Sebi

SECURITIES EXCHANGE BOARD OF INDIA

SEBI is the Regulator for the Securities Market in India. Originally set up by the Government of India in 1988, it acquired statutory form in 1992 with SEBI Act 1992 being passed by the Indian Parliament. Chaired by C B Bhave, SEBI is headquartered in the popular business district of Bandra-Kurla complex in Mumbai, and has Northern, Eastern and Southern regional offices in New Delhi, Kolkata and Chennai. It is in the news that a new Western Regional Office has been proposed at Ahmedabad.

Functions and Responsibilities SEBI has to be responsive to the needs of three groups,which constitute the market: the issuers of securities the investors the market intermediaries. SEBI has three functions rolled into one body quasi-legislative, quasi-judicial and quasi-executive. It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity. Though this makes it very powerful, there is an appeals process to create accountability. There is a Securities Appellate Tribunal which is a three member tribunal and is presently headed by a former Chief Justice of a High court - Mr. Justice NK Sodhi. A second appeal lies directly to the Supreme Court. SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and successively (e.g. the quick movement towards making the markets electronic and paperless rolling settlement on T+2 basis). SEBI has been active in seting up the regulations as required under law.

Organization Structure Chandrasekhar Bhaskar Bhave is the sixth chairman of the Securities Market Regulator. Prior to taking charge as Chairman SEBI, he had been the chairman of NSDL (National Securities Depository Limited) ushering in paperless securities. Prior to his stint at NSDL, he had served SEBI as a Senior Executive Director. He is a former Indian Administrative Service officer of the 1975 batch. The Board comprises of Name

Designation

As per

Mr CB Bhave Chairman SEBI

CHAIRMAN (S.4(1)(a) of the SEBI Act, 1992)

Mr KP Krishnan

Joint Secretary, Ministry of Finance

Member (S.4(1)(b) of the SEBI Act, 1992)

Mr Anurag Goel

Secretary, Ministry of Corporate Member (S.4(1)(b) of the SEBI Affairs Act, 1992)

Dr G Mohan Gopal

Director, National Judicial Academy, Bhopal

Member (S.4(1)(d) of the SEBI Act, 1992)

Mr MS Sahoo Whole Time Member, SEBI

Member (S.4(1)(d) of the SEBI Act, 1992)

Dr KM Abraham

Member (S.4(1)(d) of the SEBI Act, 1992)

Whole Time Member, SEBI

Mr Mohandas Director, Infosys Pai

Member (S.4(1)(d) of the SEBI Act, 1992)

THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 [4th April ,1992.] An Act to provide for the establishment of a Board to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market and for matters connected therewith or incidental thereto. Be it enacted by Parliament in the Forty-third Year of the Republic of India as follows: CHAPTER I (Preliminary) CHAPTER II (Establishment Of The Securities And Exchange Board Of India) CHAPTER III (Transfer Of Assets, Liabilities, etc., Of The Existing Securities And Exchange Board To The Board) CHAPTER IV (Powers And Functions Of The Board) CHAPTER V (Registration Certificate) CHAPTER VA (Prohibition Of Manipulative And Deceptive Devices, Insider Trading And Substantial Acquisition Of Securities Or Control) CHAPTER VI (Finance, Accounts And Audit) CHAPTER VIA (Penalties and Adjudication) CHAPTER VIB (Establishment, Jurisdiction, Authority and Procedure of Appellate Tribunal CHAPTER VII (Miscellaneous)

REGULATION SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997 SEBI (Mutual Funds) Regulations, 1996 SEBI (Venture Capital Funds) Regulations 1996 SEBI (Depositories and Participants) Regulations, 1996 SEBI (Custodian Of Securities) Regulations, 1996 SEBI (Foreign Institutional Investors) Regulations, 1995 SEBI (Bankers to an Issue) Regulations, 1994 SEBI (Debenture Trustees) Regulations, 1993 SEBI (Underwriters) Regulations 1993 SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 SEBI (Portfolio Managers) Regulations, 1993 SEBI (Merchant Bankers) Regulations, 1992

Code on Conflict of Interests for Members of Board This Code has been adopted by the Board in its meeting held on December 4, 2008 to ensure that it conducts in a manner that does not compromise its ability to accomplish its mandate or undermine the public confidence in the ability of

Member(s) to discharge his responsibilities. Definitions 1. In this Code, unless the context otherwise requires,(i) “family” means spouse and dependant children below 18 years of age. (ii) “conflict of interests” means any personal interest or association of a Member, which is likely to influence the decision of the Board in a matter, as viewed by an independent third party. (iii) “Member” means a Member of the Board and includes Chairman of the Board. (iv) “regulated entity” means a company which is listed or proposed to be listed on a recognized stock exchange(s) or an intermediary registered with SEBI. (v) “shares” means shares or any other instrument convertible into shares, of a company listed or proposed to be listed on a recognized stock exchange. (vi) ‘substantial transactions” means transactions of at least 5,000 shares or shares of a value of at least Rs. 1, 00,000. (vii) “WTM” means a Whole Time Member of the Board and includes the Chairman of the Board.

