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1. Control of Capital Issues
 Before SEBI came into existence issue of capital by companies
was regulated by Controller of Capital Issue under Capital issue
(Control ) Act in 1947.
 The act was repealed on 29th May, 1992.With the abolition of
CCI companies are not required to take permission of govt. for
issue of capital they just have to get clearance from SEBI.
 Govt. of India set up Securities and Exchange Board of India
on 12th April, 1988. it was given statutory powers by an Act of
parliament known Securities and Exchange Board of India Act,
Act, 1992.

2. Organisation of SEBI: SEBI has got 5 departments
 Primary Market department
 Issue Management Intermediaries department
 Secondary market department
 Institutional Investment department
 Advisory Investment department
FUNCTIONS OF SEBI
Section 11 of SEBI Act, 1992 gives the functions to be
performed by the board. These are:-
1. Regulatory Functions
2. Development Functions
3. Powers given by Securities Contract Regulation Act, 1956

3. Objectives of SEBI Act, 1992
 Provide investors protection and safeguard their rights and
interest.
 Promote fair dealings by the issue of securities and ensure a
market place where funds can be raised at a relatively low costs.
 Promote efficient services by the intermediaries in the capital
market such as brokers and merchant bankers

4. SEBI GUIDELINES
 IPO & Primary Market
Company
 Merchant bankers
 Underwriters
 Stock Broker & Sub-broker to the issue
 Banker to the issue
 Registrar to the issue & Share transfer agent
 Investors protection & Education
 Venture Capital
Foreign Institutional Investors (FII)

5. Initial Public Offering & Primary Market- SEBI (Disclosure
& Investors Protection) Rules and Regulation, 24th Feb., 2009.
1. Minimum offering of 25% of post issue capital to the public. This requirement
was relaxed to 10% first for IT sector, later it was relaxed to all the
sectors.
2. IPO of issue size up to 5 times of pre-issue , shall be allowed only to
those companies having consistent track record of making profit at least
for 5 years.
3. For issue above Rs. 100 crores book building route has been made
compulsory for comp. making IPO.
4. Time for finalizing the allotment of shares and refund has been reduced
from 30 to 15 days.
5. Issue shall open within 12 months from the date of issue of observation
letter by SEBI.
6. Should disclose price band at least 2 working days before opening of bid
by announcement in all newspapers in which pre-issue advt. was
released.

6. SEBI Guidelines regarding Companies Act
 Free pricing of issues. A new issue can be priced freely provided
it is backed by promoters with good track record of at least 5
years.
 Underwriting made mandatory. The new guidelines issued by
SEBI have directed full underwriting of public issue.
 Issue of shares at par. A new company with no previous track
record will be permitted to issue capital only at par.
 Promoters contribution is fixed at 25% of total issue of less than
Rs. 100 crores size and 20% of the issues above Rs. 100 crores
 For public issue of existing listed companies, the issuer will have
to disclose the high and low prices of the shares for the last 2
years.
 No bonus issue shall be made within 12 months of any public
issue or right issue.

7. SEBI (Merchant Banking) Rules and Regulation,2006
MBs are intermediaries who perform the activity of pre-issue and post-issue
management activity and also act as co-mangers, underwriters, portfolio
managers and advisors. Guidelines framed by govt.:---
 Catagories of MBs
CAT I- MBs who conduct all above activities. They also act as co-managers,
underwriters or portfolio managers.
CAT II- MBs who can act as advisors, consultants, co-managers and portfolio
managers.
CAT-III- MBs act as underwriters, advisors and consultants.
CAT-IV- MBs act as advisors or consultants to an issue.
 Certificate of registration:--
 Minimum adequacy norms in terms of its net worth is satisfied by
each category of MBs.
 They have necessary infrastructure, office , space, equipment and
manpower.
 They employ at least 2 persons competent to handle merchant banking
business.
 They are not involved in any litigation connected with security market.
 They pay the prescribed fees.

8.  Capital Adequacy Norms:---
 CAT-I MBs – Rs 5 corers
 CAT-II MBs- Rs 50,00,000
 CAT-III MBs-Rs 20,00,000
 CAT-IV MBs- NIL.
 No. of MBs depending on the size of issue
Size of issue Max. no. of MBs
Below Rs 50 crores 2
Rs 50 to 100 crores 3
Rs 100- 200 4
Rs 200-400 5
Rs 400 and above More than 5
 Renewal of registration
At the time of renewals of registration shall continue to fulfill all the conditions
required at the time of registration , pay prescribed renewal fees.

