision or order of the Securities Appellate Tribunal to him on any question of law arising out of
such order. It has been provided that the Supreme Court may, if it is satisfied that the applicant was
prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within
a further period not exceeding 60 days.

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