Meaning Stock exchange is an organised and regulated market for trading in various securities issued by companies and other institutions.

Securities and exchange board of India act, 1992 SEBI receive the assent of the parliament on 4 th April Further on may 29, 1992 the government issued an ordinance abolishing the capital issues control act,1947.

PURPOSE OF THE SEBI ACT  To protect the interests of investors in securities.  it provide grievance redressal mechanism for investor. 2) To promote the development of securities market. 3) To regulate the securities market and for matters connected therewith. 4) To ignore the fraudulent and unfair trade practices relating to securities market.

Management of the board

 Formation of the board :-  The board shall consist of the following members:- (a) A chairman (b) two members from amongst the officials of the ministry of the central government dealing with finance and administration of the Act (c) one members from amongst officials of reserve bank. (d) five other members of whom atleast three shall be the whole time members to be appointed by central govt.

(2) The term of office and conditions of service :- it shall be such as may be prescribed. Termination :- any time before the expiry of prescribed period by giving not less than three months notice in writing and 3 months salary and allowances in lieu thereof. (3) Removal of member from office:- If member :- (a) is, or at any time has been adjudicated as insolvent (b) Is of unsound mind (c) has been convicted of an offence involving moral turpitude (d) Has so abused his position.

(4) Meetings (a) board shall meet at such time and places and shall observe such rules of procedure In regard to the transaction of business at its meetings as may be prescribed by regulations. (b) decisions at the meeting are to be made by majority vote of the members present and voting and in the event of any equality of votes the chairman or presiding member has a second or casting vote.

Functions of SEBI  Section 11 of the SEBI Act specifies the duties of SEBI is to:-  Protect the interest of the investor  to promote and regulate the security market.  The following measures are to be taken by SEBI to fulfill its duties:- A) Regulating the business of stock exchanges and many other security market.

B) Registering and regulating the working of:  brokers  Sub-brokers  Trustee of trust deal  Portfolio manager  Merchant banker & etc. C) Regulating and registering the venture capital fund and collective investment scheme. D) Promoting and regulating self-regulatory organization.

E) Prohibiting fraudulent and unfair trade practices. F) Prohibiting insider trading. G) Promoting investor’s education and training. 2. power of inspection The board have power to take inspection of any:  Book  Register  Or other document  Or record of any listed public company.

3.Powers to court The board shall have the power as are vested in a civil court under the code of civil procedure 1908 namely:-  inspect any book and register of a company.  Inspect any book and register of any person referred in section 12.  Issuing commissions for the examination of witnesses or document.  Enforcing the attendance of persons and examining them.

4. POWER IN THE INTEREST OF SECURITIES MARKET The board have following powers for interest of stock market :-  Suspend the trading of any security in a recognized stock exchange.  Prohibiting any person associated with security market.  Suspend any office –bearer of any stock exchange from holding such position.  Restrict the procedure of any transactions which are under investigation.

5.Powers regarding protection of investor  The board may, for the protection of investors:  Specify by regulations- i. the matters relating to issue of capital transfer of securities and other matters incidental there to; ii. The manner in which such matters shall be disclosed by companies

 By general or special orders i. Prohibit any company from issuing of prospectus any offer documents ii. Specify the condition to which the prospectus, or such offered documents,if not prohibited may be issued. 6.power to issue directions The board have power to issue following directions:-  In the interest of investor  In the development of security market  To prevent the affairs of any intermeditary in sec.12.

7.Registration of Broker and Sub-Broker  Without certificate of registration stock broker and sub-broker,agents, merchant bankers,share transfer agents, registrar to an issue underwriter are not allowed to deal in securities markets.

8.Prohibition of Insider Trading and manipulating  No person shall directly or indirectly :- a) Engage in insider trading b) Engage in any act, practice,course of business which consider as fraud or deceit upon any person. c) Or employ any device or scheme to defraud in connection with issue or dealing in securities which listed.

