1. RAISING FUNDS- CORPORATE FINANCE- Running a business requires a great deal of capital.

Capital can take different forms, from human and labor capital to economic capital. But when most people
hear the term financial capital, the first thing that comes to mind is usually money.
That's not necessarily untrue. Financial capital is represented by assets, securities, and yes, cash. Having
access to cash can mean the difference between companies expanding or staying behind and being left in the
lurch.
There are two types of capital that a company can use to fund operations: debt and equity. Prudent corporate
finance practice involves determining the mix of debt and equity that is most cost-effective. This article
examines both kinds of capital.
a. Debt Capital
Debt capital is also referred to as debt financing. Funding by means of debt capital happens when a company
borrows money and agrees to pay it back to the lender at a later date. The most common types of debt capital
companies use are loans and bonds, which larger companies use to fuel their expansion plans or to fund new
projects. Smaller businesses may even use credit cards to raise their own capital.
A company looking to raise capital through debt may need to approach a bank for a loan, where the bank
becomes the lender and the company becomes the debtor. In exchange for the loan, the bank charges interest,
which the company will note, along with the loan, on its balance sheet.
b. Equity Capital
Equity capital is generated through the sale of shares of company stock rather than through borrowing. If
taking on more debt is not financially viable, a company can raise capital by selling additional shares. These
can be either common shares or preferred shares.
Common stock gives shareholders voting rights but doesn't really give them much else in terms of
importance. They are at the bottom of the ladder, meaning their ownership isn't prioritized as other
shareholders are. If the company goes under or liquidates, other creditors and shareholders are paid first.
Preferred shares are unique in that payment of a specified dividend is guaranteed before any such payments
are made on common shares. In exchange, preferred shareholders have limited ownership rights and have no
voting rights. EXAMPLE- some companies choose not to borrow more money to raise their capital. Perhaps
they're already leveraged and just can't take on any more debt. They may turn to the market to raise some
cash.
A startup company may raise capital through angel investors and venture capitalists. Private companies, on
the other hand, may decide to go public by issuing an initial public offering (IPO). This is done by issuing
stock on the primary market—usually to institutional investors—after which shares are traded on the
secondary market by investors. For example, Meta, formerly Facebook, went public in May 2012, raising
$16 billion in capital through its IPO, which put the company's value at $104 billion.
2. FEATURES OF DEBENTURE AND EQUITY
a. DEBENTURES- A debenture is a type of bond or other debt instrument that is unsecured by collateral.
Since debentures have no collateral backing, they must rely on the creditworthiness and reputation of the
issuer for support. Both corporations and governments frequently issue debentures to raise capital or
funds. Corporations also use debentures as long-term loans. However, the debentures of corporations are
unsecured. Instead, they have the backing of only the financial viability and creditworthiness of the
underlying company. These debt instruments pay an interest rate and are redeemable or repayable on a
fixed date. A company typically makes these scheduled debt interest payments before they pay stock
dividends to shareholders. Debentures are advantageous for companies since they carry lower interest
rates and longer repayment dates as compared to other types of loans and debt instruments.
Features of a Debenture
When issuing a debenture, first a trust indenture must be drafted. The first trust is an agreement between the
issuing corporation and the trustee that manages the interest of the investors.
i. Interest Rate
The coupon rate is determined, which is the rate of interest that the company will pay the debenture holder or
investor. This coupon rate can be either fixed or floating. A floating rate might be tied to a benchmark such as
the yield of the 10-year Treasury bond and will change as the benchmark changes.
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ii. Credit Rating
The company's credit rating and ultimately the debenture's credit rating impacts the interest rate that
investors will receive. Credit-rating agencies measure the creditworthiness of corporate and government
issues. These entities provide investors with an overview of the risks involved in investing in debt.
iii. Maturity Date
For nonconvertible debentures, mentioned above, the date of maturity is also an important feature. This date
dictates when the company must pay back the debenture holders. The company has options on the form the
