Slide 1

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 2

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 3

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 4

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 5

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 6

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 7

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 8

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 9

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 10

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 11

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 12

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 13

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 14

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 15

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 16

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 17

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 18

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 19

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 20

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 21

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 22

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 23

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 24

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 25

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 26

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 27

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

2

Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

3

Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
4

POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

5

FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

6

1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
7

2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

8

STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

9

10

11

12

13

14

POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

15

AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

16

SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

17

SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

18

REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

19

PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
20

 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
21

PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

23

Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

24

Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

25

wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

26

27

Thank you!!

28


Slide 28

Securities & Exchange Board of India
Preparad by :

Sandhya keisham Devi
Priya chauhan
Ashish chauhan
Vivek chauhan
Rahul chauhan
Nishant chaudhary

1

Contents
Introduction
Objectives of SEBI
Powers & Functions of SEBI
Structure of SEBI
Various Departments under SEBI
Powers of Central Government
Amendments

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Introduction
 Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
 In April 12, 1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India (as a non-statutory body).
 It was later made a statutory body on April 4,1992 and it came to be known as
the SEBI Act,1992.
 The mission of SEBI is to make India as one of the best securities market in the
world and SEBI as one of the most respected regulator in the world.
 In the year of 1995, the SEBI was given additional statutory powers by the
Government of India through an amendment to the Securities and Exchange
Board of India Act 1992.
 It is the apex body to develop and regulate the stock market in India.
 It is known as the watchdog of Indian Capital Market.

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Objectives
 To protect the interest of investors so that
there is a steady flow of savings into the
capital market.
 To promote the development and to regulate
the securities market .
 Ensure fair practices by the issuers of
securities so that they can raise resources at
minimum cost.
 To promote efficient services by brokers,
merchant bankers and other intermediaries
so that they become competitive and
professional.
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POWERS OF SEBI
1) Power to call periodical returns from recognized stock
exchange.
2) Power to control and regulate stock exchange.
3) Power to levy fees or other charges for carrying out the
purpose of regulation.
4) Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
5) Power to make or amend bye-laws of recognized stock
exchanges.
6) Power to grant registration to market intermediaries.
7) Power to declare applicability of section 17 of the Securities
Contract (Regulation) Act 1956 in any state or area to grant
licenses to dealers.
8) Power to compel listing of securities by public companies.

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FUNCTIONS OF SEBI
Section 11 of the SEBI Act,1992 classifies the functions
of SEBI under 2 heads:1) Regulatory Functions
2) Developmental Functions.

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1. REGULATORY FUNCTIONS
i.
ii.

iii.
iv.
v.
vi.

Regulation of stock exchanges and self regulatory
organizations.
Registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters,
portfolio managers etc.
Registration and regulation of the working of collective
investment schemes including mutual funds.
Regulating substantial acquisitions of shares and take over of
companies.
Prohibition of fraudulent and unfair trade practices relating to
securities market.
Prohibiting of insider trading.
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2. DEVELOPMENTAL FUNCTIONS
i. Promoting investors education.
ii. Training of intermediaries.
iii. Conducting research and publishing
information useful to all market participants.
iv. Promoting of fair practices.
v. Promotion of self regulatory organisations.

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STRUCTURE OF SEBI
The board shall consist of the following members : Chairman
 Two members, one from amongst the officials of the Central
government dealing with finance and another from the
administration of Companies Act,1956.
 One member from amongst the officials of the Reserve Bank
of India.
 Five other members of whom at three shall be the whole
time members to be appointed by the Central Government.

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POWERS OF CENTRAL GOVERNMENT
 The Central Government has power to issue directions to SEBI Board,
supersede the Board, if necessary and to call for returns and reports as and
when necessary.
 The Central Government has also power to give any guideline(s) or to make
regulations and rules for SEBI and its operations.

RELATION WITH THE CENTRAL GOVERNMENT
 The activities of SEBI are financed by grants from Central Government, in
addition to fees, charges etc. collected by SEBI.
 The fund called SEBI General Fund is set up, to which, all fees, charges and
grants are credited.
 This fund is used to meet the expenses of the Board and to pay salary of
staff and members of the body.

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AMMENDMENTS
SEBI Act, 1992 was amended in the years 1995, 1999 and 2002 to meet
the requirements of changing needs of the securities market.
 SEBI AMENDMENT BILL, 1995 : Mainly focussed on Foreign Institutional Investors (FII).
 Given additional statutory powers.
 SEBI AMENDMENT BILL, 1999 : Included derivates & instruments of collective investment schemes
under the definition of securities.
 Enable RBI to regulate the transactions in government securities &
other related instruments as may be specified by the Government.

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SEBI AMENDMENT BILL, 2002: Gave more teeth to SEBI to punish market offenders through Serious
Fraud Office (SFO).
 Power to search & seize books, registers & documents of
intermediaries or any other persons associated with the securities
market.

