Sebi Asks Dca To Define Regulatory Role

The war between Securities and Exchange Board of India (Sebi) and the Department of Company Affairs (DCA) over regulatory powers has taken a new turn with Sebi asking the DCA to provide a list of companies that would be under the sole purview of the market regulator.

On the other hand, the Union minister of company affairs, Thambi Durai, has demanded that Sebi be brought under the purview of the DCA in view of the substantial functional and procedural overlap between the two bodies.

According to sources, although the tussle between the two has been brewing for a long time, it is this fresh attempt by Sebi to carve out an "exclusive sphere of influence" that has precipitated the present crisis and prompted Durai to write a letter to the Prime Minister's Office (PMO) urging that Sebi be brought under DCA's wings.

 

According to sources, Durai feels that the overlapping of powers between Sebi and DCA is causing lot of duplication and hindering the effective management of company affairs. In his opinion, bringing Sebi under the DCA would streamline procedures and be a big step towards single-window clearances for companies.

"For example, a prospectus for a public issue is vetted first by Sebi and then by DCA for registration, and company has to provide the same detials all over again," says a government official.

"Also, the companies are not required to file information regarding the change of director's address with Sebi. Hence, when Sebi tries to respond to an investor's grievance, which has most probably been filed with the DCA too, it asks DCA to provide the new address," he adds.

Accroding to sources, Durai feels Sebi is a market regulator and should confine its activities to the stock exchanges. But the Dhanuka Committee appointed to look into Sebi's powers and the present market regulatory system has caused confusion by suggesting that Sebi's powers be enlarged, they feel. The new envisaged scenario obviously infringed with DCA's powers.

Sebi's latest demand of a list of companies that'll be under its sole purview was the last straw. Hence, the minister has decided to settle the matter once and for all and has directly approached the PMO regarding this.

Legal experts point out another fact in support of the DCA claim. In a pathbreaking judgement on judicial review in March 1997, the Supreme Court had advised that all tribunals should be placed under the ministry of law, justice and company affairs. Since Sebi too has a one-man tribunal under C Achutan, it should logically find a place under the ministry, experts feel.