“COMPARATIVE ANALYSIS OF INVESTOR

LAWS ACROSS COUNTRIES”

A
SUMMER INTERNSHIP PROJECT REPORT
SUBMITTED IN THE PARTIAL FULFILMENT
OF THE REQUIREMENTS OF ARKA
JAIN UNIVERSITY

For the award of the degree of

BACHELOR OF COMMERCE (HONORS)
For the session 2021-2024

Submitted By
Name: VINEET SHARMA
University Enrollment Number: AJU/211421

Faculty Mentor
Name: Prof. Seema Das
Designation: Assistant Professor

School of Commerce and Management, ARKA

JAIN UNIVERSITY
 DECLARATION BY THE STUDENT

I, VINEET SHARMA, hereby declare the project titled

“COMPARATIVE ANALYSIS OF INVESTOR PROTECTION
LAWS ACROSS COUNTRIES”, has been carried out by me during my
‘SUMMER INTERNSHIP PROJECT REPORT’ and is hereby
submitted in the partial fulfilment of the requirement of ARKA JAIN
UNIVERSITY for the award of the degree of Bachelor of Commerce.

To the best of my knowledge, the project undertaken, has been carried out
by me and is my original work. The contents of this report are authentic and
this report has been submitted to ARKA JAIN UNIVERSITY and it has
not been submitted elsewhere for the award of any Certificate/ Degree/
Diploma etc.

Signature of the Student Name of the Student: VINEET SHARMA

University Enrolment No.: AJU/211421 B.COM (H) (2021- 2024)
 CERTIFICATE OF APPROVAL

This Dissertation Report of “VINEET SHARMA” titled

“COMPARATIVE ANALYSIS OF INVESTOR PROTECTION
LAWS ACROSS COUNTRIES” is approved in quality and form and has
been found to be fit for the Partial Fulfilment of the requirements of ARKA
JAIN UNIVERSITY for the award of the degree of Bachelor of
Commerce.

Approval of the Program Coordinator Approval of the Assistant

Dean (UG) Department of B.Com (H) School of
Commerce and
Management School of Commerce and Management
ARKA JAIN UNIVERSITY ARKA JAIN UNIVERSITY

APPROVAL OF THE EXAMINER

CERTIFICATE FROM THE FACULTY MENTOR

This is to certify that VINEET SHARMA, of ARKA JAIN

UNIVERSITY, AJU/211421, a student of B.Com (H) (2021-2024), has
undertaken Dissertation Report Title “COMPARATIVE ANALYSIS OF
INVESTOR PROTECTION LAWS ACROSS COUNTRIES” for the
partial fulfilment of the requirement of ARKA JAIN UNIVERSITY for
the award of the degree of Bachelor of Commerce, under my supervision.

Signature of the Faculty Mentor, Name of the Faculty Mentor: Prof.

Seema Das Designation of the Faculty Mentor: Assistant Professor
 ACKNOWLEDGEMENT

I take this opportunity to thank my faculty mentor Prof. Seema Das,

SCHOOL OF COMMERCE AND MANAGEMENT, ARKA JAIN
UNIVERSITY, for her valuable guidance, closely supervising this work
over with helpful suggestions, which helped me to complete the report
properly and present.
More importantly, her valuable advice and support helped me to put some
creative efforts on my project. She has really been an inspiration and
driving force for me has constantly enriched my row ideas with his vast
experience and knowledge.

Specially, I would also like to give my special thanks to my parents whose

blessings and love enabled me to complete this work properly as well.

Name of the Student: VINEET SHARMA University Enrolment No.:

AJU/211421 B.Com (2021-2024)

INDEX
CHAPTER CHAPTER NAME PAGE NO.
NO.
Executive Summary
Introduction to the Topic 1-5
Chapter 1
Chapter 2 Review of Literature and 6-9
Research Gap
Chapter 3 Project Objectives 10-14
Chapter 4 Research Methodology 15-16
Chapter 5 Data Analysis and Interpretation 17-19
Chapter 6 Findings 20
Chapter 7 Suggestions or 21-22
Recommendations
Chapter 8 Conclusion 23
References 24-25
EXECUTIVE SUMMARY