2. Words and expressions used and not defined in this Code but defined in the securities laws shall have the meanings respectively assigned to them in those laws.

Code in addition to other provisions 3. This Code shall be in addition to the provisions of Section 7 A of the SEBI Act, 1992 Rule 3 (1) and 19 A (1) of the SEBI (Terms and Conditions of Service of Chairman and Members) Rules, 1992, and Regulations 9 and 11 of the SEBI (Procedure for Board Meetings) Regulations, 2001. General principles 4. (1) A Member shall take all steps necessary to ensure that any conflict of interests to which he may be subject to does not affect any decision of the Board. (2) A Member shall disclose his interests which may conflict with his duties. (3) A Member shall not exploit to his personal advantage, any personal or professional relationship with regulated entities or any employee of such entities. Outside or private activities 5. (1) A WTM shall not hold any other office of profit. (2) A WTM shall not engage in any other professional activity, which entails receipt of salary or professional fees.

Transactions in shares 6. (1) A Member shall disclose his holding of shares and holdings of shares of his family within 15 days of the assumption of Office. (2) A Member shall disclose his holding of shares and holdings of shares of his family at the end of each financial year within 15 days of the close of the financial year. (3) A WTM shall disclose substantial transactions by him and his family within 15 days of such transaction. (4) A Member shall not deal in securities of a company listed on a recognized stock exchange based on unpublished price sensitive information which he may have got access to.

Conflict in respect of agenda

7. (1) A Member, who is directly or indirectly interested in any matter coming up for consideration at a meeting of the Board, shall disclose the nature of his interest at such meeting. (2) A Member shall not take part in any deliberation or discussion of the Board with respect to such matter except to the extent of professional advice if sought by the Board. Members not to hear or decide in certain cases 8. No Member shall hear or decide any matter where he has a conflict of interest.

Availing services of intermediaries 9. A Member shall disclose if he or his family has any dispute in respect of product or services availed from an intermediary. Acceptance of gifts 10. (1) A WTM shall not accept any gift by whatever name called, to the extent possible, from a regulated entity. (2) A WTM shall hand over the gift, if he receives any and the value exceeds Rs. 1000/-, to the General Services Department of the SEBI. Other disclosures 11. A Member shall disclose the following: a) any post, other employment or fiduciary position which a Member holds, or has held in the past 5 years in connection with any regulated entity; b) any other significant relationship, including a professional, personal, financial or family relationship held in connection with a regulated entity; c) any honorary position, by whatever name called, in any organisation. Procedure for managing the conflict 12. (1) A Member shall disclose a conflict of interests at the earliest possible opportunity. (2) A Member shall seek determination from the Chairman if he has a doubt whether there is a conflict of interests or not. (3) Chairman shall seek determination from the Board if he has a doubt whether there is a conflict of interests or not. 4) If the Chairman or the Board, as the case may be, determines that there is a

conflict of interests, the Member or Chairman shall refrain from dealing with the particular matter. (5) The Chairman or the Board, as the case may be, shall assign that matter to another Member or a Committee of Members. Procedure for public to raise conflict of interests 13. (1) Any person, who has reasonable ground to believe that a Member has an interest in a particular matter, may bring the same with material evidence to the notice of Secretary to Board. (2) The Secretary to the Board shall place the details received under sub-clause (1) before Chairman in case of a Member and before the Board in case of Chairman. (3) The Chairman or the Board, as the case may be, shall determine if the Member or Chairman has an interest which is likely to affect the decision by him. (4) The Member or the Chairman, as the case may be, shall refrain from dealing with that particular matter if the Chairman or the Board determines that there is a conflict of interests. (5) The Chairman or the Board, as the case may be, shall assign that matter to another Member or a Committee of Members. Maintenance of disclosures 14. (1) The information as disclosed under this Code shall be kept confidential and shall not be disclosed save in the following circumstances: a. where there is a requirement for disclosure for the purposes of managing potential or actual conflicts;

b. where there is a requirement for disclosure following the change of responsibilities of a Member; c. where there is a requirement for the purposes of disciplinary proceedings; d. where there is any legal or regulatory obligation to disclose the information. (2) The disclosures by a Member may be scrutinized under the authority of the Chairman with due regard to Members’ areas of responsibility. (3) The disclosures by Chairman may be scrutinized under the authority of the Board with due regard to Chairman’s responsibility. (4) The Secretary nominated under Regulation 12(1) of the SEBI (Procedure for Board Meetings) Regulations, 2001 shall keep and maintain custody of documents / records etc. pertaining to any disclosure made by Members under this Code. Transitory provisions 15. The existing Members shall make the disclosure as required under this Code within a period of one month from the date on which this Code was adopted by the Board.