 Fine of 25 crores for insider trading.
 Board strength increased from six to nine.

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SEBI AMENDMENT BILL, 2013:-

 Passed by the Rajya Sabha on 5th September.
 Widen the area for eligible candidates for the post of Presiding Officer at
the Securities Appellate Tribunal (SAT).
 The Bill extends eligibility criteria for SAT Presiding Officer’s role &
includes sitting or retired Judges of a High Court with a minimum service
of 7 years.

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REGIONAL OFFICES
1.
2.
3.
4.

New Delhi
Kolkata
Chennai
Ahmadabad

1.
2.
3.
4.
5.
6.
7.

Local Offices
Jaipur
Bangalore
Guwahati
Bhubaneswar
Patna
Kochi
Chandigarh

SEBI Bhavan, Mumbai Headquarters (in Bandra Kurla
Complex)

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PACL CASE
 In just over 30 years, Nirmal Singh Bhangoo,
the man behind Pearls Agrotech Corporation
Limited (“PACL”) who use to sell milk near
Attari border in Punjab became the owner of
1.83 lakh acres of land around the country.
 A charismatic business man who milked small
investors to make Pearl(s) and always kept his
investors satisfied.
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 In its biggest-ever crackdown on a large-scale money pooling
scheme estimated at nearly Rs. 50,000 crore (twice the
amount to be recover from SAHARA group), regulator SEBI has
ordered PACL to refund investors within three months and
wind up operations.
 SEBI had found PACL violating Collective Investment Scheme
Regulations by mobilizing the money without being registered
with the regulator, SEBI.
 Besides, closure of PACL operations, SEBI is initiating further
proceedings against PACL and its nine promoters and directors
for fraudulent and unfair trade practices, as also for violation
of SEBI's CIS Regulations, among others, as per a direction
from the Supreme Court.
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PACL BUSINESS ACTIVITIES
 PACL offered two kinds of plans to its customers—a cash-down payment
plan and an installment payment plan. Under the former, it offered to allot
land to customers within 270 days of payment and under the latter within
90 days. In fact, business model of PACL isn’t very complicated. It collects
money from investors and invests in cheap land which is likely to see
changes in end use. Once that happens, the cheap land becomes a
goldmine that PACL monetizes to pay investors 12.5% interest.
 At present, it is being estimated that PACL has more than 58.5 million
customers, more than twice the 22 million demat accounts in the entire
country and has paid commission of Rs 7,893.8 crore up to March 2012 to
more than its 8 lakh agents who works as network of chain system for
collection of public deposit in return for attractive commissions on
deposits brought in by them and other agents linked to them in chain.
PACL is yet to allot land to 46.3 million investors where as PACL claimed it
was in the business of purchasing and developing land, adding the
developed land was transferred to investors.

SEBI VS PACL
 SEBI clamps down the business activities of PACL categorizing the
collection of public deposits under the grab of allotment of farm land to
depositors without any maintenance of proper records/data and without
registration of its scheme with SEBI under Collective Investment Scheme
Regulations and declare the activities of PACL are in the nature of a Ponzi
scheme.
 SEBI will make a reference to the state governments and local police to
register civil or criminal cases against PACL, its promoters, directors and
managers for fraud, cheating, criminal breach of trust and
misappropriation of public funds if the money is not refunded. SEBI will
also initiate attachment and recovery proceedings if the money is not
refunded to the public within the deadline.

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Is PACL involved in Collective
Investment Scheme?
An investment scheme wherein several
individuals come together to pool their money
for investing in a particular asset(s) and for
sharing the returns arising from that
investment as per the agreement reached
between them prior to pooling in the money.

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Cont..
 Now, the most basic questions which arises, has PACL been
altogether involved in Ponzi Scheme or it was failure on part
of PACL to get its scheme registered with SEBI under
Collective Investment Scheme Regulations? Has PACL cheated
any of its investor till date?
 Though at this moment we may not have all answers,
however few things are very clear: i. The Collective
Investment Scheme operated by PACL was not registered with
SEBI; ii. There are more than 46.31 million customers to
whom PACL is yet to allot land

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wayout
 After the first round of battle, where SEBI has ordered PACL to refund Rs.
49,100 crore to its investors, PACL is getting ready for second round and to
knock on Securities Appellate Tribunal (“SAT”) against SEBIs order. The
whole battle between SEBI and PACL is on the issue that whether the
business activities of PACL comes within the ambit of CIS or not? However,
in middle of this battle, there are millions of small investors who had been
exposed to high degree of risk, who may lose everything if PACL shrinks.
 Is there any way-out to regulate their micro finance business/raising
public deposits in real estate?? Though there are not many legal options
available, however, PACL could have registered their public raising
schemes in real estate under Collective Investment Scheme with SEBI.
 In near future we can expect further crackdown on other companies
engaged in similar activities like PACL.

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Thank you!!

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