repayment will take.
b. EQUITY FEATURES
1. Permanent Shares: Equity shares are permanent in nature. The shares are permanent assets of a
company. And are returned only when the company winds up.
2. Significant Returns: Equity shares have the potential to generate significant returns to the shareholders.
However, these are risky investment options. In other words, equity shares are highly volatile. The price
movements can be drastic and are dependent on multiple internal and external factors. Therefore, investors
with suitable risk tolerance levels should only consider investing in these.
3. Dividends: Equity shareholders share the profits of a company. In other words, a company may distribute
dividends to its shareholders from its annual profits. However, a company is under no obligation to distribute
dividends. In case a company doesn’t make good profits and doesn’t have surplus cash flow, it can choose
not to give dividends to its shareholders.
4. Voting Rights: Most equity shareholders have voting rights. This allows them to select the people who
will govern the company. Choosing effective managers assists the company to enhance its annual turnover.
As a result, investors can receive higher average dividend income.
5. Liquidity: Equity shares are highly liquid investments. The shares are trade on the stock exchanges. As a
result, you can buy and sell the share anytime during trading hours. Therefore, one doesn’t have to worry
about liquidating their shares.
6. Limited Liability: Losses a company makes doesn’t affect the ordinary shareholders. In other words, the
shareholders are not liable for the company’s debt obligations. The only effect is the decrease in the price of
the stocks. This will have an impact on the return on investment for a shareholder.
Companies act - sec 43-51
3. WHAT IS INVESTMENT- DIFFERENT TYPES- MODERN TRADITIONAL-
An investment is an asset or item acquired with the goal of generating income or appreciation. Appreciation
refers to an increase in the value of an asset over time. When an individual purchases a good as an
investment, the intent is not to consume the good but rather to use it in the future to create wealth.
An investment always concerns the outlay of some resource today—time, effort, money, or an asset—in
hopes of a greater payoff in the future than what was originally put in. For example, an investor may
purchase a monetary asset now with the idea that the asset will provide income in the future or will later be
sold at a higher price for a profit. The act of investing has the goal of generating income and increasing value
over time. An investment can refer to any mechanism used for generating future income. This includes the
purchase of bonds, stocks, or real estate property, among other examples. Additionally, purchasing a property
that can be used to produce goods can be considered an investment. Because investing is oriented toward the
potential for future growth or income, there is always a certain level of risk associated with an investment.
An investment may not generate any income, or may actually lose value over time. For example, a company
you invest in may go bankrupt. Alternatively, the degree you investing time and money to obtain may not
result in a strong job market in that field.
Traditional- In finance, the notion of traditional investments refers to putting money into well-known assets
(such as bonds, cash, real estate, and equity shares) with the expectation of capital appreciation, dividends,
and interest earnings. The traditional investment category includes stocks, bonds, and cash. Stocks are shares
of publicly traded companies. Each share of stock represents fractional ownership of a company in
proportion to the total number of shares available. When it comes to saving or investing money, most
Indians prefer traditional options such as fixed deposits (FDs), Public Provident Fund (PPF) or gold.
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These avenues are well-known for capital preservation and stable returns.
Modern method- Modern investing can mean, for example, concentrating on equity funds and focusing on
the so-called ETF (exchange-traded funds).
The advantage is that there are virtually no administrative costs and there is no need to interact with banks.
In other words, the investment is more direct and less money is lost. Equity funds or ETFs focus on risk
diversification, which is why they are not individual shares, but always a whole bundle of securities from
different companies. Modern investing nowadays means the willingness to take a little more risk but also the
anticipation of significantly more profit. A further option that can be used to make modern investments on
the face of it is to invest in tangible assets. If you follow the press, you will always hear about solid profits
that can be achieved by buying wristwatches, vintage cars, designer furniture, works of art or even old wine
and records.

