Power of SEBI to regulate Issue of Securities, etc.
What is SEBI?
SEBI stands for Securities and Exchange Board of India, and it was founded in 1988. It was given statutory authority on January 30, 1992, by the SEBI Act 1992, and it became an autonomous entity on April 12, 1992, by the Indian government. The company's headquarters are in Mumbai, with regional zonal offices in New Delhi, Ahmedabad, Chennai, and Kolkata. The securities of Exchange Board of India (SEBI) is the regulation for the securities market in India owned by the government of India, securities include shares, debentures, bonds etc. SEBI works as regulating such markets by forming rules and regulations for such companies and supervise them to know whether they are working according to its rules or regulations or not. SEBI has also developed two advisory groups, which are made up of market participants, investors' associations, and experts with critical capital knowledge. These committees are established to provide significant guidance and recommendations in the development of SEBI policy.
Powers of SEBI –
· It has the authority to create and regulate stock exchange bylaws.
· It has the authority to issue a notice to anyone suspected of being a terrorist and can question them under oath.
· It has the authority to check documents, accounting books, and any intermediaries.
· SEBI has the authority to inspect any document witness under the supervision of the Security Commission in order to prevent any fraudulent activity.
Roles & Functions of SEBI –
SEBI's major goal is to oversee the laws and regulations in order to prevent malpractices and frauds. The Securities and Exchange Commission (SEBI) assists in the representation of investors' interests. SEBI was established to safeguard the interests of three distinct groups.
It is in charge of policing security market malpractices and fraudulent transactions. It is in charge of broker and sub-broker registration, also regulates insider trading and punishes those who engage in it and aids in the flexibility of the stock market's operation. To avoid any sort of fraud, the SEBI supports investor education and intermediary training.
Section 24 of Indian Companies Act 2013 –
The Securities and Exchange Board of India has the authority to control and transfer securities under Section 24 of the Indian Companies Act 2013. The following provision of the Indian Companies Act 2013 pertains to SEBI's power to regulate and transfer securities, among other things that are:
(1) Except as otherwise provided in this Act, the Securities and Exchange Board shall administer the provisions of this Chapter, Chapter IV, and section 127 insofar as they relate to I the issue and transfer of securities; and (ii) the non-payment of dividends by listed companies or companies intending to get their securities listed on any recognised stock exchange in India, by making regulations in this regard. Otherwise, the Central Government will be in charge of administration. For the avoidance of doubt, it is hereby declared that the Central Government, the Tribunal, or the Registrar, as the case may be, shall have complete authority over all other matters relating to prospectus, return of allotment, redemption of preference shares, and any other matter specifically provided in this Act.
(2) The Securities and Exchange Board shall, in respect of matters specified in subsection (1) and the matters delegated to it under proviso to sub-section (1) of section 458, exercise the powers conferred upon it under sub-sections (1), (2A), (3) and (4) of section 11, sections 11A, 11B and 11D of the Securities and Exchange Board of India Act, 1992.
Failure to distribute dividend as punishment –
Securities and non-payment of dividends by listed firms or companies seeking to have their securities listed on a recognized stock market in India will be controlled by SEBI and, in some cases, the central government.
All matters relating to prospectuses, write off on allocation, and redemption of preference shares must be approved by the central government, tribunal, or registrar, according to this clause. Matters allocated to it under section 458(1) utilize the powers granted to it under section 11's subsections 1(2A), (3), and (4). Wherever any obstacles arose in accordance with sections 24, 58, and 59 of the Companies Act 2013. They concern the tribunal's exercise of specific powers during the period when it was lawfully formed under the 2013 Act, and the ministry of corporate affairs issued an order called the Companies Removal of Difficulties Order 2013 in relation to it. The ministry clarified until the date is notified by central government under section 434(1) of the companies act for the transfer of all the matters proceeding or cases to the tribunal constituted the power of tribunal under section 24 , 53 , 59 in pursuance of the second proviso to subsection (1) of 465 of said act.