Question

Marvel Ltd. plans to expand its business and needs help in generating capital while ensuring compliance with the securities market regulator.

1. Identify the securities market regulator referred to above.
2. State any one way in which the securities market regulator protects investors.
3. Which intermediary of the securities market regulator protects investors.
4. Can the securities market regulator permit a commercial bank to give funds to Marvel Ltd.? Justify your answer by giving a reason.

Answer 1

1. The securities market regulator in India is the Securities and Exchange Board of India (SEBI).
2. By outlawing dishonest and unethical business activities like price-rigging and insider trading, SEBI safeguards investors. SEBI enables investors to make well-informed selections by requiring companies to include all “material” information in their offer documents.
3. The intermediary in charge of performing “due diligence” to guarantee that Marvel Ltd.’s prospectus is accurate and conforms with legal requirements, so safeguarding the interests of the investors, is the merchant banker (also known as the lead manager).
4. No, a commercial bank is not allowed to provide funds by SEBI. The Reserve Bank of India (RBI) oversees commercial banks in accordance with the Banking Regulation Act. While the RBI is in charge of bank fund management and lending, SEBI’s authority is restricted to the securities market (shares, debentures, etc.).