4. SECTORS OF INVESTMENT- banking market, insurance market, security market

5. WHY INVESTMENT IS NECESSARY- inflation, tax exemption-

a. It is a great source of passive income
One thing that the ongoing corona virus crisis has taught us is that we cannot solely rely on your regular
income. If we Are unable to earn our regular income for some reason, we can land up in immense hardships.
To mitigate this risk, you will need to have a second line of income which will help you to sustain yourself in
times of such crisis. This can be your investments in Fixed deposits, equities, Mutual Funds, properties, and
other assets. These investments will continue to earn returns for you even when your regular income stops
and enable you to tide over the situation comfortably.
b. Brings financial Independence
Are you afraid of becoming dependent on others after retirement for your monetary needs? Do not worry.
You can get financial freedom in your old age by investing regularly to create a retirement Corpus. The
passive income you will earn from this corpus will enable you to take care of your monthly expenses and
other needs comfortably after retirement.
c. It lets you follow your passion
Do you dream of retiring early to pursue a passion that you have? If yes, then your investments are the key to
achieving your dream. Your strategy should be to invest and accumulate wealth in a planned way in your
early years and when you accumulate a sizable wealth, retire early.
The passive income you earn from those investments will help you to meet your expenses thereafter while
you are busy in actively pursuing your passion.
d. Helps to beat inflation
Inflation is a fact of life which none of us can avoid. It reduces the purchasing power of money we have and
makes us poorer as time passes by. Unless you take steps to address this problem, you can be in serious
trouble.
The best way to combat the negative effect of inflation is to invest the money that you have in your hands
today. Investing regularly will enable you to beat inflation and your purchasing power will not go down. If
you are to stay ahead of inflation, you need to have more money to purchase the extent of the goods you
intend to in the future with the money you have today. But, money doesn’t grow on its own. If your money
has to grow, then it has to earn returns. To earn returns, you need to invest. Therefore, making investments is
necessary to tackle inflation.
e. Get tax benefits
Various investment products like PPF, ELSS, Tax Saving Bonds and long-term fixed deposits offer tax
benefits under section 80C of the Income Tax Act 1961. Invest in them wisely to reduce your tax burden.
You need to start investing regularly in a disciplined way to get the benefits
6. MARKET AND TYPES-
a. primary market- The primary market is where securities are created. It's in this market that firms sell
(float) new stocks and bonds to the public for the first time. An initial public offering, or IPO, is an example
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of a primary market. These trades provide an opportunity for investors to buy securities from the bank that
did the initial underwriting for a particular stock.
b. secondary market- For buying equities, the secondary market is commonly referred to as the "stock
market." This includes the New York Stock Exchange (NYSE), Nasdaq, and all major exchanges around the
world. The defining characteristic of the secondary market is that investors trade among themselves.
That is, in the secondary market, investors trade previously issued securities without the issuing companies'
involvement. For example, if you go to buy Amazon (AMZN) stock, you are dealing only with another
investor who owns shares in Amazon. Amazon is not directly involved with the transaction.
In the debt markets, while a bond is guaranteed to pay its owner the full par value at maturity, this date is
often many years down the road. Instead, bondholders can sell bonds on the secondary market for a tidy
profit if interest rates have decreased since the issuance of their bond, making it more valuable to other
investors due to its relatively higher coupon rate.
Features of Primary Market
A company turns to the primary market for its long term capital needs. Fulfilling the need for long
term capital is, therefore, a feature of a primary market.
A fresh issue of securities takes place in the primary market. The buyers are usually institutional
investors and retail investors.
Features of Secondary Market
The secondary market helps companies fulfil short-term liquidity requirements. It facilitates the
marketability of existing securities.
It also ensures true and fair dealing for the protection of the investor’s interest.
DIFFERENCE BTW THEM-
Securities that are issued in a market are referred to as the primary market. When the company gets
listed on an exchange and its stocks are then traded among investors, it is called the secondary market.
The primary market is also known as a ‘new issue market’ and the secondary market is known as an
‘after issue market.’ Depending upon the demand and supply of the securities traded the prices in the
secondary market vary. But, the prices in the primary market are fixed.
In the primary market, investors have an option to purchase the shares directly from the company,
whereas in the secondary market, the investors buy and sell the securities among themselves.
Investment bankers do the selling in a primary market. In the secondary market, the broker acts as an
intermediary while the trading is done.
In the primary market, the company stands to gain from the sale of a security. While in the secondary
market, investors stand to gain any sort of capital appreciation from the securities.
The securities in the primary market can only be sold once, while in the secondary market sale and
purchase is a continuous process.
The amount that is received from the securities becomes capital for a company whereas; in the case
of the secondary market, the same reflects the income for investors.
The two financial markets -- primary market and secondary market, play a major role in the mobilization of
money and help develop the economy. Countries with robust financial markets make it easier for companies
to access funds and grow faster.