Investor protection is one of the most important elements of a thriving

securities market or other financial investment institution. Investor
protection focuses on making sure that investors are fully informed about
their purchases, transactions, affairs of the company that they have invested
in and the like. The Law created by the government and various authorities
should not only be sufficient but should also be implemented in an effective
way. The echo of investor protection is about the amount of informed
knowledge the investor is getting before doing any kind of investment.
Investor confidence is the requirement of the vibrant capital market. And
this confidence of the investor is created by an efficient regulator of the
capital market. A wealthy investor should take the right choice in the
securities market for which there will be sufficient capital formation in the
economy. So, the role of the regulation’s education and awareness in the
market.
Though both countries like India and the United Kingdom’s differs from
many aspects, India has adopted many laws of the United Kingdom and
implemented for the upliftment of the country. The article first describes the
historical background of laws resalting to investors protection in the
financial market of India and the United Kingdoms. It also describes the
current regulator and what step are being taken to protect the interest of
investor by both countries. The comparison also describes the grievance cell
for the investor and the awareness they created about the investment they
do in the financial market. If an investor is aware of its risk, rule and
regulation in the country it can be well protected. The comparison also
identifies the significance of Investor awareness and education towards the
risk of investment they are making in the securities market.
 CHAPTER – 1 INTRODUCTION OF THE TOPIC

1.1 Introduction

An investor is anyone who invest money in business entity with the aim of gaining
return. Investing is securities market serves the purpose of both the investor as well as
the business entity. The investor gets the opportunity to earn while the business entity
gets the capital it requires to run the business. Investor play a very crucial role in the
growth of economy of a country. They help a company to grow and succeed which in
turn affect the economy. The investments are the sole differentiate between developed,
developing and under -developed economics. Thus, investors are very important, and it
is necessary to protect them from risks. If the investor is well protected, it will increase
their confidence and encourage other to follow suit and become investor.

To protect the investor, there needs to be certain set of laws and rules for business
entities to follow. These legislations are not perfect as various scams take place despite
them. However, new legislation is created, and old ones are amended to ensure that the
investor are given their due protection and so the scams are never repeated. In India we
have the Securities and Exchange Board of India (SEBI) act which came into effect in
1992 while in the United Kingdom (UK) we have Financial Services and market Act
which came into effect in 2000. Both these acts provide for the setup of regulators
which regulates the market and improve investor protection.

The Securities and Exchange Boards of India: -

The Securities and Exchange Boards of India Act ,1992 (The SEBI Act) was amended in
the years 1995,1999 and 2202 to meet the requirement of changing needs of securities
markets and responding to the development in the securities market.

Financial Conduct Authority: -

The financial Conduct Authority (FCA) is the financial regulatory body and also
operates independently in UK. It was formed in 1st April 2013. The FCA regulates
financial firm providing services to consumers and maintains the integrity of the
financial markets in the United Kingdoms.

1.2 History and Background

Securities and Exchange Board of India (SEBI)-: SEBI was incorporated on 12th
April1988 and the statutory powers was given on 30th January 1992, teo official
member of Central Government who deals with the Finance, one member from the

1
 Reserve bank and the central government appoints five members among which three
shall be whole time members. It was governed under SEBI Act 1992. SEBI has its
headquarters at the business district of Bandra Kurla Complex in Mumbai and has
Northern, Chennai, and Ahmedabad respectively. It has opened various local offices in
various other cities all over nation. Controller of Capital Issues was the regulatory
authority before SEBI came into existence; it derived authority from the Capital Issues
(Control) Act, 1947.

The SEBI is managed by its members, which consists of the following:

• The chairman is nominated by the Union Government of India.

• Two members, i.e., Officers from the Union Finance Ministry.
• One member from the Reserve Bank of India.
• The remaining five members are nominated by the Union Government of India, out of
them at least three shall be whole-time members.

Financial Conduct Authority (FCA)-: The FCA was established on April 1, 2013. It
was Governed under Financial Services and Markest Act 2000. The management boards
of FCA consist of Chief Executive who is appointed by the HM Treasury; the Secretary
of State for Business, Innovation and Skills and the Treasury appoints two nonexecutive
members among which at least one shall be appointed by the Treasury. Most of the
Board members consists of Non-Executive Directions. The FCA is an independent
financial regulator and falls under the purview of the Treasury, which is responsible for
the UK’s financial system, and the Parliament.

