POWERS AND FUNCTIONS OF SEBI

POWERS AND FUNCTIONS OF SEBI
Chapter IV of SEBI Act, 1992 deals with the powers and functions of SEBI. Section 11 of the Act lays down that
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. Section 11(2) provides that these
measures would include:
(a) regulating the business in stock exchanges and any other securities markets;
(b) registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to
an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio
managers, investment advisers and such other intermediaries who may be associated with securities
markets in any manner;
(ba) registering and regulating the working of the depositories, participants, custodians of securities, foreign
institutional investors, credit rating agencies and such other intermediaries as SEBI may, by notification,
specify in this behalf;
(c) registering and regulating the working of venture capital funds and collective investment schemes,
including mutual funds;
(d) promoting and regulating self-regulatory organisations;
(e) prohibiting fraudulent and unfair trade practices relating to securities markets;
(f) promoting investors’ education and training of intermediaries of securities markets;
(g) prohibiting insider trading in securities;
(h) regulating substantial acquisition of shares and takeover of companies;
(i) calling for information from, undertaking inspection, conducting inquiries and audits of the stock
exchanges, mutual funds, other persons associated with the securities market, intermediaries and self-
regulatory organisations in the securities market;
(ia) calling for information and records from any person including any bank or any authority or board or
corporation established or constituted by or under any central or state Act, which in the opinion of SEBI,
shall be relevant to any investigation or inquiry by SEBI in respect of any transaction in securities.
(ib) calling for information from or furnishing information to other authorities. Whether in India, or outside India
having functions similar to those of SEBI, in the matters relating to the prevention or detection of violation
in respect of securities laws, subject to the provisions of other laws for the time being in force in this regard.
However, SEBI for the purpose of furnishing any information to any authority outside India, may enter
into an arrangement or agreement or understanding with such authority with approval of the Central
Government.
(j) performing such functions and exercising such powers under the provisions of the Securities Contracts
(Regulation) Act, 1956, as may be delegated to it by the Central Government;
(k) levying fees or other charges for carrying out the purposes of this section;
(l) conducting research for the above purposes;
(la) calling from or furnishing to any such agencies, as may be specified by SEBI, such information as may
be considered necessary by it for the efficient discharge of its functions;
(m) performing such other functions as may be prescribed.
Section 11(2A) prescribed 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 (not being intermediaries referred to
in section 12) 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.
Section 11(3) of SEBI Act provides that for carrying out the duties assigned to it under the Act, 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 in section 12 of the Act,
namely stock brokers, sub brokers, share transfer agents, bankers to an issue, trustee of trust deed,
registrar to an issue, merchant bankers, underwriters, portfolio managers, investment advisors and
other such intermediaries associated with securities markets 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.
As per Section 11(4) 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.
(b) restrain persons from accessing the securities market and prohibit any person associated with 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 one month, with prior approval of a magistrate of the first class having
jurisdiction, one or more bank accounts of any intermediary or any person associated with the securities
market in any of the Act or rules or regulations made thereunder.
However, only the 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 regulations
made there under shall be allowed to be attached.