10/21/2010 1 The Role of SEBI in India The Watchdog of Indian Market GroupNo.

22 The Great Indian Bazaar Securities Market in India Resource Mobilization in Primary Market 2 Indian Share Market is the oldest Asian stock market Incorporated way back in 18 75, BSE. 1994 BSE Market Cap (Sep 2010) NSE Market Cap (Sep 2010) $ 1.58 Trillio n $ 1.54 Trillion Source: RBI Website NSE 1

10/21/2010 Why a Watchdog? The Need of a Regulatory Body in India 3 Absence of conditions of perfect competition in the securities market The i in T h rise i no. of i f investors t increase i malpractices in i l ti Erosion of Investor Confidence The Government and the stock exchanges were helpl ess, the existing legal framework just not enough The Genesis Securities & Exchange Board of India 4 Constituted by the Government of India in 1922 with SEBI Act Similar to the Secu rities Exchange Commission in the US Chaired by Shri C. B. Bhave Bound by the Ce ntral Govt. which directs policies Vision: To be the most dynamic and respected r egulator - globally. sebi.gov.in 2

10/21/2010 The Genesis SEBI - Departments 5 SEBI Market Intermediaries Regulation & Supervision Market Regulation Derivatives & New Products Corporation Finance Investment Management SEBI Integrated Surveillance Investigations Enforcement Legal Affairs Enquiries & Adjudication SEBI Office of Investor Assistance & Education General Services Department of Economic & Policy Analysis Office of the Chairman Regional Offices Scope & Objectives Securities & Exchange Board of India 6 Primary Market Corporate Debt Market Secondary y Market Demat & Derivatives SEBI Venture Capital Foreign Institution Investors Takeovers & Legal Affairs Mutual Funds

10/21/2010 Scope & Objectives Securities & Exchange Board of India 7 To protect the interests of investors in securities To promote the development o f Securities Market Ensuring steady flow of savings into the market To regulate the Securities Market Easy Availability of funds at low costs To develop a code of conduct and fair practices by the intermediaries involved i n the capital markets For matters connected therewith or incidental thereto Functions Securities & Exchange Board of India 8 Regulating the business in stock exchanges Regulating the working of Stock brokers, Share transfer agents, merchant bankers, underwriters, portfolio m anagers Depositories custodians of securities, foreign institutional investors, c redit rating agencies Venture capital funds and collective investment schemes inc luding mutual funds Maintaining fair trade practices relating to stock markets Regulation of acquisition of shares and take-over of companies Inspection, Inquiries and Audits of the stock exchanges, intermediaries and othe r self-regulatory organizations in the securities market 4

10/21/2010 Powers Securities & Exchange Board of India 9 Undertake inspection of any book, or register, or other document or record of an y listed public company Suspend the trading of any security in a recognized stoc k exchange Restrain persons from accessing/buying/selling the securities market Suspend any office-bearer of any stock exchange or self-regulatory organization Impound and retain the proceeds or securities in respect of any transaction whic h is under investigation My Company wants to get listed Understanding SEBI Series 10 Stakeholder/Party Dalal SonsPrivateLimited Objective Dalal SonswishestomakeapublicofferofRs. 80Lakhs.Canitdoso? HowcanSEBI help?

IfValue>Rs50lacs,adrafttobefiledwithSEBI SEBIsDIPguidelines(1992)tob sthecompliancewith g itsDIPguidelines Constraints

MinimumNetTangibleAssets 3crores for3years IssuesSize NotExceeding5times mNetWorth 1crorein3years Issuetobeopenedwithinthreemonthsfromthe dateof 5

10/21/2010 I want to invest in Mutual Funds Understanding SEBI Series 11 Stakeholder/Party Mr.Deen Dayal Trivedi Objective Mr.DDTwishestoinvestinMutualFunds.Will itbeaSafebet? HowcanSEBI help? SEBI approved Asset Management Company (AMC) manages the funds by making investm ents in various types of securities All mutual funds are required to be register ed with SEBI before they launch any scheme y y Constraints Two thirds of the directors of trustee company or board of trustees must be inde pendent 50% of the directors of AMC must be independent We want to invest in India Understanding SEBI Series 12 Stakeholder/Party Maze International Co. Objective Maze Inc. (US) wants to invest their proprietary funds in Indian stock market HowcanSEBI help? Form A to be filed by the company under SEBIs Regulation 1995 SEBI validates the relevant documents and finally issues the registration certificate Constraints Registration fee of US $ 5,000 The applicant has to take permission from RBI und er the provisions of FEMA 1999 Appoint a designated bank to route its transactio ns 6

