UGC NET COMMERCE December 2018 Q1
0. Which one of the following statements is correct?
- A
The purpose of issuing different types of rules and regulations by SEBI is to bring monetary gains to investors.
- B
SEBI has been constituted under the Securities (Contract and Regulation) Act, 1956.
- C
One of the objectives of setting up SEBI is to protect the interests of investors.
- D
SEBI is constituted from amongst the directors of various stock exchanges.
- Option : C
- Explanation : Government of India set up the Securities and Exchange Board of India (SEBI) on April 12, 1988 on the basis of the recommendations of the high powered Committee on Stock Exchange Reforms headed by G.S. Patel. SEBI was given a legal status by the Securities and Exchange Board of India Ordinance, 1992. The members of the Board of Management of the SEBI comprised those drawn from professional brokers, financial consultants, merchant bankers, investors, stock exchange authorities, finance ministry, etc.
FEATURES OF THE SEBI BILL
The SEBI has been entrusted with a wide range of responsibilities in regulating the activities of almost all the players in the capital market. After the abolition of the controller of capital issues, the issuer of capital, which is the promoter, has come under SEBI’s jurisdiction. The SEBI laid down certain guidelines for the issuers to ensure investor protection. The SEBI was expected to regulate mutual funds, merchant bankers, registrars to issue, share transfer agents, portfolio managers, underwriters, investment advisors, brokers and sub-brokers. SEBI has also been given certain powers to regulate the functioning of stock exchanges in India.
OBJECTIVES
SEBI was set up with the following objectives of assisting and facilitating the mobilization of adequate resources through the securities market and its efficient allocation, keeping in mind the interests of issuers, investors and the intermediaries:
1. Conducive environment: SEBI aims at creating a proper and conducive environment required for raising money from the capital market through the rules, regulations, trade practices, customs and relations among institutions, brokers, investors and companies. It also aims at endeavouring to restore and safeguard the trust of investors, especially the interest of the small investors. This is to be achieved by meeting the needs of the players connected with the securities market such as the investors, the corporate sector and the intermediaries. SEBI works for creating proper investment climate to enable corporate sector to float industrial securities easily, efficiently and at affordable minimum cost.
2. Investor education: SEBI aims at educating investors so as to make them aware of their rights in clear and specific terms by providing them with information. This way, SEBI aims at maintaining liquidity, them with information. This way, SEBI aims at maintaining liquidity, safety and profitability of the securities in the market that are crucial for any investment. A high degree of protection of investor rights and interests is made possible by providing adequate, accurate and authentic information on a continuous basis. This way, the market efficiency is also ensured.
3. Infrastructure: SEBI aims at developing a proper infrastructure for facilitating automatic expansion and growth of business of middlemen like brokers, jobbers, commercial banks, merchant bankers, mutual funds, etc. This is aimed at providing efficient service to their constituents, viz. investors and corporate sector at competitive prices.
4. Others: In addition to the above mentioned objectives, SEBI would also make efforts to bring about necessary enactments for regulating business of intermediaries such as mutual funds, NBFCs and chit funds, etc. SEBI would also work towards creating a framework for more open, orderly and unprejudiced conduct in relation to takeover and mergers in the corporate sector so as to ensure fair and equal treatment to all the security holders.