• The Financial Conduct Authority (FCA) is responsible for the functioning of the U.K.
financial markets.
• The FCA is a public body under the purview of the U.K’s Treasury and Parliament. 
The FCA charges fees to the firms that it regulates.

1.3 Functions and Responsibilities

SEBI-: The objectives of SEBI as a regulatory body are to monitor and regulate India’s
securities market to safeguard investors’ interests. It only aim is to inculcate a safe
investment environment by implementing several rules and regulation and formulating
investment -related guideline.

SEBI has to be responsive to the needs of three groups, which constitute the market:

• The issuers of securities.

• The investors.
• The market intermediaries.

2
 SEBI has three powers rolled into one body: quasi-legislative, quasi-judicial and
quasiexecutive.

• It drafts regulations in its legislative capacity.

• It conducts investigation and enforcement action in its executive function and it passes
rulings and orders in its judicial capacity.
• Through this market it very powerful, there is an appeal process to create accountability.

FCA-: The FCA has “rule-making, investigation and enforcement powers” that it uses to
regulate the financial services industry. The FCA is also responsible for promoting
effective competition, ensuring that relevant markets function well, and for the conduct
regulation for the conduct regulation of all financial services firms. Its function and role
includes protection consumers, keeping the industry stable, and promoting healthy
competition between financial service providers. The principle firm takes regulatory
responsibility for the appointed representative, and must ensure it meets FCA
requirement.

The Function of the FCA

• The FCA authority regulates the conduct of around 50k businesses, supervises 48k
firms, and sets specific standards for arounds 18k firms.
• The goal is to ensure honest and fair markets for individuals, businesses of all sizes, and
the economy as a whole.
• The Authority does this by protecting consumers, protecting the financial market, and
promoting competition.
• The FCA is controlled by the U.K’s Treasury and Parliament.

1.4 Powers of Regulation

In India, SEBI has three main powers rolled into one body which is quasilegislative,
quasi-judicial and quasi-executive. This gives SEBI the power to formulate rules and
regulation for protection the right of the investor.

Securities and Exchange Board of India Powers-:

• SEBI has the power to regulate the stock exchange in the securities market, insider
trading, function of merchant bankers, registration of brokers, mutual funds, unfair trade
practices which relates to securities, and which relates to regulates of acquisition of
companies and shares.
• The authority has the power to impose monetary penalties and can also impose
suspension of registration for a period in capital market.

3
• They frame rules and regulation, code of conduct for efficient working of financial
market.
• SEBI is government funded as it comes under the jurisdiction of Ministry of Finance,
Government of India.
• They build an investigation team to check the proper functioning of the financial.

FCA-: In UK, FCA has the power to regulate companies that handle the management
the finance and has the power to enforce rules over the individuals or companies that
breach their duties. Financial Conduct Authority Powers-:

• FCA has the power to regulate the conduct of financial firm and market in UK. The
authority ensure that the market is running fairly for all individual and all of its
investor’s rights are well protected and save guarded.
• If the company or individual doesn’t meet the standard set by the FCA, they possess
power to issue caution and impose monetary penalties. They also apply for insolvency,
winding up, injunction and restriction order from relevant courts.
• The authority has comprehensive power to enforce its directive command and
rulemaking for proper functioning of financial market.
• FCA does not receive any government funding as it is independent, so it has the power
to raise fees.
• They build an official team which conduct investigate and penalize UK businesses for
breaching financial regulation.

1.5 Legislation Salmond defined Legislation as “source of law which comprises in the
assertion of lawful standard by a competent specialist”. The Cambridge Dictionary
defines Legislation as “rule or laws relating to a particular activity that are made by a
government”.
In India there is the SEBI Act, 1992 while in the UK there is the Financial Service and
Markets Act, 2000 (FSMA). These acts lay down provision for regulated activities in the
respective countries.
Legislating in India-: The SEBI Act, 1992
• Before this Act, there were three principal Acts THAT governed the securities markets.
These were:
A. the Capital Issues (Control) Act ,1947
B. the Companies Act ,1956 the Securities Contract (Regulation) Act, 1956.
• Do not have any financial compensation scheme.
• The Act deals with the formation and various powers od SEBI including registration of
intermediaries, investigation, and imposition of penalties.

4


Provides for Self-Regulation Organization (SRO) through Regulation such as the SEBI (SRO) Regulation,
2004.

