Tag: TN Board 12th Commerce Important Questions Chapter 8

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

Question 1.
Write a short notes on SEBI.
Answer:

1. Securities and Exchange Board of India (SEBI) was first established in the year 1988 as a non-statutory body for regulating the securities market.
2. SEBI Act 1992 being passed by the Indian Parliament.
3. SEBI has its headquarters at the business district of BandraKurla Complex in Mumbai.
4. SEBI is to regulate stock exchanges safeguarding the interest of investors by means of adequate education and guidance.

Question 2.
Write any two objectives of SEBI.
Answer:

1. The first objective of SEBI is to regulate stock exchanges. So that efficient services may be provided to all the parties operating there.
2. SEBI is to provide security to the investors.
3. Many steps have been taken to check insider trading through the medium of the SEBI.

Question 3.
What is Demat account?
Answer:
A demat account holds all the shares that are purchased in electronic or dematerialized form. Basically, a demat account is to shares. Like the bank account a demat account holds the certificates of financial instruments like shares, bonds, Government securities, mutual funds and Exchange Traded Funds (ETFS).

Question 4.
Mention the headquarters of SEBI.
Answer:
The business district of BandraKurla Complex in Mumbai and has Northern, Eastern, Southern and Western Regional offices in New Delhi, Kolkata, Chennai and Ahmedabad respectively.

Question 5.
What are the various ID proofs?
Answer:

1. Pan Card
2. Voters ID
3. Passport
4. Driver’s License
5. IT Returns
6. Telephone bill
7. Electricity bill

Question 6.
What is meant by Dematerialization?
Answer:

1. Dematerialization is the process by which physical certificates of an investor are taken back by the company/registrar and destroyed.
2. An equivalent number of securities in the electronic form are credited to the investors account with his Depository Participant.
3. Dematerialization is done at the request of the Investor.
4. Trading in dematerialized shares commenced on the NSE in December 1996 where Reliance Industries was the first company to trade its 100 shares in demate form.
5. In case of the BSE, dematerializations of shares commenced in the year December 1997.

Question 7.
What are the documents required for a Demat account?
Answer:
You need to submit proof of identity and address along with a passport size photograph and the account opening form. Only photocopies of the documents are required for submission but originals are also required for verification.
List of documents that can be used as proofs
(i) Proof of Identity:
Pan Card, Voter’s ID, Passport, Driver’s License and IT Returns

(ii) Proof of Address:
Ration Card, Passport, Voter ID Card, Bank Pass Book, residence telephone bills, electricity bills.

Question 8.
What is the power of SEBI under Securities Contract Act?
Answer:

1. For effective regulation of stock exchange, the Ministry of Finance issued a Notification on 13 September 1994.
2. It is delegating several of its power under the securities contracts (Regulations) Act to SEBI.
3. SEBI is also empowered by the Finance Ministry to nominate three members on the Governing Body of every stock exchange.

Question 9.
What is meant by Insiders trading?
Answer:

1. Insider trading means the buying and selling of securities by directors, promoters etc who have access to some confidential information about the company.
2. Who wish to take advantage of this confidential information.
3. This affects the interest of the general investors. Many steps have been taken through medium of the SEBI.

Question 10.
Draw the organization structure of SEBI.
Answer:
Organization Structure of SEBI

Question 11.
What are the functions of SEBI?
Answer:
Securities and Exchange Board of India (SEBI) is the nodal agency which safeguards the interest of an investor in the Indian Financial Market. SEBI performs three key functions, Quasi legislative, Quasi-judicial and Quasi executive.

1. Safeguarding the interests of investors by means of adequate education and guidance.
2. SEBI makes rules and regulation that must be followed by the financial Intermediaries like port folio exchanges, underwriters and merchant bankers etc.
3. Regulating and controlling the business on stock markets. Registration of brokers and Sub-brokers is made mandatory and they have to abide by certain regulations and rules.
4. Barring insider trading in securities.
5. Prohibiting deceptive and unfair methods used by financial intermediaries operating in securities markets.
6. Registering and controlling the functioning of stock brokers, Sub-brokers, Share transfer agents, bankers, trustees, registrars, managers and various other intermediaries to linked to securities markets.
7. SEBI issues Guidelines and Instructions to business concerning capital issues.
8. Promoting self-regulatory organization of Intermediaries.
9. SEBI regulates mergers and acquisitions as way to protect the interest of investors.
10. Provide appropriate training to financial intermediaries.

