Samacheer Kalvi 12th Commerce Notes Chapter 8 Securities Exchange Board of India (SEBI)

→ SEBI was first established in the year 1988 as a non-statutory body for regulating the securities market. It was made as an autonomous body by the Government of India on 12 May 1992 with SEBI Act 1992 being passed by the Indian Parliament. SEBI has its headquarters at the business district of BandraKurla Complex in Mumbai.

→ The various objectives of SEBI Regulation of stock exchanges are protection to the investors, checking the Insider Trading and control over Brokers.

→ SEBI is the nodal agency which safeguards the interests of an investor in the Indian Financial market. SEBI performs three key functions, Quasi¬legislative, Quasi-judicial and Quasi executive.

→ SEBI has wide powers regarding the stock exchanges and intermediaries dealing in Securities, power to impose monetary penalties, power to regulate Insider Trading. SEBI is also empowered by the Finance Ministry’ to nominate the members in the Governing body of every stock exchange.

→ Dematerialization is the process by which physical shares certificates of an investor are taken back by the company/registrar and destroyed.

→ Dematerialization is done at the request of the investor. Investor will first have to open an account with a DP (Depository Participant) and then request for dematerialization of certificates through the (D.P).

→ A demat account holds all the shares that are purchased in electronic or dematerialized form. Basically a demat account is to shares what a bank account is to money.

A demat account holds the certificates of financial instruments like shares, bonds, Government securities, mutual funds and exchange traded funds (ETFS).

→ Koushikaa’s father has gifted her the shares of a large cement company with which he had been working. The securities were in physical form. She already has a bank account and does not possess any other forms of securities. She wishes to sell the shares and approached a registered broker for the purpose. Mention one mandatory detail which she will have to provide with the broker.

  1. By opening a Demat Account through this account the shares can be sold.
  2. She has mentioned total number of shares of the cement company.
  3. She can mention Name of the company, types of shares and market value of shares of the company.

→ Mr. Kulandaivel was the Chairman of Thangam Bank. The bank was earning good profits. Shareholders were happy as the bank was paying regular dividends. The market price of their share was also steadily rising. The bank was about to announce taking over the ‘Trinity Bank’.

Mr. Kulandaivel knew that the share price of Thangam Bank would rise on this announcement. Being a part of the bank, he was not allowed to buy shares of the bank. He called one of the his rich friends Mr. Chandrasekaran and asked him to invest ₹ 5 crores in shares of his bank promising him the capital gains.

As expected, the share prices went up by 40% and the market price of Chandrasekaran’s shares was now ₹ 7 crores. He earned a profit of ₹ 2 crores. He gave ₹ 1 crore to Mr. Kulandaivel and kept ₹ 1 crore with himself. On regular inspection and by conducting enquires of the brokers involved, the Securities and Exchange Board of India (SEBI) was able to detect this irregularity. The SEBI imposed a heavy penality on Mr.Kulandaivel. By quoting the lines from the above paragraph, identify and state any two functions that were performed by SEBI in the above case.

Regulating, controlling, inspection and inquiries of share market by SEBI.

  1. The price (market) of their shares were controlled by SEBI.
  2. On regular inspection by conducting enquires SEBI was able to detect this irregularity and imposed a heavy penality on Mr. Kulandaivel.

Collect the information on various measures taken by SEBI to protect the interests of investors since its inception.

Investor awareness program:
Investor education and protection fund. Investor Assistance and Education. He knows how to invest and he has full knowledge and complete information about the market.

Send a group of students to a trading terminal in your city to gain first hand information on securities trading and prepare a report.

  1. Identifying information and related assets plus potential threats, Vulnerabilities and impacts.
  2. Evaluating the risks.
  3. Deciding how to address or treat the risk to avoid mitigate share or accept them.
  4. Selecting appropriate security control and implementing them.
  5. Monitoring activities making adjustment as necessary to address any issues, changes improvement opportunities.
  6. To offer guidance, policies industrial, standard, software legal liability and security awareness.

Collect information about SEBI action for Investor Protection taken during last two years.

The securities Exchange Board of India has sent notices to mutual fund companies that defaulted on fixed maturity plan payments. SEBI has taken action for not fulfilling the investor, protection norms by delaying the payment due on fixed maturity plan and for giving loan against shares.

SEBI has taken action on mutual fund on several issues that occurred in the recent past. Mutual fund which defaulted on fixed maturity plan scheme (HDFC and Kotak for delay in FMP).

Samacheer Kalvi 12th Commerce Notes