Legislating in UK-: The FSMA, 2000.
The securities and Investments Board (SIB) was the regulatory body till 1997.10 When the banking
supervision and investment services regulation was merged SIB become FSA by changing its name.
After the implementation of the Act several other responsibilities which till now were being dealt by
various other organization, were now transferred to Financial Conduct Authority (FCA) making it the

sole regulatory body.
 Has a Financial Services Compensation Scheme.

The Act not only deals with the formation and powers of FCA and PRA but also deals with provision
regarding various intermediaries, compensation scheme, ombudsman, grievances, etc.

When the Act came into power, the regulatory function of SROs came to an end and the Financial
Services Authority (FCA) become the single regulators for the UK financial services industry. Then
power was transferred to FCA.

5
 CHAPTER – 2 REVIEW OF LITERATURE AND
RESEARCH GAP

2.1 Review of Literature

Liberalization v. Regulation: 5 Student Advoc. 10 (1993) By Jopeph

Pokkatt : - This Paper makes an attempt to develop an understanding of the
Factors that SEBI does to protect and ensure the Security and Interest of
Investors in the market. As well the Liberalization took effect gradually the
number of companies Listed in the market all Increased Which Creates
more Risks and Fraud Potential to The Investors Which SEBI is Updating
itself and has been successfully regulating in all kinds of market.

Redressal of Investor grievances (Circular of SEBI ) 1994 The main

objective of this Paper was The Announcement that SEBI launched a
centralized web complaints redress system ‘SCORES’ in June 2011. The
purpose of scores is to provide a platform for aggrieved investors, whose
grievances, pertaining to securities market, remain unresolved by the
concerned listed company or registered intermediary after a direct
approach.

Dr. Deepika Maheshwari [National Journal of Research and

Innovative Practices (NJRIP) 1992 The Main Objective of this Paper is to
judge the implication of the Redressal system of SEBI which had his own
limitations and merits which comes with it. As the New Scores system Is
fully Online and New to the community which is running 24x7 Securities
and Exchange Board of India (SEBI) is a statutory body established under
the SEBI Act, 1992 to protect the interests of investors in securities and to
promote the development of, and to regulate the securities market.
Redressal of investor grievances is one of the key components of SEBI’s
efforts to protect the interests of investors in securities.

Jayati Sharma and M. S. Turan 1998: This article discusses the legal
framework for investor protection in India, focusing on key legislations,
such as the Companies Act, 2013, and the role of SEBI. It also analyzes the
enforcement mechanisms and identifies challenges in ensuring effective
investor protection. This paper explores the relationship between corporate
governance and investor protection in India. It discusses the corporate
governance practices and regulations in place and their impact on
safeguarding the interests of investors.

Swati Verma and Sanjeev Singh 1996: This study offers empirical insights
into investor protection in India by examining the impact of regulatory

7
 changes and their effectiveness. The authors assess the role of SEBI and
corporate governance mechanisms in enhancing investor confidence.

Shalini Dubey and Shubham Kumar 1997: This article provides a

comparative analysis of investor protection laws in India and the United
States. It highlights differences and similarities in regulatory approaches,
enforcement, and corporate governance practices in both countries.

Dr. Sunita Tripathy 2009: Dr. Tripathy's work critically appraises the legal
framework for investor protection in India, with a focus on key legislations
and regulatory bodies. The paper assesses the adequacy of existing laws and
suggests areas for improvement.

Renu Arora and Dr. Sanjay Nandal 2006: This paper discusses the link
between investor protection and corporate governance in India,
emphasizing the role of independent directors, audit committees, and the
importance of transparency and accountability in safeguarding investors'
interests.

Dr. R. K. Uppal and Dr. Amol Kulkarni 2005: This study offers a
comparative analysis of investor protection in India and China, two major
emerging economies. It explores the legal frameworks, regulatory bodies,
and corporate governance practices in both countries.

Dr. Pankaj Jain 2010: Dr. Jain's article provides an in-depth review of the
role of SEBI in protecting investors' interests in India. It discusses SEBI's
powers, functions, and its impact on securities markets.