Question 12.
Explain the powers of SEBI.
Answer:
Powers relating to Stock Exchanges and Intermediaries:
SEBI has wide powers regarding the stock exchanges and intermediaries dealing in securities.
Power to Impose Monetary Penalties:
(i) SEBI has been empowered to impose monetary penalties on capital market intermediaries and other participants for a range of violations.
(ii) It can even impose suspension of their registration for a short period.

Power to Initiate Actions in Functions Assigned:
SEBI has a power to initiate actions in regard to functions assigned.

Power to Regulate Insider Trading:
SEBI has power to regulate insider trading or can regulate the functions of merchant bankers.

Powers under Securities Contracts Act:
The Ministry of Finance issued a Notification on 13 September 1994 delegating several of its powers under Securities Contracts (Regulations) Act to SEBI.

Power to Regulate Business of Stock Exchanges:
SEBI is also empowered to regulate the business of stock exchanges intermediaries associated with the securities market.

Question 13.
What are the benefits of Dematerialisation?
Answer:

1. The risk pertaining to physical certificates like loss, theft, forgery and damages are eliminated completely, with a Demat Account.
2. Lack of paper work enable quicker transactions and higher efficiency in trading.
3. Trading has become more convenient as one can trade through computers at any location.
4. The shares that are created through mergers and consolidation of companies are credited automatically in the Demat account.
5. As all the transactions occur through the depository participant.
6. Certain banks also permit holding of both equity and debt securities in a single account.
7. Banks also provide dedicated and trained customer care officers to assist through all the procedures.
8. A Demat account holder can buy or sell any amount of shares. There is limit on the number of transactions done using physical securities.

Choose the correct answer:

Question 1.
Securities Exchange Board of India was first established in the year:
(a) 1988
(b) 1992
(c) 1995
(d) 1998
Answer:
(a) 1988

Question 2.
The headquarters of SEBI is:
(a) Calcutta
(b) Bombay
(c) Chennai
(d) Delhi
Answer:
(b) Bombay

Question 3.
In which year SEBI was constituted as the regulator of capital markets in India?
(a) 1988
(b) 1992
(c) 2014
(d) 2013
Answer:
(a) 1988

Question 4.
Registering and controlling the functioning of collective investment schemes as:
(a) Mutual Funds
(b) Listing
(c) Rematerialisation
(d) Dematerialization
Answer:
(d) Dematerialization

Question 5.
SEBI is empowered by the Finance ministry to nominate members on the Governing body of every stoAnswer:ck exchange.
(a) 5
(b) 3
(c) 6
(d) 7
Answer:
(b) 3

Question 6.
The process of converting physical shares into electronic form is called:
(a) Dematerialisation
(c) Delisting
(c) Materialisation
(d) Debarring
Answer:
(a) Dematerialisation

Question 7.
Trading is dematerialized shares commenced on the NSE is:
(a) January 1996
(b) June 1998
(c) December 1996
(d) December 1998
Answer:
(c) December 1996

Question 8.
________ was the first company to trade its shares in Demat form.
(a) Tata Industries
(b) Reliance Industries
(c) Infosys
(d) Birla Industries
Answer:
(b) Reliance Industries

Question 9.
_____ enables small investors to participate in the investment on share
(a) Mutual Funds
(b) Shares
(c) Debentures
(d) Fixed deposits
Answer:
(a) Mutual Funds

Question 10.
PAN stands for:
(a) Permanent Amount Number
(b) Primary Account Number
(c) Permanent Account Number
(d) Permanent Account Nominee
Answer:
(c) Permanent Account Number

TN Board 12th Commerce Important Questions