Page 72 - DMGT401Business Environment

Unit 2: Industrial Policy and Regulatory Structure

The SEBI Insider Regulations, 1992 prohibits insider trading and lays down that no insider Notes
should:
1. Either on his own behalf or on behalf of any other person, deals in securities of a company
listed on any stock exchange on the basis of any unpublished price sensitive information;
or

2. Communicate any unpublished price sensitive information to any person, with or without
his or her request for such information except as required in the ordinary course of business
or under any law; or
3. Counsel or procure any other person to deal in securities of any company on the basis of
unpublished price sensitive information.

2.4.5 Underwriting

Underwriters make a commitment to get the underwritten issue subscribed either by others or
by themselves. They agree to take unsubscribed portions of the issue. They render this service
for a commission agreed upon between the issuing company and the underwriter subject to the
ceiling under the Companies Act.
Underwriter services are available from brokers, investment, companies, commercial banks
and term-lending institutions. Only such person (an individual, firm or a company) who has
obtained certificate of registration from SEBI can act as an underwriter.

Example: Merchant bankers and stock brokers already have a valid certificate from SEBI
for working as underwriters.

Task Find out the underwriters involved in some of the biggest IPOs that have
taken place in last five years.

2.5 LPG Policy

2.5.1 Liberalisation

The ongoing reforms in India are referred to as economic liberalisation of India. After
Independence in 1947, India adhered to socialist policies. The extensive regulation was
sarcastically dubbed as the "Licence Raj"; the slow growth rate was named the "Hindu rate of
growth". In the 1980s, the Prime Minister Rajiv Gandhi initiated some reforms. His government
was blocked by politics. In 1991, after the International Monetary Fund (IMF) had bailed out the
bankrupt state, the government of P. V. Narasimha Rao and his Finance Minister Manmohan
Singh started breakthrough reforms. The new policies included opening for international trade
and investment, deregulation, initiation of privatization, tax reforms, and inflation-Controlling
measures. The overall direction of liberalization has since remained the same, irrespective of
the ruling party, although no party has yet tried to take on powerful lobbies such as the trade
unions and farmers, or contentious issues such as reforming labor laws and reducing agricultural
subsidies.
As of 2009, about 300 million people – equivalent to the entire population of the entire United
States – have escaped extreme poverty. The fruits of liberalization reached their peak in 2007,
with India recording its highest GDP growth rate of 9%. With this, India became the second
fastest growing major economy in the world, next only to China. An Organisation for Economic

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