7. PRIMARY, SECONDARY, FINANCIAL, CAPITAL, MONEY- for how long investment possible in
primary and money market-
FINANCIAL MARKET- Financial markets refer broadly to any marketplace where the trading of securities
occurs, including the stock market, bond market, forex market, and derivatives market, among others.
Financial markets are vital to the smooth operation of capitalist economies. Financial markets play a vital
role in facilitating the smooth operation of capitalist economies by allocating resources and creating liquidity
for businesses and entrepreneurs. The markets make it easy for buyers and sellers to trade their financial

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holdings. Financial markets create securities products that provide a return for those who have excess
funds (Investors/lenders) and make these funds available to those who need additional money (borrowers).
The stock market is just one type of financial market. Financial markets are made by buying and selling
numerous types of financial instruments including equities, bonds, currencies, and derivatives. Financial
markets rely heavily on informational transparency to ensure that the markets set prices that are efficient and
appropriate. The market prices of securities may not be indicative of their intrinsic value because of
macroeconomic forces like taxes.

CAPITAL MARKET- Capital markets are where savings and investments are channeled between suppliers
and those in need. Suppliers are people or institutions with capital to lend or invest and typically include
banks and investors. Those who seek capital in this market are businesses, governments, and individuals.
Capital markets are composed of primary and secondary markets. The most common capital markets are the
stock market and the bond market. They seek to improve transactional efficiencies by bringing suppliers
together with those seeking capital and providing a place where they can exchange securities.
The term capital market is a broad one that is used to describe the in-person and digital spaces in which
various entities trade different types of financial instruments. These venues may include the stock market, the
bond market, and the currency and foreign exchange (forex) markets. Capital markets are used primarily to
sell financial products such as equities and debt securities.
These markets are divided into two different categories:
Primary markets where new equity stock and bond issues are sold to investors
Secondary markets, which trade existing securities

MONEY MARKET- It falls under financial market. Typically the money markets trade in products with
highly liquid short-term maturities (of less than one year) and are characterized by a high degree of safety
and a relatively low return in interest. At the wholesale level, the money markets involve large-volume trades
between institutions and traders. At the retail level, they include money market mutual funds bought by
individual investors and money market accounts opened by bank customers. Individuals may also invest in
the money markets by buying short-term certificates of deposit (CDs), municipal notes, or U.S. Treasury
bills, among other examples.

8. AUTHORITIES GOVERNING CAPTIAL MARKET- REGULATING MECHANISM- SEBI

The regulatory structure has been framed under the four pillars that are the Ministry of Finance, Reserve
Bank of India, Security and Exchange Board of India, and the National Stock Exchange.
a. Ministry of Finance(MoF)- The ministry depicts that the Government of India plays a very important role
and their economic policies and manifestos help in market regulation and framework. They formulate rules
and analyze them for the efficient and effective growth of the market. The Department of Economic Affair
which manages the market works under certain sets of laws that are the Depositories Act, 1996, Securities
Contract (Regulation) Act, 1956, and Securities and Exchange Board of India Act, 1992. There are
many other laws such as the Companies Act, 2013, etc.
b. Reserve Bank of India- The body that was established in 1934 frames the policies, formulates the bodies
and regulates the rules as per the current situation. RBI has active participation in the stock market and also
sets the various parameters that are used in the transactions of debt, equity, and other types of securities.
c. Security Exchange Board of India (SEBI)- This body can also be considered as the apex body of capital
market regulators. SEBI is a principal regulatory body that is also a statutory body established under the
SEBI Act,1992. SEBI was earlier established as the non statutory body in 1988. They not only protect the
interest of investors in securities but also promote the market. It supervises, controls, and manages several
institutional brokers, investors, companies, and all other associated persons related to the market. The body’s
primary function is to prohibit malpractice or unfair trade practices such as insider trading or manipulating
funds. The stock exchanges work under the direct control of this body as they adopt the flexible and
adaptable approach for regulating the market. They perform many other such regulatory functions such as
training of intermediaries, auditing of stock exchanges, regulating and registering the mutual funds
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9. What is mutual fund and why mutual funds- A mutual fund is a pool of money managed by a professional
Fund Manager.
It is a trust that collects money from a number of investors who share a common investment objective and
invests the same in equities, bonds, money market instruments and/or other securities. And the income /
gains generated from this collective investment is distributed proportionately amongst the investors after
deducting applicable expenses and levies, by calculating a scheme’s “Net Asset Value” or NAV. Simply put,
the money pooled in by a large number of investors is what makes up a Mutual Fund.
WHY MUTUAL FUNDS
Mutual funds are ideal for investors who either lack large sums for investment, or for those who neither have
the inclination nor the time to research the market, yet want to grow their wealth. The money collected in
mutual funds is invested by professional fund managers in line with the scheme’s stated objective. In return,
the fund house charges a small fee which is deducted from the investment. The fees charged by mutual funds
are regulated and are subject to certain limits specified by the Securities and Exchange Board of India
(SEBI).
India has one of the highest savings rate globally. This penchant for wealth creation makes it necessary for
Indian investors to look beyond the traditionally favoured bank FDs and gold towards mutual funds.
However, lack of awareness has made mutual funds a less preferred investment avenue.
Mutual funds offer multiple product choices for investment across the financial spectrum. As investment
goals vary – post-retirement expenses, money for children’s education or marriage, house purchase, etc. – the
products required to achieve these goals vary too. The Indian mutual fund industry offers a plethora of
schemes and caters to all types of investor needs.
Mutual funds offer an excellent avenue for retail investors to participate and benefit from the uptrends in
capital markets.

