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Corporate Legal Framework

Notes The general superintendence, direction and management of the affairs of the SEBI vest in a Board
of members, which may exercise all powers and do all acts and things which may be exercised or
done by the Board. Save as otherwise determined by regulations, the Chairman shall also have
powers of general superintendence and direction of the affairs of the Board and may also exercise
all powers and do all acts and things which may be exercised done by the Board.
The Chairman and members referred to at (a) and (b) above shall be appointed by the Central
Government and the member referred to at (a) and (c) above shall be nominated by the Central
Government and the Reserve Bank of India respectively.
For day-to-day functions, the activities of SEBI have been divided into five operational departments

viz. many markets - policy, intermediaries, investor grievances and guidance, etc.,
1. Such management and intermediaries, investor grievances and guidance, etc.
2. Secondary market-exchange administration, inspection and non-member intermediaries
etc.,
3. Institutional investment - Mutual funds and Fills, mergers and acquisitions, research and
publications and internal regulation.

4. An Executive Director heads each department. Besides these five departments, there are
the legal and investigation departments too.

Task Prepare a report on the performance of SEBI since its inception.

14.4 Activities

The first major activity undertaken by SEBI was preparation of an Approach paper on

comprehensive legislation for the securities markets. Since inception, SEBI has issued a number
of guidelines, rules, drafts regular consultative papers etc. in order to regulate and develop
the securities market and protect investors in some important guidelines etc. Issues by SEBI
include:

(a) Rules regarding the registration of intermediaries such as share transfer agents, bankers to
the issue, detect trustees to the trust deeds, registrars to an issue, underwriters, portfolio
managers and investment advisors brokers and sub-brokers associated with the securities
market.
(b) Guidelines for merchant bankers stating authorized activities of merchant bankers, the
authorization and the terms of authorization.
(c) Code of conduct for merchant bankers, the violation, intentional or otherwise, of which
will make merchant bankers guilty of misconduct or unprofessional conduct.
(d) Categorizations of merchant bankers, under which merchant bankers have been categorized
into categories. Category I merchant bankers are authorized to act in the capacity of lead
management co-market advisor or consultant to an issue, portfolio manager and underwriter
to an issue as mandatory required. Category II merchant bankers are authorized to act in
the capacity of co-manager/advisor or consultant to an issue of portfolio manager.

(e) Guidelines on portfolio management services which cover such aspects as portfolio
management and client relationship, investment tenure, fees to be paid to the portfolio
manager, client’s money account, investment of the client and periodical reports to the
clients and administrative powers of the SEBI in this regard.

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