2.2 Research Gap

Conducting a comparative analysis of investor protection laws across

countries is a valuable and complex research endeavour. There are several
potential research gaps and areas of interest that can be explored in this
field:

1. Cross-Country Variation in Investor Protection Laws: One research gap

is a comprehensive analysis of how investor protection laws vary across
different countries. This could involve comparing the legal frameworks,
regulatory bodies, and enforcement mechanisms in place in various
countries. Understanding the differences and similarities can provide
valuable insights into the global landscape of investor protection.

8
2. Impact of Investor Protection Laws: A crucial research gap is examining
the actual impact of investor protection laws on investment decisions and
financial markets. Do stronger investor protection laws lead to higher levels
of foreign investment, better market stability, or increased investor
confidence? Conversely, what are the consequences of weak or poorly
enforced protection laws?
3. Investor Perception and Behavior: Another research gap is exploring how
investor perception and behavior are influenced by the quality of investor
protection laws in a given country. Do investors consider these legal
safeguards when making investment decisions? Are there significant
differences in the investment strategies of institutional and individual
investors based on their confidence in the legal framework?

4. Enforcement and Compliance: Investigating the effectiveness of

enforcement mechanisms and the level of compliance with investor
protection laws is a critical research gap. Understanding whether legal
provisions are routinely enforced and whether investors and corporations
adhere to these laws can shed light on the real-world impact of the legal
framework.

5. Regulatory Arbitrage: Research can delve into whether companies or

investors engage in regulatory arbitrage, where they choose jurisdictions
with more favorable investor protection laws. This could include exploring
cases of forum shopping, where parties select specific legal jurisdictions for
dispute resolution.

6. Long-Term Effects: Research could focus on the long-term effects of

investor protection laws on economic development, financial market
stability, and overall investment climate in various countries. Do strong
investor protection laws contribute to sustainable economic growth, or are
they merely short-term measures?

7. Case Studies: In-depth case studies of specific countries or regions can

provide insights into the practical challenges and successes of implementing
investor protection laws. These studies can also highlight the role of
cultural, political, and historical factors in shaping investor protection
frameworks.

8. Emerging Markets: Comparing investor protection laws in emerging

markets versus developed markets is an area of particular interest. Emerging
markets often face unique challenges in implementing and enforcing such
laws, and studying these differences can yield valuable insights.

9. Investor Education and Awareness: Investigating the role of investor

education and awareness in conjunction with investor protection laws is an

9
 essential research gap. Do well-informed investors have better outcomes in
countries with weaker legal protections? How can investor education
complement legal safeguards?
10. Global Convergence or Divergence: A study of whether there is a global
convergence or divergence in investor protection laws could be a
fascinating research topic. Are countries moving towards harmonizing their
legal frameworks, or are they increasingly diverging in their approaches?

To address these research gaps, scholars can employ a variety of

methodologies, including comparative legal analysis, empirical research,
case studies, and surveys. Conducting such research can provide valuable
insights for policymakers, investors, and legal professionals seeking to
enhance investor protection globally.

10
 CHAPTER – 3 PROJECT OBJECTIVES

3.1 Problem Statement

Despite the significant growth and development of India's financial

markets, there remain notable concerns and challenges regarding the
efficacy of investor protection laws. This analysis seeks to identify, assess,
and compare the key issues and shortcomings in India's investor protection
legal framework when juxtaposed with international standards and best
practices. The primary problems to be addressed are:

1. Inadequate Investor Safeguards: India's existing investor protection laws

may not provide sufficient safeguards to protect the rights and interests of
individual and institutional investors. There is a pressing need to determine
the extent to which these laws fail to address the diverse and evolving needs
of investors.

2. Weak Enforcement Mechanisms: The effectiveness of regulatory bodies

in enforcing investor protection laws is questioned, with concerns about
delays, lack of transparency, and inefficiency in the legal process. This
analysis will investigate these weaknesses and their impact on investor
confidence.

3. Lack of Transparency: Transparency in corporate disclosures and financial

reporting is crucial for investor confidence. However, there are concerns
that disclosure requirements are not stringent enough or that enforcement is
inadequate. The analysis will explore these transparency issues.

4. Inequity in Shareholder Rights: Some investors may not have equal

access to shareholder rights or may face challenges in exercising these
rights effectively. The analysis will examine the disparities in shareholder
rights and assess their impact on investor protection.