10. SECURITIES CONTRACT REGULATION ACT-

The SCRA is an enactment to provide for direct and indirect control of all aspects of securities trading,
running of stock exchanges and to prevent undesirable transactions in securities. The SCRA,1956, among
other provisions, making provision as to recognition of the stock exchanges by the Government, providing
for their corporatisation and demutualisation, ensuring adequate government control over the functions and
affairs of the stock exchanges in the interest of investors, has contributed to a healthy, disciplined and
beneficial platform for the dealings in security. Due to such provisions contained in the Act, there has been a
raising in investment.
The SCRA, in Section 3 of the Act, has provided for a specific procedure which enabled the stock exchange
desirous of being recognized by the Government to apply in the manner prescribed by the act. The
Procedures relating to granting of recognition by the Government to the stock exchange are explained in
Section 4 of the SCRA. Simultaneously, the SEBI (Securities and Exchange Board of India) is also
empowered to give recognition to the Stock Exchange. It is explicitly provided by the SCRA that prior to
granting recognition to a stock exchange, the Central Government has to be satisfied after proper inquiry that
the rules and bylaws of a stock exchange applying for registration are in conformity with the prescribed
conditions in order to ensure fair dealing and to protection of the interest of the investors. The SCRA also has
provided for other conditions for recognition of stock exchange which increase the Government control and
interference, such as, conditions related to qualifications for membership of stock exchanges; manners in
which the contracts shall be entered into and enforced as between members; the representation of the Central
Government on each of the stock exchange by such number of persons not exceeding three as the Central
Government may nominate in this behalf; etc.
Section-5 of the SCRA enables the Central Government to withdraw the recognition granted to a stock
exchange under the provisions of the said act in the interest of the trade or the public interest following the
procedure provided by the Act in this regard.
Section 6 of the SCRA requires the recognized stock exchanges to furnish periodical returns to the SEBI
relating to the affairs of the stock exchange. The SCRA empowers the SEBI to direct inquiry and call for
inquiry report in relation to the affairs of any member of the stock exchange. Section 7 of the Act requires
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annual reports to be furnished by the stock exchanges to the Central Government. The Section 8 of the
SCRA further empowers the Central Government to make rules, direct a stock exchange to make any rule or
make amendment of already existing rules related to the affairs of the stock exchange as the government may
deem fit.

