SEBI IN CAPITAL MARKET ISSUES

During the late 80, the GOI decided to replace the Controller of Capital Issues Act, by way of inducting the Securities Exchange Board of India, in order to introduce the regulatory environment in the Indian capital market, to pave way for the promotion of congenial and conducive climatic condition for the investing public. Hence the Government of India has instituted the supreme authority SEBI to monitor and control the proceedings SEBI in Capital Market Issues
of the capital market in the country.
OBJECTIVES OF THE SEBI
To replace the office of the following major acts of implementation and to attain
the following objectives:
Control of Capital Issues Act (1947)
The Companies Act (1956) - issue, allotment of the securities and disclosures
Securities contract regulation Act (1956) - to control over the stock exchanges
In May, 1992 - the controller of issue of capital, pricing of the issues, fixing premia
and rates of debentures were ceased in operation, provided the SEBI was
promulgated.
Protecting the interest of the investors
Promoting the development of the securities market
Regulating the securities market
ENTITY OF SEBI
It was registered with the common seal and with the power to acquire, hold and dispose any property
Power to sue or to be sued in its own name
The Head office is situated in Mumbai; in addition the regional offices were established in the following metropolitan cities viz Kolkata, Chennai and Delhi, to
monitor and control the capital market operations across the country
ORGANISATIONAL GRID OF THE SEBI
Six members in the committee
1 Headed by the chairman
2 One member each from the ministries of Law and Finance
3 One member from the officials of Reserve Bank of India
4 Two nominees from the central government
5 It contains 4 different departments viz Primary department, Issue management and
intermediaries department, Secondary department and Institutional Investment department
POWERS AND FUNCTIONS OF SEBI
Regulating the business of the stock exchanges
Regulating the role of the intermediaries
Registering and regulating of depositories, participants and custodian of securities,
credit rating agencies
Regulating of mutual funds and venture capital funds
Prohibiting the unfair trade practices
Prohibiting of insider trade activities
Regulating substantial takeovers and acquisitions
Frequent conduct of research activities
To conduct any enquiry which warrants the situation to safeguard the interest of
the investors
Civil Court Procedure 1908: The SEBI has been given additional powers and
functionswith reference to Civil Court Procedure 1908 to regulate the capital market in
addition to the above enlisted powers and functions
Discovery and production of books of account of the errant during the inspection
and enquiry.
Summoning and enforcing the attendance of the persons to stand before for the
examination of oath.
Acc to Sec 12 SEBI is empowered to conduct Inspection of books
ROLE OF SEBI
Entry norms for the companies at the moment of raising the capital from the
market:
The companies are expected to produce 3 years dividend track record of
preceding the issue.
At the entry level, immediately after listing, important point to be ensured is
that Post issue of networth should be 5 times greater than the Pre issue
networth.
If it is a manufacturing company without any track record, wants to raise any
capital from the market, the appraisal has to be done through development
banks or commercial banks.
Having three years track record, the SEBI never vets offer document of the
issue of capital.
Promoter's Contribution
Promoter's contribution should not be less than 20% and should be made before
the issue.
If the size of the issues is Rs. 100 cr -50% of the contribution should be made
before the opening of issue and the remaining should be paid before the calls are
made to the investors.
Disclosures
Acc.Bhave committee- Financial results i.e., unaudited and audited financial results
should be published.
Risk factors and positions of the company should be highlighted in detail in the
prospectus .
Book Building
75% route was specified at the early moment in the process of book building. Then
the book building process was opened to 100% route to the public.
Sufficient opportunities are to be furnished to the investors to represent through the
terminal to take part in the process of Book building.
The company during the process requires 30 centers atleast for book building process
to raise the share capital from the market.
Allocation of Shares
The Minimum application was -100 Nos for subscribing the issue of share capital.
Then the Minimum application was hiked to 500 Nos. Then SEBI has felt that the
Minimum application was too high, which did not pave the small investors to within
the available surplus, then the minimum application brought down to 200 Nos.Small investors are who hold 1000 shares or few securities SEBI in Capital Market Issues
Allotment should be done within 30 days from the date of closure of the issue.
During the non allotment of the shares, the company should refund the amount of
the application money.

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