5. Complexity and Accessibility: The legal framework and regulatory

requirements may be overly complex, making it challenging for investors to
navigate the system and understand their rights. The analysis will evaluate
the accessibility and comprehensibility of the legal framework.

6. Inconsistent Cross-Border Investment Standards: In an increasingly

globalized financial environment, concerns may arise regarding the
consistency of investor protection standards for domestic and international
investors. This analysis will explore the implications of varying standards
for cross-border investment.

11
7. Inadequate Compensation Mechanisms: Investors who suffer losses due
to fraud or financial institution insolvency may not have adequate
compensation mechanisms. The analysis will assess the availability and
effectiveness of such mechanisms.

8. Ineffective Regulatory Oversight: Regulatory authorities may lack the

independence and authority needed to effectively oversee market
participants and enforce investor protection laws. This analysis will
scrutinize the regulatory framework's weaknesses.

9. Non-compliance and High Enforcement Costs: The cost of compliance

with investor protection laws and the high costs associated with
enforcement may pose challenges for investors and regulatory bodies alike.
This analysis will investigate these financial burdens.

10. Comparative Shortcomings: By comparing India's investor protection

laws with international best practices, this analysis will aim to identify
specific areas where India falls short and where improvements are needed to
align with global standards.

This problem statement outlines the central issues and concerns related to
investor protection laws in India that the comparative analysis seeks to
address. It sets the stage for the research and analysis that will follow, with
the ultimate goal of providing recommendations for improving the
regulatory framework and enhancing investor protection in the country.

3.2 Objectives of the Study

• Evaluate and compare the legal provisions and regulations governing

investor protection in India with those in other selected countries.
• Determine the effectiveness of investor protection laws in India in
safeguarding the interests of investors and ensuring market stability.
• Identify the strengths and weaknesses of India's investor protection laws, as
well as areas where improvement is needed.
• Benchmark India's investor protection laws against international best
practices and standards, highlighting areas where India can learn from other
jurisdictions.
• Assess the protection afforded to minority shareholders in India and other
countries, with a focus on their rights and remedies.
• To understand the Proceedings of SEBI & FCA.
• To measure the level of safety and Insurance of Investors.
• To study the factors to Motivate the Investors.
• To Know which one is more updated and secure.

12
3.3 Purpose

1. Assess Legal Frameworks: Compare and contrast the legal and regulatory
frameworks in different countries to understand the extent of protection
provided to investors. This can help identify gaps or areas where
improvements may be needed.

2. Promote Investor Confidence: By analyzing and comparing investor

protection laws, you can determine which countries offer stronger legal
safeguards for investors. This information can help investors make informed
decisions and feel more confident about investing in certain jurisdictions.

3. Risk Assessment: Investors and businesses often assess the legal and
regulatory environment when deciding where to invest or establish
operations. A comparative analysis of investor protection laws can help in
risk assessment by highlighting the strengths and weaknesses of different
legal systems.

4. Encourage Foreign Direct Investment (FDI): Countries with strong

investor protection laws are more likely to attract foreign direct investment.
Analyzing these laws can be a part of the strategy for countries seeking to
attract FDI.

5. Enhance Legal Reform: The comparative analysis can serve as a tool for
policymakers and regulators to identify areas where their country's investor
protection laws can be improved or strengthened. It can help drive legal
reforms to better protect investors.

3.4 Investors Protection Awareness Programs

Investor education is considered as a fundamental segment of financial

education that focuses on the populous who contribute or could have the
financial capacity to invest in the securities market, mostly including both
subsisting and potential investor. Keeping in mind the circumstance of the
country and empowering them to engage safely in the market.
Consequently, investor education policies and activities are additionally a
supplement to investor protection and financial market regulation with a
perspective to assisting healthy and transparent markets growth and
development and long- term prosperity.

There was instance where the stock exchange scams happened and many
other irregular activities where the investors lost their confidence in the
market. It became important to spread awareness of such scams through
awareness programs. Thus, India and UK, to prevent scams and protect

13
 investor interests have taken an initiative to start and promoting investor
awareness programs.

Investor Awareness Programs in India-

• In India, Investor Awareness programs are conducted regularly by the stock

exchange to educated the investor and to spread awareness regarding the
capital market working as well as of working stock exchange.
• SEBI takes the responsibility of disclosing fair and adequate information for
investor for the purpose of investment decision.
• SEBI is imparting education on financial concept and products to young
investor, school children, middle-aged, executives and retired persons
through resource persons.
• In 2003, SEBI organized the Securities Market Awareness Campaign where
the market regulators were called upon to learn lesson from the past years
and to stop stock markets scams.

