Established in 1992, the Securities Exchange Board of India is essential to corporate governance of India's securities market, as it serves as the central body that ensures investors are protected and the securities market is regulated.
Corporate governance is the manner in which companies or market systems operate, including the rules, regulations, policies and standards for accountability, transparency and general corporate integrity.
SEBI was formed after the Indian Parliament passed the Securities and Exchange Board of India Act, 1992 in response to the Financial Services Assessment Programme, a program developed by the World Bank and International Monetary Fund that observes and reports on global financial systems. The Indian government wanted to establish a strong financial atmosphere and securities market with a regulator promoting the latest in corporate governance standards.
SEBI sets governance standards in which the securities market must operate, protecting the rights of issuers and investors. SEBI has power to investigate circumstances where the market or its players have been harmed and can enforce governance standards with directives. An appeal process in place ensures accountability and transparency. SEBI may terminate from the securities list any company that does not comply with its governance standards and regulations.