INVESTOR PROTECTION GUIDELINES BY SEBI

MEMBERS
NIKITA JAIN

8050

NIKITA KARAMBELKAR

8049 ASHUTOSH JHA 8054 PRATEEK JANI 8052 VIBHA SINGH 8053 KAPIL GAGAL

8051

What is SEBI?
In 1988 the Securities and Exchange Board of India (SEBI) was established by the Government of India through an executive resolution, and was subsequently upgraded as a fully autonomous body (a statutory Board) in the year 1992 with the passing of the Securities and Exchange Board of India Act (SEBI Act) on 30th January 1992. In place of Government Control, a statutory and autonomous regulatory board with defined responsibilities, to cover both development & regulation of the market, and independent powers have been set up

Investment
DEFINATION: An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.

Who are investors?

An individual who commits money to investment products with the expectation of financial return. Generally, the primary concern of an investor is to minimize risk while maximizing return, as opposed to a speculator, who is willing to accept a higher level of risk in the hopes of collecting higher-than-average profits.

Types of investors?
Individual investors

Partnership/HUF
Societies and Trusts Companies Mutual Funds Financial Institutions (Banks) Arbitragers Retail investors Foreign Institutional Investors (FIIs):

Cont.
Hedgers

Domestic investors

What is Investor Protection?

The term Investor Protection is a wide term encomoassing various measures designed to protect the investors from malpractices of companies, brokers, merchant bankers, issue managers, Registrars of new issues etc. Investors beware should be watchword of all programme for mobilization of savings of investments. As all investments have some risk element, this risk factor should be borne in mind by the investors and they should take all precautions to protect their interest in the first place. If caution is thrown to the winds and they invest in any venture without a proper assessement of the risk they have only to blame

Why do we need a regulatory body for investor protection in India?

India is an ` informationally ' weak market. Boosting capital market demands restoring

theconfidence of lay investors who have been beatenconfidence of lay investors who have been beatendown by repeated scamsdown by repeated. The best way to exercise control over your investments is to have complete knowledge about the stocks in which you invest. The transparency and accurate information from the corporate world is desired to enable investors to make informed decisions.

Cont.
Disclosures and Investor Protection guidelines

are tools that empower investors with information and also protect them from cases of mismanagement like insider trading. Progressively softening interest rates and an under performing economy have eroded investment options, performing economy have eroded investment options, and require enhanced investing skills.and require enhanced investing skills.

Investor protection guidelines include

Instructions for eligibility standards for companies

issuing securities. Pricing of securities to be issued by companies. Requirements relating to promoter contribution. Lock-in period for securities and more. It describes the information that should be included in offer documents to the public like a prospectus, abridged prospectus, and letter of offer.

Guidelines are as follows:

Contract notes should be passed on to the

person on the dates when the orders are executed. Make sure that your deal is registered with the stock exchange in the souda Block Book or recorded electronically. Collect a settlement table from the stock exchange mentioning the pay-in and pay-out days. Execution periodic settlements of dues and delivery of shares to avoid accumulation of transactions. If the company returns your papers and shares with objections, contact your broker immediately.

Cont.
Issuance of a succession certificate is necessary

before selling or dealing in shares where any one of the holders has passed away. Do not expect the money for shares to come immediately. It will atleast take a fortnight at present from the date of transaction. Do not take delays or harassment from the brokers.You have to complain to the grievance cell of the stock exchange or SEBI in case of delays and harassment. It insists that all your deals should be done in the trading ring. The SEBI guidelines insists that all companies should get CRISIL rating and publise them compulsorily.

Programs undertaken by SEBI for reformation in investor protection.

It was started with the licensing and registration

of brokers and sub brokers in the recognised stock exchanges. This was later extended to underwriters, portfolio managers and other categories of players in the stock markets including foreign securities firms, FFIs ,OCBs, FIIs, Debenture trustees, collecting bankers etc. Compulsory audit and inspection of stock exchanges and their member brokers and their accounts. Transparency in the prices and brokerage charged by brokers by showing them in their contract notes.

Cont.
Board of directors of stock exchanges has to be

reconstituted so as to include non brokers, public representatives, and Govt. representatives to the extent of 50% of the total number of members. Capital adecuacy norms have been laid down for members of various stock exchanges separately and depending on their turn over of trade and other factors. Guidelines have been laid down for dealing of FFIs and foreign brokers firms in the Indian stock exchanges through Indian brokers.

Cont.
New guidelines for corporate members have

been laid down with limited liability of diectors and opening up of their membership to more than one stock of directors and opening up of their membership to more than one stock exchange without the limiting requirement of experience of 5 years in 1 exchange.

Conclusion
SEBI, if not 100%, than for sure it has been near to 100% success as far as the protections of the investors are concerned. As we have seen that via different guidelines it had made it sure that no stone remains unturned in the path of the mission of protecting the investors. But at present the two greatest challenges are the scams relating to mutual fund and the disgorgement of money. SEBI is planning to hold a workshop for the trustees to get their feedback and to know their requirements. The regulator has also decided to set up a mutual fund advisory committee to address the issues faced by the industry.