Investor Awareness Programs in UK-

• In UK, FCA is supported by money Advice Service which plays an

important role in providing financial education to the age group below 18 as
well as to the ones between the age of 18 to 25. The point is to furnish these
youngsters with a strong establishment for building sound monetary
conduct and to support their utilization of the Money Advice Service.
• The FCA rules impose limits on the type of investment in which an
authorized funds capital property that may be invested in particular assets.
In each case however it is the fund manager responsibility to ensure that the
fund provides a prudent spread of risk for investor.
• The materials to assist investor education are provided by the financial
services sector as an element of Corporate social Responsibility (CSR).
• In 2009, Money Guidance Pathfinder was initiated to conduct free money
advice service covering the topic of budgeting, protection of investment and
borrowing and welfare benefits which proved to be a success.

3.5 Offenses

To protect the investor interest, certain illegal activities like insider trading
need to be prevented. In India and U.K, insider trading is illegal but
however the gravity of punishment is different.

INDIA-:

• In India, insider trading is treated as a criminal offence, however, SEBI Act

and Companies Act, 2003 has prescribed both civil and criminal penalties.

14
• Under Section 15G of the SEBI Act, if an insider has for his sake or dealt
for the sake of the company any kind of unpublished information, has given

15

any price sensitive information or persuaded any individual to trade
securities of somebody will be liable for a fine of rupees twenty-five crore
or three times the gain made, whichever is excessive.
 Nonetheless, Section 24 of the Act45, it prescribes if the award for the
penalties is not met or there is any contravention to the provision, then there
shall be liability for punishment of ten years imprisonment or fine which
may increase to rupees twenty-five crore or both.
Section195 of the Companies Act,2013 which prescribe punishment of five
years of imprisonment or a fine of five crore or three times the profit made
 out of inside trading, whichever is excessive or both.

UK-:

In U.K, insider trading is acknowledged as a criminal as well as civil
offence and both are dealt under different statutes, that is FSMA 2000 and
Criminal Justice Act, 1993.
Under FSMA 2000, the FCA is empowered to impose a civil penalty which
includes an unlimited pecuniary penalty, issuing of a public declaration that
 the individual or the person is involved in market abuse, appeal to the court
to prevent perused market abuse or for an injunction or a freezing order,
appeal to the court for an order for restitution and finally requisite the
amount of compensation to the aggrieved.
Under the criminal jurisdiction, if a person is found culpable of insider
dealing, that person is punishable for an in-exhaustive fine or imprisonment
for a period not more than six months on summary sentence, or seven years
on sentence on accusation.

17

14
 CHAPTER – 4 RESEARCH METHODOLOGY

Research methodology is a methodology for collecting all sorts of

information and data pertaining to the subject in question. The objective is
to examine all the issues involved and conduct situational analysis. The
methodology used in the study consists of secondary data. Secondary data
has been collected from the official websites of some private sectors,
reviews from previous reports, and other related projects.

4.1 Research Design

Creating a research design for a project is a crucial step in planning and

conducting your research effectively. The design should outline the research
objectives, data collection methods, analysis techniques, and the overall
structure of the study. Choose the appropriate research type for our study. In
this case, a comparative research design is most suitable to compare investor
protection laws in India with those in other countries.

Type of research

The type of research used in this project is analytical in nature. Data was
collected using questionnaire. A questionnaire consists of number of
questions involving both specific and general questions related to the study
topic.

4.2 Data Collection

Sources of data: There are two sources of data namely primary and
secondary.