Penalties and Adjudication

 penalty for failure to furnish information,return etc (section 15(A))  Fails to furnish any document return or reports = one lakh rupees for each day during which such failure continues or one crore rupees whichever is less.  to file any return or furnish any information, books or other documents= One lakh rupees for each day during which such failure continues or one crore rupees whichever is less.  Fails to maintain books of accounts or records = One lakh rupees for each day during which such failure continues or one crore rupees whichever is less.

penalty for failure by any person to enter into agreement with clients (sections 15 (B)). Penalty = One lakh rupees for each day during which such failure continues or one crore rupees whichever is less.  penalty for failure to redress investors grievances (sections 15 (C)). Penalty = One lakh rupees for each day during which such failure continues or one crore rupees whichever is less.

 Penalty for certain defaults in case of mutual funds (sections 15 (D)). (a) without obtaining certificate of registration Penalty = One lakh rupees for each day during which he sponsors or carries on any such collective investment scheme including mutual funds or one crore rupees whichever is less. (b) fails to comply with the terms and conditions of the certificate. (c) Fails to make an application for listing its schemes (d) fails to dispatch unit certificate of any scheme in the manner provided in the regulation of governing such dispatch. (e) fails to refund the applications monies paid by the investor within the period specified in the regulations. (f) fails to invest money collected by such collective investment schemes.

 penalties of failure to observe rules and regulations by an asset management company. Penalty = One lakh rupees for each day during which such failure continues or one crore rupees whichever is less.  Penalty for default in case of stock brokers (a) fails to issue contract note = 5 times the amount for which the contract note was required to be issued by the broker. (b) fails to deliver any security or fails to make payment of the amount due to the investor. Penalty = One lakh rupees for each day during which such failure continues or one crore rupees whichever is less. (c) Charges an amount of brokerage which is in excess of the brokerage specified in the regulations. Penalty = One lakh rupees for each day during which such failure continues or one crore rupees whichever is higher.

 Penalty for Insider Trading (section 15(G)). If any insider who –  Either on his behalf or on the behalf of any other person, deals in securities of body corporate listed on any stock exchange on the basis of any unpublished price sensitive info ; or  communicates any unpublished price sensitive info. To any person, with or without his request for such info. Except as required in the ordinary course of business or under any law;  Counsels, or procures for any other person to deal in any securities of any body corporate on the basis of unpublished price sensitive info., shall be liable to a penalty of twenty five crore rupees Or 3 times the amount of profits made out of the insider trading which ever is higher.

 Penalty for non disclosure of acquisition of shares and takeovers (section 15(H)) if any person who is required under this act or any rules regulations made there under fails to- (a) disclose the aggregate of the shares holding in the body corporate before he acquires any share of that body corporate; (b) make a public announcement to acquire shares at a minimum price; (c) make a public offer by sending letter of offer to the share holders of the concerned company ; or (d) make payment of consideration to the share holders who sold their shares pursuant to better of offers. shall be liable to a penalty of twenty five crore rupees Or 3 times the amount of profits made out of the failure which ever is higher.

 Penalty for fraudulent and unfair trade practices( section 15 HA) shall be liable to a penalty of twenty five crore rupees Or 3 times the amount of profits made out of the such practices which ever is higher.  penalty for contravention where no separate penalty ahs been provided (section 15 HB) shall be liable to a penalty which may extend to 1 crore rupees.  Power to adjudicate (section 15 I) (a) the board shall appoint any of its officers not below the rank of Division Chief to be an adjudicating officer.  Penalty to be taken into account by adjudicating officer (section 15J) while adjudging the quantum of penalty under section 15(I) (a) the amount of the disproportionate gain an unfair advantage, where quantifiable, made as a result of the default; (b) the amount of loss caused to an investor or the group of investors as a result of default; (c) the repetitive nature of default.

Presented by :-  Meenu  Tamanna  Kirandeep kaur  Ravina  B.com II (a)