9.  Maintenance of the books of A/cs:----
The copy of B/S at each accounting period. The statement containing the
name of the issue co, size of the issue, timing of the issue and activities
performed by merchant bankers on behalf of issue company. P/L account and
auditors report.
SEBI ( Underwriters) Rules and Regulation Act,1993
 Underwriters are intermediaries who undertake to subscribe the unsubscribed
portion of issued capital.
Condition for grant or renewal of certificate
 In case of any change in the constitution, underwriter shall obtain prior
permission of the Board to continue to act as underwriter.
 the underwriter should enter into valid agreement with body corporate on
whose behalf he is acting as underwriter.
 He shall pay the amount of fees of registration in the manner
An underwriter may, if so desired makes an application in FORM A for
renewal of certificate before 3months of the expiry of period of certificate.

10. Which is Rs 2 lakh for 1st ,2nd year and Rs 20,000 for 3rd year.
Registration is granted for 3 years.
 Has the necessary infrastructure like adequate office space, equipment
manpower to effectively discharge his activities.
 Has any past experience in underwriting or has in his employment
minimum 2 persons who had the experience in underwriting.
Not to Act as underwriter without certificate:--
 No person shall act underwriter unless he holds a certificate granted
by the Board under the regulation.
 Notwithstanding anything contained in sub-rule(1), every stock-
broker or merchant banker holding a valid certificate of registration
under Section 12 of the Act, shall be entitled to act as an underwriter
without obtaining a separate certificate for underwriting activities which
shall be governed by the rules and regulations.
CAPITAL ADEQUACY NORMS:-
 The capital adequacy requirement referred to insub-regulation 6 shall
not be less than the networth of Rs 20 lakhs.

11. SEBI ( Stock Broker and Sub-brokers) Rules,1992
•Stock broker means a member of stock exchange
• Sub-broker means any person not being a member of stock exchange who
acts on behalf of a stock broker as an agent or otherwise for assisting the
investors in buying, selling or dealing in securities through stock broker.
• No stock broker or sub broker shall buy,sell or deal in securities unless he
holds a certificate granted by board under the regulation, provided that such
person may continue to buy, sell or deal in securities if he has made an
application for such registration.
CONDITION FOR GRANT OF CERTIFICATE OF REGISTRATION:-
• He holds the membership of any stock exchange
• He shall abide by rules, regulation and bye-laws of stock exchange of which
he is a member.
• He shall pay the fees for registration in the manner provided in the
regulations
• He shall take adequate steps for redressal of grienvances of the investors
within one month of the date of receipt of complaints.

12. Condition for the grant of Certificate to Sub- Broker:--
 He shall pay the fees in the manner provided in the regulations
Every stock broker shall subject to pay registration fees in the manner set out
below :
(a) where the annual turnover does not exceed rupees Rs. 1 crore during any
financial year, a sum of Rs. 5,000 for each financial year;
(b) where the annual turnover of the stock-broker exceeds Rs 1 crore during
any financial year, a sum of Rs. 5,000 plus 1 % of the turnover in excess of
Rs. 1 crore for each financial year
 He shall take adequate steps in redressal of grievances of the investors
within one month of the date of complaints.
 In case of any change in constitution , the sub-broker shall obtain prior
permission of the board to continue to buy , sell or deal in securities in any
stock exchange.
 He is authorized in writing by a stock- broker being a member of stock
exchange for affiliating himself in buying, selling or dealing in securities.

13. SEBI (Banker to the Issue) Rules and Regulation Act,1992
 Banker to the issue helps in functioning in primary market by engaging in
activities of acceptance of application for shares/debentures along with
application money from investors.
 A bank can operate as banker to the issue only after obtaining a certificate
of registration from SEBI. It considers past experience, nature, size of
bank.
 Certificate of registration is granted if it satisfies :--
 The applicant has necessary infrastructure, office space,equipemnet, data
processing and manpower.
 Applicant is scheduled bank.
 Application fees is paid i.e. Rs 2.5 lakh for 1-2 years from date of initial
registration and Rs. 1 lakh for 3rd year.
 Renewal is made 3 months before expiry by paying renewal fees of Rs 1
lakh annually for 1-2 years and Rs 20,000 for 3rd year.
 Banker to the issue should record in the statement the agreement with
issuing company, Submission of daily statements, furnishing the
information to SEBI i.e. details of issue, No. of applicants and details of
application money, refund to the investors. Inspection by RBI.