11. STOCK EXCHANGE- FUNCTION-

A stock exchange is an important factor in the capital market. It is a secure place where trading is done in a
systematic way. Here, the securities are bought and sold as per well-structured rules and regulations.
Securities mentioned here includes debenture and share issued by a public company that is correctly listed at
the stock exchange, debenture and bonds issued by the government bodies, municipal and public bodies.
Typically bonds are traded Over-the-Counter (OTC), but a few corporate bonds are sold in a stock exchange.
It can enforce rules and regulation on the brokers and firms that are enrolled with them. In other words, a
stock exchange is a forum where securities like bonds and stocks are purchased and traded. This can be both
an online trading platform and offline (physical location).
FUNCTIONS-
A. Role of an Economic Barometer: Stock exchange serves as an economic barometer that is indicative of
the state of the economy. It records all the major and minor changes in the share prices. It is rightly said to be
the pulse of the economy, which reflects the state of the economy.
B. Valuation of Securities: Stock market helps in the valuation of securities based on the factors of supply
and demand. The securities offered by companies that are profitable and growth-oriented tend to be valued
higher. Valuation of securities helps creditors, investors and government in performing their respective
functions.
C. Transactional Safety: Transactional safety is ensured as the securities that are traded in the stock
exchange are listed, and the listing of securities is done after verifying the company’s position. All
companies listed have to adhere to the rules and regulations as laid out by the governing body.
D. Contributor to Economic Growth: Stock exchange offers a platform for trading of securities of the
various companies. This process of trading involves continuous disinvestment and reinvestment, which
offers opportunities for capital formation and subsequently, growth of the economy.
E. Facilitates liquidity: The most important role of the stock exchange is in ensuring a ready platform for
the sale and purchase of securities. This gives investors the confidence that the existing investments can be
converted into cash, or in other words, stock exchange offers liquidity in terms of investment.
F. Better Capital Allocation: Profit-making companies will have their shares traded actively, and so such
companies are able to raise fresh capital from the equity market. Stock market helps in better allocation of
capital for the investors so that maximum profit can be earned.
G. Encourages investment and savings: Stock market serves as an important source of investment in
various securities which offer greater returns. Investing in the stock market makes for a better investment
option than gold and silver.

12. COLLECTIVE INVESTMENT SCHEME REGULATION - features- sec 11AA- SEC 11 AND
11AA- heart of sebi enactment- https://blog.ipleaders.in/collective-investment-scheme-2/
The term Collective Investment Scheme has been defined under Sec 11AA of the SEBI Act, 1992. These are
regulated by the SEBI Act, 1992 and CIS regulations,1999. It is a trust-based scheme comprising of pools of
assets which is managed by the scheme manager. CIS portfolio is the contribution of group of small
investors. The stake of each investor in the total portfolio is represented by the units of scheme held by the
investors. These units are securities in terms of Sec 2(h) of the Securities Contract Regulation Act, 1956.

The definition of Collective Investment Scheme is as follows:

Section 2(ba): collective investment scheme? means any scheme or arrangement which satisfies the
conditions specified in section 11AA.
Section 11AA

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Any scheme or arrangement which satisfies the conditions referred to in sub-section (2) [or sub-section (2A)]
shall be a collective investment scheme: [Provided that any pooling of funds under any scheme or
arrangement, which is not registered with the Board or is not covered under sub-section (3), involving a
corpus amount of one hundred crore rupees or more shall be deemed to be a collective investment scheme.]
Any scheme or arrangement made or offered by any [person] under which:
i. the contributions, or payments made by the investors, by whatever name called, are pooled and utilized for
the purposes of the scheme or arrangement;
ii. the contributions or payments are made to such scheme or arrangement by the investors with a view to
receive profits, income, produce or property, whether movable or immovable, from such scheme or
arrangement;
iii. the property, contribution or investment forming part of scheme or arrangement, whether identifiable or
not, is managed on behalf of the investors;
iv. the investors do not have day-to-day control over the management and operation of the scheme or
arrangement.
2[(2A)] Any scheme or arrangement made or offered by any person satisfying the conditions as may be
specified in accordance with the regulations made under this Act.]
Sub section 3 provides what will not fall under CIS.
This section provides for pre-conditions necessary for any scheme to be constituted as collective investment
scheme.
It provides for four conditions; it is as follows:
i. The contributions of the small investors must be pooled and deployed for the purpose of scheme only.
ii. Investors have contributed in the scheme with the aim to gain: Profits, or Income, or Produce, orProperty
Movable or Immovable
iii. These contributions are managed on behalf of investors.
iv. Investors do not have day-to-day control on the contributions or scheme.
Eligibility of CIS Regulation
The applicant must be set up and enlisted as a company under the Companies Act of 1956.
The applicant has indicated the administration of a collective investment scheme as one of the principle
objective in its Memorandum of Association.
The applicant should be fit and legitimate as a person for the grant of such authentication of registration.
The applicant should have a total asset of INR 5 Crores or more. Notwithstanding, this is under the condition
that, at the hour of making the application, the candidate will have a minimum net worth of INR 3 Crores
which will increment to INR 5 Crores within 3 years from the date of grant of registration.
The applicant has sufficient foundation so as to empower it to work a collective investment scheme as per the
provisions of the applicable guidelines.
At least 50% of the directors of such Collective Investment Management Companies will comprise people
who are independent and are not directly or indirectly connected with the people who have authority over the
concerned Collective Investment Management Company.
The directors/key faculty of the applicant will comprise people of genuineness and respectability with
satisfactory expertise knowledge and involvement with the related field. They should not have been indicted
for an offence including moral turpitude, any monetary offence or for the infringement or violation of any
securities law.
No people, directly or indirectly associated with the applicant, has been rejected registration by the Board
under the Act before.

