GSSDGS KHALSA COLLEGE

SEMINAR ON CORPORATE GOVERNANCE AND

BUSINESS ETHICS

ROLE OF SEBI IN ESTABLISHING CORPORATE

GOVERNANCE
SUBMITTED TO SUBMITTED BY
Prof. SUPANPREET SINGH PUNEET KAUR
10729
M.COM -1 (SEM-2)
 INTRODUCTION TO SEBI

OBJECTIVES ,FUNCTIONS
POWERS

CORPORATE GOVERNANCE

Agenda MODEL,ROADMAP,
CASE STUDIES

ROLE OF SEBI IN
ESTABLISHING CORPORATE
GOVERNANCE
 INTRODUCTION
SEBI stands for Securities and Exchange Board of India. It
is a statutory regulatory body that was established by the
Government of India in 1992 for protecting the interests of
investors investing in securities along with regulating the
securities market. SEBI also regulates the stock market and
mutual funds function. The Securities and Exchange Board
of India (SEBI) was first established in 1988 as a non-
statutory body for regulating the securities market.
OBJECTIVES AND FUNCTIONS

PREVENTING FROM
INVESTORS
FRAUDS AND CODE OF CONDUCT
PROTECTION
MALPRACTICES

PROTECTIVE REGULATORY DEVELOPMENT

FUNCTION FUNCTION FUNCTION
.

• PROTECTIVE FUNCTION :-
The protective function implies the role that SEBI plays in protecting the
investor interest and also that of other financial participants. The protective
function includes the following activities.

Check Price rigging:

Prohibits insider trading: Promoting fair practices:
It is the act of causing
Insider trading is the act of SEBI promotes fair trade
unnatural fluctuations in the
buying or selling of the practice and works towards
price of securities by either
securities by the insiders of prohibiting fraudulent
increasing or decreasing the
a company, which includes activities related to trading
market price of the stocks
the directors, employees of securities.
that leads to unexpected
and promoters
losses for the investors
REGULATORY FUNCTION:-
Regulatory functions involve establishment of rules and regulations for the financial
intermediaries along with that ,It helps in efficient management of the market

Regulates the
working of stock
defined the Regulating the brokers
rules and process
Conducting
regulations
inquiries and
and formed audit
guidelines
DEVELOPMENT FUNCTION:-
: Developmental function refers to the steps taken by SEBI in order to provide investors with
knowledge of the trading and market function.

Training of intermediaries who . By making the use writing an

are a part of the security optional system
market.

.Introduction of trading
through electronic

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 PURPOSE OF SEBI
The purpose for which SEBI was setup was to provide an environment that paves the way for
mobilization and allocation of resources .It provides practices, framework and infrastructure to
meet the growing demand.

MARKET PROMOTION OF
INVESTORS REGULATION FAIR AND
PROTECTION AND EFFICIENT
OVERSIGHT MARKETS

DEVELOPMENT CORPORATE REGULATION OF REGULATION

OF CAPITAL GOVERNANCE MARKET OF INSIDER
MARKET ENHANCEMENT: INTERMEDIARIES TRADING
 STRUCTURE OF SEBI

One Chairman of the

One Board member who
board who is appointed
is appointed by the
by central Government of
central bank, that is RBI
India

Two Board members who

Five Board members who
are hailing from the
are elected by the central
Union Ministry of
Government of India
Finance
.

POWER OF SEBI
Quasi-Judicial Quasi-Legislative
SEBI can issue rulings against fraud SEBI retains the authority to
and other unethical behavior in the enact laws and regulations to
securities industry. This powerful S
safeguard investors’ interest
authority allows SEBI to promote and prevent misconduct.
and encourage fairness, transparency,
and accountability easily.

