What are the achievements of SEBI?


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ACHIEVEMENTS OF SEBI:
(1) Guidelines to Issuing Companies: The SEBI had issued detailed guidelines for all
companies — old as well as new — for disclosure of information and protection of the
interests of investors. The guidelines relate to first issue of new companies, first issue
by existing companies, issue of convertible debentures, etc. The guidelines are in
addition to other legal provisions in existence.

After the abolition of the post of CCI, companies were allowed to approach the capital
markets without prior government permission subject to getting their offer documents
cleared by SEBI. In other words, SEBI was given the power to ‘control and regulate
the new issue market as well as the old issues market i.e. stock exchange.
SEBI has introduced a code of advertisement for public issues for ensuring fair and
truthful disclosures. SEBI has also made underwriting of issue optional subject to
certain conditions.
The purpose is to reduce the cost of issue. The purpose behind issuing these
guidelines is to give protection to small investors and avoid their exploitation due to
misleading information.
The SEBI can take action against companies if these guidelines are not followed in
the right spirit. The SEBI may issue fresh guidelines from time-to-time.
Companies have to take the consent of SEBI before bringing its new issue in the
market. This suggests that SEBI has now effective control on the new issue market.
This is one achievement of SEBI.
(2) Regulation of Portfolio Management Services: The highly infringed portfolio
management services (PMS) were placed under the regulation of SEBI since
January 11, 1993. This is the fourth financial activity to be brought under SEBI’s
control, the previous ones being stockbrokers and sub-brokers, merchant banking
and insider trading. The violations of the PMS scheme and similar schemes offered
by various banks and merchant banking subsidiaries had come to light during the
securities scam. The Janakiraman Committee had highlighted such blatant misuse in
its report published on August 26, 1992. The SEBI regulations evidently have been
framed keeping the securities scam in mind.
It is noticed that the role of RBI as supervisory head had been highly inefficient in
regard to PMS. The same is the case with the Finance Ministry. SEBI has now been
entrusted with the job of policing the portfolio managers and provide adequate
protection to the investors. This is a good beginning on the part of SEBI and can be
treated as one achievement of SEBI.
(3) Regulation of Mutual Funds: The Mutual Funds were placed under SEBI control on
January 20, 1993. Next to portfolio management services, it is the fifth financial
activity to be brought under SEBI’s regulatory framework. Mutual funds have been
barred from indulging in option trading, short selling or carrying forward transactions
in securities. Permission has been granted to invest only in transferable securities in
the money/capital market. Registration would be henceforth granted only to those
mutual funds who can prove their efficiency and conduct business in an orderly
manner, as stipulated by SEBI. These regulatory measures will improve the working
of mutual funds and take them on healthy lines. This is one area where SEBI is
playing a positive role.
(4) Action for Delays in Transfers and Refunds: SEBI has prosecuted many
companies for delaying share transfers and for delay in refund of public issue money.
This step gives protection to investors and avoids their exploitation through delayed
payments.
(5) Issue of guidelines to intermediaries: In 1991, the Narasimham Committee made
certain recommendations relating to capital market. It suggested that SEBI should
formulate a new set of guidelines to protect investors. By issuing different types of
guidelines, the SERI has executed this recommendation of the Committee and have –
issued guidelines to intermediaries. Such guidelines will give protection to investors
and will also control unfair practices of intermediaries operating on securities market.
This is an example of positive role of SEBI
(6) Guidelines on Takeovers and Mergers: SEBI has issued guidelines as regards
takeovers and mergers. The purpose is to ensure transparency in acquisition of
shares, fair and truthful disclosure through public announcement and avoidance of
unfair practices in takeovers and mergers. The guidelines issued by SEBI are for the
protection of the interest of small investors.
(7) Special Measures for Protection of Investors: SEBI has placed special emphasis
on investor protection, especially by insisting that issuers of capital and associated
market intermediaries provide full and fair information to prospective investors,
registration of market intermediaries and inquiring into investor complaints. This is a
move in the right direction. As a result, the market intermediaries will come under
effective supervision and control of SEBI in the near future.
(8) Education and Guidance of Investors: SEBI has brought out number of
publications for the education and guidance of investors and other intermediaries.
The publications include Investors’ Grievances – Rights and Remedies, Merchant
Bankers – Rules and Regulations, SEBI Act – 1992, SEBI Market Review and SEBI
News letter.
(9) Orderly Functioning of Stock Exchanges: SEBI is working for broadening the
membership of stock exchanges, shortening settlement periods, improving
transparency of transactions, promoting professionalism among brokers and
encouraging the stock exchanges to computerise their functions.
The measures noted above are for healthy growth of Indian stock exchanges. These
measures are likely to strengthen the functioning of stock exchanges in India. SEBI
has introduced longer and uniform trading hours in the stock exchanges. It has also
issued a statutory order dated 20 April, 1993, to stock exchanges directing them to
amend their Rules/Articles of Association for broad basing their governing bodies.
(10) Regulation of Foreign Institutional Investors: SEBI has started the registration of
foreign institutional investors. This is in pursuance of the government guidelines for
investments by foreign institutional investors issued in September, 1992. This is a
step in the right direction for effective control on such investors who are likely to
invest on a massive scale in the near future.
(11) Control on Merchant Banking: Merchant banking has been statutorily brought
under the regulatory framework of SEBI. Merchant bankers are now to be authorised
by SEBI. They have to adopt the stipulated capital adequacy norms, abide by the
code of conduct which specifies a high degree of responsibility towards investors in
respect of pricing and premium fixation of issues and disclosures in the prospectus.
‘Merchant bankers have now a greater degree of accountability in the offer document
and issue process.


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