Powers of SEBI

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Posted on Sunday, January 10, 2010
This was posted in Accounting and Finance

Powers of SEBI: For the purpose of regulation of the securities market, SEBI has been vested with all the powers of a Civil Court as per Code of Civil Procedure, 1908. The powers include:
1. The discovery and production of any books of accounts and other documents.
2. Summoning and enforcing the attendance of persons and examining them on oath.
3. Inspection of any books, registers and other documents.
4. To inspect any book, register, other documents and records of a listed company or a public company (not being any of the intermediaries mentioned above) intending to get its securities listed on stock exchange where the Board suspects the company of indulging in insider trading or fraudulent and unfair trade practices relating to the securities market.
5. Issuing commission for the examination of witnesses or documents.
6. During an investigation or a pending enquiry, in order to protect the interests of investors or the securities market, the board may
a) Suspend trading of a stock in a stock exchange.
b) Restrain persons from accessing the securities market and prohibit any person associated with the securities market to buy, sell or deal in securities.
c) Suspend any office bearer of any stock exchange or self – regulatory authority.
d) Impend and retain the proceeds or securities of any transaction under investigation.
e) Attach after the specified process, for a period not exceeding one month, the bank account(s) or any intermediary or person associated with the securities market in a matter involving violation of the provisions of the SEBI Act.
f) Direct any intermediary or person associated with securities market not to dispose of or alienate an asset forming past of any transaction under investigation.
The Board may take any of the measures in clause (d), (e) and (f) in respect of any listed company or a public company intending to get its securities listed, where it suspects the company to be indulging in insider trading or fraudulent and unfair trade practices relating to the securities market.
7. With respect to prospectus, offer documents and advertisement soliciting money, the Board may for the protection of investors,
a) Specify by regulation:
i) Matters relating to issue of capital transfer of securities and matters incidental thereto.
ii) The manner in which such matters are disclosed.
b) Specify by special orders:
i) Prohibit any company from issuing prospectus, any offer document or issue advertisements, soliciting money for issue of securities.
ii) Specify the conditions subject to which these documents can be issued.
8. The Board may specify the requirements for listing and transfer of securities.
In addition to the above, the other powers of SEBI are:
a) Levy penalties for certain offenses.
b) Levy fees and other charges.
c) Issue orders/directions in the interest of investors or orderly development of securities market. However, such orders can be issued only after conduct of an inquiry.
d) Hear appeals by companies against the decision of stock exchanges to refuse listing of their securities.
e) Suspend or cancel the registration of any intermediary.

APPEAL AGAINST SEBI ORDER: Any person aggrieved by an order of SEBI can file an appeal petition to the Central Government. Such appeal has to be filed within 30 days from the date of communication of the order. However, the Central Government may extend the period by a further 15 days if it is satisfied that the appellant had sufficient cause for not preferring the appeal within 30 days.

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