Meaning and Establishment of SEBI

A capital market with growing numbers of investors, intermediaries and listed companies cannot be left to regulate itself — unfair practices such as price rigging, insider trading and delayed allotment of shares had become common in the Indian stock market by the 1980s, and investors had no single, powerful body to turn to for protection. The Securities and Exchange Board of India (SEBI) was set up to fill exactly this gap.

SEBI was first constituted as a non-statutory body on 12 April 1988 by a resolution of the Government of India, functioning initially without any real legal powers of enforcement. Recognising that a watchdog without teeth cannot regulate an entire market, the Government of India gave SEBI statutory status through the Securities and Exchange Board of India Act, 1992 (enacted 30 January 1992), which came into force with retrospective effect from 12 April 1988. Since then, SEBI has been the primary regulator of India's securities market, with its head office in Mumbai and regional offices at Delhi, Kolkata, Chennai and Ahmedabad.

SEBI today regulates every major participant in the securities market — stock exchanges, listed companies, stock brokers, sub-brokers, merchant bankers, mutual funds, portfolio managers, credit rating agencies and depositories — with the twin aim of protecting investors and promoting the orderly development of the market. TN's own commerce syllabus builds this chapter on the same statutory framework — the SEBI Act, 1992 — that every Indian commerce/company-law course draws on; the treatment here is TN's own, but the underlying law is common ground across boards.