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Unit 14: Financial Regulations

11. The promoters, after such offer, retain at least 25% of the total issued capital with lock-in- Notes
period of five years from the date of the sponsor taking up the shares.
12. The sponsor agrees to act as market-maker for the shares at least for a period of three years
on a compulsory basis and also finds an additional market maker for such compulsory
market making.

13. The sponsor compulsorily gives two-way quotes based on minimum or maximum trading
prices as stipulated by the OTC in respect of the scrip.
With a view to making markets more competitive and compliant, SEBI has brought in the
following new regulations:
1. SEBI (Prohibition of Fraudulent and Unfair Trade Practices - relating to Securities Market)
Regulations, 2003
2. SEBI (Ombudsman) Regulations, 2003
3. SEBI (Central Listing Authority) Regulations, 2003
4. SEBI (Central Database for Market Participants) Regulations, 2003

5. SEBI (Self Regulatory Organizations) Regulations, 2004
6. SEBI (Criteria For Fit and Proper Person) Regulations, 2004
As a measure of regulatory pro-activeness, the existing regulations were reviewed and the
following amendment to the above regulations was notified:

1. SEBI (Foreign Institutional Investors) (Amendment) Regulations, 2003
2. SEBI (Mutual Funds) (Amendment) Regulations, 2003
3. SEBI (Depositories and Participants) (Amendment) Regulations, 2003

4. SEBI (Debenture Trustees) (Amendment) Regulations, 2003
5. SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2003
6. SEBI (Issue of Sweat Equity) (Amendment) Regulations, 2003
7. SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2003
8. SEBI (Stock Brokers and Sub-Brokers) (Second Amendment) Regulations, 2003

9. SEBI (Procedure for Holding Enquiry and Imposing Penalty) (Amendment) Regulations,
2003
10. SEBI (Ombudsman) (Amendment) Regulations, 2003

11. SEBI (Foreign Institutional Investors) (Amendment) Regulations, 2004

14.2 Securities and Exchange Board of India

14.2.1 Evolution and Objectives of SEBI

Securities market in India witnessed a phenomenal growth in the 1980s leading to financial
disintermediation with corporate sector, placing increasingly greater reliance on the market for
satisfying their long-term financial needs, and emergence of new intermediaries and institutions
in the country and thereby developing a new awareness and interest in investment opportunities.
However, the quality of transactions in the securities market was not adequate and there was
lack of professionalism and healthy competition among the various players in the market. As a

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