10/21/2010 I wish to go Online! Understanding SEBI Series 13 Stakeholder/Party Ms. Sheetal Anand Sheetal wants to trade online and hence dematerialize her shar es of Reliance. Can she do so? Objective HowcanSEBI help? SEBI (Depositories and Participants) Regulations, 1996 determine whether they wi ll be eligible or not Constraints She needs a depository account Securities will be in the name of the account hol ders and owned by her We want to Invest Venture Capital Understanding SEBI Series 14 Stakeholder/Party Robin Venture Asset Management Objective Invest in the innovative online travel business to be started by Anil Bros. HowcanSEBI help? SEBI Act, 1992 and SEBI (Venture Capital Fund) Regulations, 1996 Company plannin g to carry out activity of a VCF should obtain a grant of certificate by SEBI. Constraints The VCF should be set up under the Central or State legislations, should have th e certificate from SEBI The VCF cannot accept investment < 5 Lacs VCF should hav e firm commitment of at least 5 Cr. from the Investors VCF cannot invest 25% of the funds in one Venture Capital Undertaking 7

10/21/2010 We believe in Inorganic Growth Understanding SEBI Series 15 Stakeholder/Party Batra &Co. Batra & Co. wants to acquire Noveltec Corporation Protect Shareholders interest Acquirer company to open an escrow account before m aking a Public Announcement, which will be distributed to the various stakeholde rs in case the Acquirer fails to make the subsequent payment Ensuring that the r egulation constraints are met Objective HowcanSEBI help? Constraints Target company should be a listed company Public Announcement is to be made for an open offer Minimum Offer of 20% shares to be made (Exceptions possible) Perio dic disclosures have to be made on acquiring shares above threshold values Time-line Benchmarks For Activities Involving Public Interface 16 Activity Fresh registration - FIIs Fresh registration - Credit Rating Agencies Fresh regi stration - Brokers Cancellation/surrender of broker /sub brokers Approval for Tr ustees of Mutual Funds Applications for foreign securities / ADRs/GDRs Investor Complaints Benchmark Time line 7 days 30 days 30 days 30 days 7days 7days Investor complaints within the jurisd iction of SEBI within 7 days 8

10/21/2010 SEBI -The Darker Side Malpractices & Failures 17 Manipulation of security prices Price Rigging The Osian Art Fund Satyam Fraud Case Insider Trading Delay in Settlement Harshad Mehta Case Ketan Parekh Incident Delay in listing and commencement of trading in shares MS Shoes rigged prices of company shares (1995) SEBI -The Darker Side Malpractices & Failures 18 Harshad Mehta in 1992 had caught the SEBI napping. -A Journalist SEBI has become like a programmed watchdog. The robbery takes place right under i ts nose but it barks only the next morning when its owner (the Ministry of Finan ce) asks it to do so. so. - Sujay Marathi, Journalist, mouthshut.com 9

10/21/2010 References 19 SEBI Website sebi.gov.in sebi gov in Principles of Corporate Finance by Brealey, Myers, Allen & Mohanty, India Edition Legal Service India, a premier and leading Indian Legal portal focused on law an d government www.icmrindia.org/casestudies finance.indiamart.com 20 Your securities & interest are being guarded Go ahead, Seal a Deal Today! Presentedby: GroupNo.22 10

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GroupNo.22 Aarooshi R i K A hi Rai Kumar(PGP10094),Arpan A (PGP 10 094) A Anand (PGP 10 106) Hi d (PGP10106),Himanshu Sh h Sharma(PGP10122), (PGP 10 122) Mayank Garg (PGP10132), na Bagrodia (PGP10146),Priya Badri (PGP10151) PGDM201012

SPJainInstituteofManagement&Research,Mumbai SP Jain Institute of Management & Resear Mumbai 11