14. SEBI (Registrar to the Issue and Share transfer agent) Rules and
Regulation Act,1993
 Registrar to the issue perform the function to collect application from
investors and keep a proper record of application and money received from
investor, assist co. in determining the basis of allotment of securities.
 Share transfer agent maintain record of holder of securities of company for
& on behalf of company & handle all matters related to transfer and
redemption of securities of the company.
 Category of Registrar and Share transfer agent
CAT-I -those who carry on activities of both Registrar and STA
CAT-II- Those who carry on activities of either Registrar and STA
 Both require registration with SEBI for carrying on with their operations.
They can also seek renewal of registration.
 Capital adequacy is net worth of Rs 6 lakh for CAT-I and Rs 3 lakh for
CAT-II
 Annual fees of Rs 15,000 & Rs 10,000 respectively for initial registration.
 Maintenance of book of Account- record relating to all applications
received from investors relating to the issue, record all rejected application
together with reasons, basis of allotment of shares in consultation with
stock exchange, date of transfer of shares, name of transferor and
transferee.

15. SEBI (Investors protection & Education Fund)
Regulations, 2009
 “ Fund” means Investors Protection and Education Fund
created by the Board under section 11 of the Act.
 “ Legal Proceedings” means any proceedings before a court
where one thousand or more are effected by misstatement in
connection with the issue sale , purchase of securities.
 Non payement of dividend
 Non receipt of shares allotted or refund of application money.
Utilization of fund:-
 The fund shall be utilized for the purpose of protection of
investors and promotion of investors education and awareness
with these regulations.
 Education activities including seminar, training, research and
publications aimed at investors.
 The fund is utilized to provide aid which shall not exceed 70%
of the total expenditure on legal proceedings.

16. • Such an aid shall not be considered for more than one legal
proceedings in a particular matter.
• If more than one investor applies for seeking legal aid , the
application is received first is considered first for such an aid
Classification of complaints:-
• Type I- Non-receipt of refunds orders/allotment letters/ stock
invest.
• Type II- Non-receipt of dividend
• Type III- Non-receipt of share certificate/ bonus shares
• Type IV- Non receipt of debenture certificate/interest on
debentures/redemption amount of debentures/ interest on delayed
payments of interest.
• Type V- Non-receipt of annual reports, right issue forms/ interest
on delayed receipt of refund orders/ dividends.

17. SEBI (Venture Capital fund) Amended Regulation, 2010
 Venture capital Fund means fund established in form of trust under
Indian trust Act,1882 or a company including body corporate and
registered under these regulations which:--
 Dedicated pool of capital
 Raised in a manner specified in the regulation.
Or venture capital undertaking domestic company whose shares are not
listed on recognized stock exchange in India, which is engaged in
the activity of providing services, production or manufacturing of
articles or thing.
Registration of VC Funds:--
 Application of grant of certificate
 Any company or trust proposing to carry on any activity as a
venture capital fund on or after the commencement of these shall
make an application to the Board for grant of certificate.

18. Eligibility Criteria:---
For the purpose of grant of Certificate by Board the application
should fulfill these criteria
 Memorandum of association and Article of Association prohibits
to form making an invitation to public to subscribe its securities.
Its director, employee is not involved in any litigation connected
with security market.
Minimum Investment in Venture Capital Fund:--
• A venture capital fund may raise monies from any investor
whether Indian or foreign or NRI.
• No VCF set up as a company shall accept any investment from
any investor which is less than Rs 5lakhs.

19. SEBI Guidelines for FIIs
All foreign institutional investors including pension funds, mutual
funds, asset mangement companies and portfolio managers were
permitted to invest in Indian capital market fulfilling the following
conditions:-
 The FIIs are required to obtain certificate of registration from
the SEBI. For grant of certificate SEBI checks the applicant's
track record, professional competence, financial soundness,
experience, general reputation of fairness and integrity
 They have to obtain approval from RBI under Foreign Exchange
Regulation Act (FERA), 1973.
 Certificate of registration is granted for period of 3 years and
after it can be renewed.
 FIIs are permitted to invest in securities in the primary and
secondary markets including shares, debentures

20. listed or to be listed on a recognized stock exchange in India; and
Units of schemes floated by domestic mutual funds including Unit
Trust of India, whether listed on a recognized stock exchange or
not.
• A registered foreign institutional investor shall pay a fee of US $
10,000 for every block of three years after grant of registration
during which the registration subsist.
• The fee mentioned in shall be paid at least one month before
expiry of the period of three years.