SEBI - Glossary

Depositories
Organisation which holds securities of investor, with request, in electronic form through a registered Depository Participant (DP) is known as Depository. It can be compared with Bank. It hold securities in an account, transfers securities between accounts on the instruction of the account holder, facilitates transfers of ownership without having to handle securities and facilitates safekeeping of shares. Minimum net worth stipulation needed by SEBI is Rs. 100 crore.

Depository Participant (DP)
The agent through which Depository interfaces with the investor is known as Depository Participant (DP). It is compared with a branch of a bank like Depository with a bank. DP is offered with depository services only after it gets proper registration from SEBI.

Derivatives
The value of which is entirely "derived" from the value of the underlying asset like securities, commodities, bullion, currency, live stock, etc. is termed as "Derivative". It is any hybrid contract of pre determined fixed duration like forward, future, option, etc. linked for the purpose of contract fulfillment to the value of a specified real or financial asset or to an index of securities.

Broad Based Fund (sub account)
A fund which has minimum of 20 shareholders without any single investor holding more than 10% of shares and units of the fund is known as Broad Based Fund.

Proprietary fund (sub account)
Where the ownership of the funds is that of the Foreign Institutional Investor is known as Proprietary Fund.

Sub-Accounts
A sub-account includes institutions (established or incorporated outside India) and those funds, or portfolios (established outside India) whether incorporated or not and corporates and individuals, on whose behalf investments are proposed to be made in India by a Foreign Institutional Investor. NRIs and Overseas Corporate Bodies (OCB) do not entitle of getting registered as sub- account.

There are two categories of sub-accounts:

Broad-based / Proprietary sub-accounts which are allowed to individually invest upto 10% of the total issued capital.
Foreign Corporates and foreign individuals which is not allowed to exceed 5% of the issued capital.

Net Asset Value (NAV)
Net Asset Value (NAV) is the market value of the securities held by the scheme of a Mutual Fund. NAV varies on day to day basis since the market value of securities changes regularly. It is divided by the total number of units of the scheme on a specific date.

Initial Public Offering (IPO)
When an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public is known as Initial Public Offering.

Follow on Public Offering (FPO)
When an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public, through an offer document, it is known as Follow on Public Offering. An offer for sale in such case is allowed only if it is made to satisfy listing or continuous listing obligations.

Rights Issue (RI)
When a listed company which proposes to issue fresh securities to its existing shareholders as on a record date is known as Rights Issue. These are normally offered in a particular ratio to the number of securities held prior to the issue. It is suitable for those companies who likes to raise capital without diluting stake of its existing shareholders unless they do not intend to subscribe to their entitlements.

Disclosures and Investor protection (DIP) guidelines
SEBI (Disclosure and investor protection) guidelines 2000 are in short called DIP guidelines. It provides a comprehensive framework for issuances buy the companies. DIP guidelines was framed by SEBI in 1992. Many amendments have been carried since then. "Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000" was issued by SEBI in 2000. It is a compilation of all circulars chanpter wise. These are issued under section 11 of the Securities and Exchange Board of India Act, 1992.

Collective Investment Scheme (CIS)
According to sub-section (2) of section 11AA of the SEBI Act, CIS is scheme or arrangement made or offered by any company under which the contributions, or payments made by the investors, are pooled and utilised with a view to receive profits, income, produce or property, and is managed on behalf of the investors. Over the management and operation of such scheme or arrangement investors do not have day to day control.

Secondary Market
Secondary market is a market where securities are traded after initially being offered to the public in the primary market and/or listed on the Stock Exchange. Maximum of the trading is done in the secondary market. Secondary market comprises of two markets equity and debt.

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