Disclosure Violations
Listed entities are required to disclose material events that have a significant impact on the company’s operations, financials, or stock price. Failure to comply with these disclosure obligations can lead to regulatory scrutiny and penalties by SEBI to ensure transparency and fairness in the market.
1.Takeover Regulations
SEBI mandates that companies acquiring shares or control of listed entities make an open offer to minority shareholders. This is designed to protect the interests of minority shareholders and ensure that they are given an opportunity to sell their shares on the same terms as the acquiring party.
2.PFUTP Regulations (Prohibition of Fraudulent and Unfair Trade Practices)
SEBI enforces regulations that prevent the manipulation of stock prices through unusual trading practices, such as the trading of illiquid stock options. Companies and traders must comply with these regulations to avoid engaging in market manipulation or deceptive activities that could distort the fair functioning of the securities market.
3.Internal Code of Conduct
Listed companies are required to establish and adhere to an internal code of conduct, which includes provisions for reporting transactions, pre-clearance requirements, and the ethical conduct of employees and management. This code aims to prevent conflicts of interest and promote transparency and integrity within the organization.
4.Insider Trading
SEBI strictly prohibits insider trading, which involves trading securities based on non-public, material information. Individuals with access to confidential company information, such as directors, employees, or insiders, must not use this information for personal gain, as it undermines market fairness and investor trust.
5.Price Manipulation
SEBI takes strong action against any attempts to manipulate stock prices or create a false market, which distorts the natural supply and demand dynamics of securities. Price manipulation practices, such as misleading transactions, artificial trading volumes, or collusion to influence prices, are serious offenses under SEBI regulations and are subject to penalties and legal actions.
The Securities and Exchange Board of India (SEBI) plays a crucial role in ensuring the integrity, transparency, and fairness of the securities markets by regulating various aspects, including corporate disclosures, takeovers, insider trading, and market manipulation. Compliance with these regulations is essential for the proper functioning of India’s financial markets.