13. SEBI MUTUAL FUND REGULATION 1996- https://www.sebi.gov.in/sebi_data/commondocs/

mutualfundupdated06may2014.pdf
The SEBI plays a critical role in regulating mutual funds in India. Some of the key functions of the SEBI in
this regard include:

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a. Registration and Approval of Mutual Funds: The SEBI is responsible for approving and registering mutual
funds in India. Mutual funds must comply with various regulatory requirements and guidelines before they
can be approved by the SEBI.
b. Monitoring and Supervision of Mutual Funds: The SEBI monitors the operations of mutual funds in India
to ensure that they are complying with regulatory requirements and guidelines. The SEBI may conduct
inspections, audits, or investigations of mutual funds to ensure compliance.
c. Enforcement of Regulations: The SEBI has the power to take enforcement action against mutual funds that
violate regulatory requirements or guidelines. This may include imposing fines, revoking registration, or
initiating legal proceedings against the offending entity.
d. Investor Education and Awareness: The SEBI is responsible for promoting investor education and
awareness in relation to mutual funds. This includes educating investors about the risks and benefits of
mutual fund investments, providing information about the regulatory framework, and addressing investor
grievances.
14. SEBI ACT- https://www.sebi.gov.in/sebi_data/attachdocs/1456380272563.pdf
This Act provides the statutory powers to the SEBI organisation. The governing body regulates the market in
a multifarious manner by protecting the interest of the shareholders, preventing any kind of malpractices in
the market and promoting the development of the Securities Market. The Act provides wide powers and
scope to the SEBI in order to effectively and efficiently run the capital market.
The Parliament established the Securities and Exchange Board of India Act,1992 or SEBI Act, 1992 to
regulate and develop the securities market in India. It was further amended to meet the changes in the
developing requirements of the securities market.
Features and Regulations of the Act
Sebi is an organization that is responsible for maintaining an environment that is free from malpractices to
restore the confidence of the general public who invest their hard-earned money in the market. SEBI controls
the bylaws of every stock exchange in the country. SEBI keeps an eye on all the books of accounts related to
the stock exchange and financial intermediaries to check their irregularities. SEBI Act defines and gives
powers to the body. The SEBI Act is divided into seven chapters that provide the rules and regulations
associated with the capital market.

15. INTERMEDIARIES- investor+issuer+intermediary- An Intermediary is a person who acts as a

mediator between people with an intent to bring about an agreement or reconciliation.
Similarly, SEBI Intermediaries acts as a link between investor and SEBI/Stock exchanges. By definition, an
Intermediary means a person as mentioned in sub-sections of section 11 and section 12 of SEBI Act. Broadly,
these are the persons such as stockbrokers, sub-broker, investment advisers, merchant banker, underwriter,
portfolio manager, share transfer agent, registrar to an issue, depositories, custodians of securities, foreign
institutional investors, credit rating agencies, asset management companies, venture capital funds, mutual
funds and such other intermediaries who may be associated with securities market in any manner.
Intermediaries are regulated under securities and exchange board of India (Intermediaries) regulations, 2008.
SEBI regulates various intermediaries in the primary and secondary markets through its Regulations for
these intermediaries. These Regulations allow SEBI to inspect the functioning of these intermediaries and to
collect to fees from them.
1995 amendment, foreign institutional investor, credit rating agreement, brokers