Quasi-Executive
SEBI has the authority to enforce
the rules and rulings imposed as
well as to pursue legal action
against those who violate them.
SEBI can review and analyze your
books of accounts and relevant
documents if it finds any rule
violations.
CORPORATE GOVERNANCE
Corporate governance is the system of rules,
practices, and processes by which a company is
directed and controlled. Corporate governance
essentially involves balancing the interests of a
company's many stakeholders, which include , senior
management, customers, suppliers, lenders, the
government, and the community. As such, corporate
governance encompasses practically every sphere of
management, from action plans and internal
controls to performance measurement and
corporate disclosure .Governance refers to the set of
rules, controls, policies, and resolutions put in place
to direct corporate behavior. A board of directors is
pivotal in governance, while proxy advisors
and shareholders are important stakeholders who can
affect governance
BENEFITS OF CORPORATE GOVERNANCE
• Good corporate governance creates transparent rules ,controls, guides leadership and aligns the interests
of shareholders, directors, management and employees.
• It helps build trust with investors, the community, and public officials.
• Corporate governance can give investors and stakeholders a clear idea of a company's direction and
business integrity.
• It promotes long-term financial viability, opportunity, and returns.
• It can facilitate the raising of capital.
• Good corporate governance can translate to rising share prices.
• It can reduce the potential for financial loss, waste, risks, and corruption.
• It is a game plan for resilience and long-term success.
 THE PRINCIPLES OF CORPORATE GOVERNANCE

FAIRNESS
The board of directors must treat
shareholders, employees,
vendors, and communities fairly
and with equal consideration.
TRANSPARENCY RISK MANAGEMENT
The board should provide timely,
The board and management
accurate, and clear information
must determine risks of all kinds
about such things as financial
and how best to control them
performance, conflicts of interest

RESPONSIBILITY ACCOUNTABILITY
The board is responsible for The board must explain the
the oversight of corporate purpose of a company's
matters and management activities and the results of its
activities conduct
.
CORPORATE GOVERNANCE MODELS
The Anglo-American Model:-
This model can take various
forms, such as the Shareholder,
Stewardship, and Political
Models. The Shareholder Model
is the principal model at present.
The Shareholder Model is
designed so that the board of
directors and shareholders are in
control. Stakeholders such as
vendors and employees, though
acknowledged, lack control.
Management is tasked with
running the company in a way
that maximizes shareholder
interest.
The Continental Model:-
Two groups represent the
controlling authority under the
Continental Model. They are the
supervisory board and the
management board. In this two-
tiered system, the management
board is composed of company
insiders, such as its executives.
The supervisory board is made up
of outsiders, such as shareholders
and union representatives. Banks
with stakes in a company also
could have representatives on the
supervisory board.
The Japanese Model:-
The key players in the Japanese
Model of corporate governance
are banks, affiliated entities,
major shareholders
called Keiretsu (who may be
invested in common companies or
have trading relationships),
management, and the
government. Smaller,
independent, individual
shareholders have no role or
voice. Together, these key players
establish and control corporate
governance.
S
 HOW TO ACCESS CORPORATE GOVERNANCE IN DIFREENT AREAS
•Disclosure practices
•Executive compensation structure.
•Risk management.
•Policies and procedures for reconciling conflicts of interest.
•The members of the board of directors.
•Contractual and social obligation.
•Relationships with vendors
•Complaints received from shareholders and how they were addressed
•Audits
 CORPORATE GOVERNANCE : BOTTOM LINE
The bottom line of corporate governance refers to the fundamental goal or objective that corporate governance
practices aim to achieve. In essence, it is about ensuring the long-term sustainability, success, and ethical
behavior of a corporation while maximizing value for its shareholders and stakeholders.

RISK
ETHICAL CONDUCT ACCOUNTABILITY COMPLAINCE
MANAGEMENT

LONG TERM TRANSPERANCY BOARD

VALUE CREATION DISCLOSURE EFFECTIVENESS
 KEY ELEMENT OF CORPORATE GOVERNANCE
TRANSPARENCY
It’s all about being open,
STAKEHOLDERS honest, and forthcoming in
MANAGEMENT: your business operations.
Corporate governance Transparent practices, such
as timely and accurate
ensures that the interests
financial reporting,
of these stakeholders are disclosure of relevant
taken into account and information, and effective
balanced effectively communication, build trust
and credibility among
stakeholders.
DECISION MAKING:
It sets the stage for
responsible decision-
making, ensures
accountability, promotes
transparency, and
nurtures strong
stakeholder
relationships.
INDIAN MODEL OF CORPORATE GOVERNANCE
The Indian corporate governance landscape is a blend of regulatory frameworks, cultural values,
and the country’s dynamic business environment. It’s a colorful tapestry that weaves together principles of
transparency, ethics, and stakeholder welfare.

