What is SEBI ? What are its functions and powers?
Ans :- Based on the recommendations of Narasimham Committee as well as of other committees, to overcome the undesirable practices in the stock exchange "Controller of Capital Issues" was established in the year 1988 and derived authority from Capital Issues Act, 1947.
Later on, SEBI came into existence through the SEBI Act, 1992 by the Indian Parliament and was given statutory powers. In the year 1995, SEBI was given additional statutory powers by Government of India through an amendment to SEBI Act, 1992.
SEBI is managed by its members which consists of
(a) the chairman who is nominated by Govt. of India
(b) two members i.e., officers from Union Finance Ministry,
(c) one member from the RBI
(d) the remaining five members are nominated by Union Government of India, out of them atleast three shall be whole time members.
Read Notes :- What is Stock Exchange? Explain its functions
Functions: SEBI has three functions rolled into one body i.e.,
(1) quasi legislative
(2) quasi judicial
(3) quasi executive
It drafts regulations in its legislative capacity, (quasi legislative), it conduct investigation and enforcement action in its executive function (quasi judicial) and it passes rulings and orders in its judicial capacity (quasi executive). These functions may be summarized as:
1) Educate investors and imparting training to the intermediaries of securities.
2) Controls the working of stock exchanges.
3) Register and regulate the working of intermediaries such as stock brokers, merchant bankers, underwriters etc.
4) Regulate working of collective investment schemes including mutual funds.
5) Conducts audits and inspections.
6) Restricts insider trading of securities.
Though the SEBI is very powerful, there is an appeal process to create accountability Firstly, there is a Securities Appellate Tribunal which is a three member tribunal and secondly an appeal can be made to the supreme court. SEBI has taken a very proactive role in streamlining disclosure requirements to international standards.
Powers:
For the discharging of its functions efficiently, SEBI is vested with the following powers
1) To approve and amend the by-laws of stock exchange.
2) To inspect the books of accounts of financial intermediaries.
3) To inspect the books of accounts and call for periodical returns from recognized stock exchanges.
4) To mandate the companies to list their shares in one or more stock exchanges.