Securities and Exchange Board of India (SEBI)
The Securities and Exchange Board of India (SEBI) was established by the Government of India on 12th April 1988 and given statutory powers in 1992 with SEBI Act, 1992 being passed in the Parliament. The SEBI Act, 1992 has come into force with effect from 30th January, 1992.
SEBI is an authority to regulate and develop the Indian capital market and protect the interest of investors in the capital market. Controller of Capital Issues has been repealed by the SEBI, an authority under Capital Issue (Control) Act, 1947.
SEBI has its headquarters at the business district of Bandra Kurla Complex in Mumbai, and has Northern, Eastern, Southern and Western Regional Offices in New Delhi, Kolkata, Chennai and Ahmedabad, respectively.
Controller of Capital Issues (CCI) was the regulatory authority before SEBI came into existence; it derived authority from the Capital Issues (Control) Act, 1947. In April 1988, the SEBI was constituted as the regulator of capital markets in India under a resolution of the Government of India.
The SEBI is managed by a board, which consists of following:
II. Functions and Responsibilities of SEBI
The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as “...to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected there with or incidental there to”.
SEBI has to be responsive to the needs of three groups, which constitute the market:
SEBI has three functions rolled into one body which are as follows:
• Quasi-legislative: SEBI drafts regulations in its legislative capacity.
• Quasi-judicial: SEBI passes rulings and orders in its judicial capacity.
• Quasi-executive: SEBI conducts investigation and enforcement action in its executive function.
Though this makes it very powerful, there is an appeal process to create accountability. There is a Securities Appellate Tribunal which is a three-member tribunal and is headed by Mr. Justice J P Devadhar, a former judge of the Bombay High Court. A second appeal lies directly to the Supreme Court. SEBI has taken a very proactive role in streamlining disclosure requirements to international standards.
III. Powers of SEBI
For the discharge of its functions efficiently, SEBI has been vested with the following powers:
1. To approve by−laws of stock exchanges.
2. To require the stock exchange to amend their by−laws.
3. To inspect the books of accounts and call for periodical returns from recognized stock exchanges.
4. To inspect the books of accounts of a financial intermediary.
5. To compel certain companies to list their shares in one or more stock exchanges.
IV. SEBI’s Role in Business Facilitation
SEBI is responsible for the development of India’s capital market i.e. market for the corporate issues of capital. For example, it facilitates public offering of capital by the company. Thus, these companies are able to access the capital market for their funding requirements. It also oversees the susequent trading of their shares on the floor of the stock exchanges. It even facilitates oversaes entities desrious of particiating in Indian
capital markets and the domestic capital market entities desirous of participation in oversaes markets. It coordinates with the market developers and regulators aborad. It is responsible for investors’ faith in the functioning of the capital markets and thus assures the corporates of steady flow of funds.
Competition Commission of India (CCI)
Competition is a contest between organisms, animals, individuals, groups, etc. in the context of business, competition is the best means of ensuring that the ‘Common Man' has access to the broadest range of goods and services at the most competitive prices. With increased competition, producers will have maximum incentive to innovate and specialize. This would result in reduced costs and wider choice to consumers.
A fair competition in market is essential to achieve this objective. Competition Commission was set up to create and sustain fair competition in the economy that will provide a ‘level playing field’ to the producers and make the markets work for the welfare of the consumers.
Competition may be either Direct or Indirect as discussed below:
i. Direct competition: Products that perform the same function compete against each other. Example: Fast-food restaurants McDonald’s and Burger King, Coca-Cola and Pepsi, Pizza Hut and Dominos etc have competition with each other.
ii. Indirect competition: Products that are close substitutes for one another compete.
Example: A fine dining restaurant has competition with other local restaurants, but it also competes with nearby supermarkets that offer ready-to-eat meals such as frozen parathas and eat and serve
There should be free and fair competition in the market to get the following benefits:
a. Encourages Innovation.
b. Increases Efficiency.
c. Punishes the Laggards.
d. Boosts choice improves quality, reduces costs.
e. Ensures availability of goods in abundance of acceptable quality in affordable price.
II. The Competition Act, 2002
Basically, Competition law is a tool to implement and enforce competition policy and to prevent and punish anti-competitive business practices by firms and unnecessary Government interference in the market. The Competition Act, 2002, as amended by the Competition (Amendment) Act, 2007, follows the philosophy of modern competition laws. The Act prohibits anti-competitive agreements, abuse of dominant position by enterprises and regulates combinations (acquisition, acquiring of control and M&A), which causes or likely to cause an appreciable adverse effect on competition within India.
III. Features of the Competition Act, 2002
i. The competition Act, 2002 has been enacted to prevent practices having an appreciable adverse effect on competition.
ii. To promote and sustain competition in the market and to protect the interests of consumers.
iii. To ensure freedom of trade.
iv. With the enforcement of the Competition Act, 2002 the MRTP Act, 1969 shall stand repealed and the MRTP Commission shall be dissolved.
v. The Competition Act, 2002 provides for the establishment of Competition Commission of India (CCI) and prescribes its duties, functions, and powers.
IV. The Competition Commission of India (CCI)
The Competition Commission of India (CCI), was established by the Central Government on 14th October 2003. The Commission is a body corporate having perpetual succession and common seal. CCI consists of a Chairperson and Six Members appointed by the Central Government. It is the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of India. The Commission
is also required to give opinion on competition issues on a reference received from a statutory authority established under any law and to undertake competition advocacy, create public awareness and impart training on competition issues.
The Competition commission has been establishment for the accomplishment of the following objectives:
V. Role of CCI
The preamble to the competition act states “An Act to provide, keeping in view of the economic development of the country, for the establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto”.
To achieve its objectives, the Competition Commission of India endeavours to do the following:
VI. Role of CCI As a Business Facilitator
Fair competition is key to a thriving business sector. CCI protects businesses from other businesses’ unfair practices and penalises the erring entitites too. It promotes competition by preventing abuse of dominance by a market player to the deterrent of other competitors and the consumers. As such it ensures the coexistence of large and small enterprises.
Insurance Regulatory and Development Authority of India (IRDAI)
Insurance Regulatory and Development Authority of India (IRDAI) is an autonomous apex statutory body which regulates and develops the insurance industry in India. It was constituted under Insurance Regulatory and Development Authority Act, 1999 and duly passed by the Parliament.
The IRDA Act, 1999 allows private players to enter the insurance sector in India besides a maximum foreign equity of 26 per cent in a private insurance company having operations in India. The Insurance Bill (Proposed by UPA government in July, 2013) but passed in July, 2014, raised the FDI limit in insurance sector to 49%. It serves as an Authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith.
IRDAI role is to protect rights of policy holders and they provide registration certification to life insurance companies and responsible for renewal, modification, cancellation and suspension of this registered certificate.
II. Mission Statement of the Authority
III. Duties, Powers and Functions of IRDAI
Section 14 of IRDAI Act, 1999 lays down the duties, powers and functions of IRDAI.
Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business.
The powers and functions of the Authority shall include:
IV. Role of IRDAI as Business Facilitator
IRDAI also acts as a business facilitator. Firstly, it takes steps to regulate and develop the insurance industry in the country. Secondly, it serves as an authority to protect the interest of the insurance policy holders in create confidence among them. Thirdly, IRDAI disseminates a lot of information for the benefit of policy holders and also for educating the general public about the advantages of getting insurance policies and keeping then alive.