The Tata model: Followed by the renowned Tata Group, this model emphasizes the significance of ethics,
integrity, and accountability. The Tata Group’s commitment to ethical practices, social responsibility, and
long-term sustainability has made it a role model for many aspiring companies in India.

The Mahindra model: Embraced by the Mahindra Group, this model places a strong emphasis on the
empowerment of employees and stakeholders. The Mahindra Group’s approach is centered around the idea
that nurturing and empowering its people leads to overall organizational success. By promoting a culture of
inclusivity, transparency, and innovation, the Mahindra Group has established itself as a frontrunner in the
Indian corporate governance landscape.

The Infosys model: Adopted by the renowned IT giant Infosys, this model is built on the pillars of
transparency, integrity, and shareholder value. Infosys believes in fostering a culture of meritocracy, where
performance is recognized and rewarded.
BENEFITS OF EFFECTIVE CORPORATE GOVERNANCE

IMPROVER
BUILD LONG TERM
FINANCIAL
STAKEHOLDERS SUSTAINABILITY
PERFORMANCE
TRUST

FOSTERS
POSITIVE POSITIVE
CORPORATE SOCIETAL
CULTURE IMPACT
 ROADMAP FOR CORPORATE GOVERNANCE

Robust Regulatory Independence of

Frameworks: Boards:
Investor Education:
Implementing and The presence of
Many investors,
maintaining effective independent directors
especially small
corporate governance brings in diverse
investors, may not have
practices in India is no expertise and
a deep understanding of
walk in the park. While perspectives to
corporate governance
India has made strengthen decision-
principles and their
significant progress in making and promote
importance.
this area, there is still transparency within the
room for improvement. company.

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 CORPORATE GOVERNANCE SUCCESSFUL STORIES IN INDIA

TATA GROUP
One of the best examples HDFC BANK Sun Pharmaceutical
of corporate governance The bank has consistently Industries
excellence in India is the demonstrated its Sun Pharmaceutical has
Tata Group. The Tata commitment to sound demonstrated exemplary
Group, with its strong corporate governance corporate governance
ethical values and practices, setting an practices, emphasizing
unwavering commitment example for the entire the importance of
E
to transparency, has banking industry. With a stakeholder engagement
become a beacon of trust well-defined governance and risk management.
and integrity. Through its framework, HDFC Bank The company’s board not
robust governance prioritizes transparency, only comprises
practices, the group has risk management, and independent directors but
established itself as a stakeholder engagement. also encourages diversity
paragon of good and gender
corporate citizenship. representation.
ROLE OF SEBI IN ESTABLISHING CORPORATE GOVERNANCE

DISCLOSURE
REQUIREMENT
REGULATORY
FRAMEWORK
DEVELOPMENT

BOARD COMPOSITION AND

INDEPENDENCE

AUDIT COMMITTEE CODE OF CONDUCT

MANATES

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 PROXY ADVISORY
SHARE HOLDERS RIGHT SERVICES REGULATION
PROTECTION

WHISTLEBLOWER
MECHANISMS

CORPORATE SOCIAL ENFORCEMENT AND

RESPONSIBILITY MONITORING
CONTINUOUS GUIDANCE
ENHANCING
AND EDUCATION
TRANSPERANCY
DISCLOSER

REGULATION OF INSIDER
TRADING AND MARKET
ABUSE

CAPACITY BUILDING PROMOTION OF ETHICAL

AWARENESS CONDUCT
 CONCLUSION
In conclusion, the Securities and Exchange Board of India (SEBI) plays a pivotal role in ensuring

effective corporate governance practices within Indian companies. Through its regulatory oversight

and enforcement mechanisms, SEBI aims to foster transparency, accountability, and integrity in

corporate operations, thereby enhancing investor confidence and safeguarding the interests of all

stakeholders. Overall, the role of SEBI in corporate governance is instrumental in fostering investor

confidence, promoting market integrity, and advancing the long-term interests of all stakeholders in

the Indian capital markets. Through its proactive regulatory approach and commitment to upholding

high standards of governance, SEBI continues to be a key driver of sustainable economic growth

and development in India.

THANK YOU