Primary data: Primary data refers to data that is collected directly from
original sources for a specific research or analysis. This type of data is
firsthand information that researchers gather themselves, and it has not been
previously published or documented by others. Primary data is typically
collected for a specific research purpose, tailored to the needs of the study,
and it may involve various data collection methods, including surveys,
interviews, observations, experiments, and more. Primary data is valuable in
research because it allows for the collection of data that is specific to the
research objectives and can be customized to answer specific research
questions. However, collecting primary data can be time-consuming and
resource-intensive compared to using existing secondary data sources.
Researchers often choose between primary and secondary data based on the
research's goals and available resources. Example: Surveys, Observations,
Experiments, Interviews, etc.
 Secondary data: Secondary data refers to data that has been collected and
documented by someone else for a purpose other than the current research or
 analysis. Unlike primary data, which is collected directly by the researcher
for a specific research project, secondary data is pre-existing and has been
compiled or generated by individuals, organizations, or sources for various
 reasons, such as government reports, academic studies, market research, or
historical records. The data collected for my SIP is from the Past records of
 Project material. These may include:

 Legal documents and statutes related to investor protection laws.

Reports and publications from regulatory bodies like SEBI and the Ministry of
Corporate Affairs.
Academic research papers and articles.
Case studies and court judgments related to investor protection.
Interviews or surveys with legal experts, policymakers, and industry professionals.

19
CHAPTER -5 DATA ANALYSIS AND INTERPRETATION

According to Govt data is a collection of the most important governance

metrics. ITS currently consist of 33 datasets with global coverage and time
spans of more than ten years, with the goal of assisting in the identification
of problem areas, providing guidance on the design of reforms, and
monitoring impacts.

The strength of Investor Protection

The above Figure shows the strength of Investor Protection in United

Kingdoms, and India. The data mentioned is from 2007to 2006, India
climbed 12 places in the world in term of investor protection. In 2016, it
was ranked 13th out of 137 countries. New Zealand was ranked first in
2016, while Haiti Country was ranked 137th. Based on the graph the
investor protection ranking of UK is better than India. India has
significantly improved her position in the world ranking. India can adopt the
provision for compensation and improve criminal jurisprudence to
safeguard investors.

India's ranking in terms of investor protection stood much lower at 21st

position last year. World Bank said that the rank has improved on account of
various reforms launched in India over the past year. Major countries ranked
below India include France (17th), Korea and Italy (21st), the US (25th),
Japan (35th), Germany (51st), Australia (71st) and Switzerland (78th).

India is ranked best among the BRICS nations, out of which South Africa is
17th, Brazil 35th and Russia at 100. China is much lower at 132nd place.
Protection of minority investors is one of the ten sub- rankings based on
which the World Bank has prepared the overall 'ease of doing business'
ranks for 189 countries, where India has been ranked 142nd. "India
strengthened minority investor protections by requiring greater disclosure of
conflicts of interest by board members, increasing the remedies available
in case of prejudicial related-party transactions and introducing additional
safeguards for shareholders of privately held companies," the Bank said.
Many of these reforms have come in place following enactment of a new
Companies Act, as also after amendments made by the securities market
regulator Sebi for its norms applicable to all listed companies in the country
and to various market entities.

"Globally, India stands at 7 in the ranking of 189 economies on the strength

of minority investor protection index". While the indicator does not
measure all aspects related to the protection of minority investors, a higher
ranking does indicate that an economy’s regulations offer stronger minority
investor protections against self-dealing in the areas measured," the Bank
said.

According to the report, economies with the strongest protections of

minority investors from self-dealing require detailed disclosure and define
clear duties for directors. "They also have well-functioning courts and upto-
date procedural rules that give minority shareholders the means to prove
their case and obtain a judgement within a reasonable time," it said." As a
result, reforms to strengthen minority investor protections may move ahead
on different fronts—such as through new or amended company laws,
securities regulations or civil procedure rules," it added.

ASIC and the New Zealand Securities Commission are also empowered to
accept enforceable undertakings from entities alleged to have breached
securities laws or regulations 9, whereas MAS is currently conducting a
study on whether enforceable undertakings could be included as part of its
enforcement toolkit. The purpose of such undertakings is to ensure
compliance with securities law by requiring that an entity refrains from (or
performs, where appropriate) a certain action. These undertakings are
enforceable in courts if entities fail to comply.

Other forms of preventive measures include temporarily prohibiting or

restraining members’ trade in the securities (India and Thailand: In
Thailand, the prohibition applies to trading in which a member provides a
margin to its clients for purchasing the securities and the sale of securities
in which the securities must be borrowed for settlement purposes. This
measure would be used by the Stock Exchange of Thailand if its board of
directors is of the view that the position of the trading of any securities is
likely to have an adverse effect on the overall trading position due to a
drastic change in the price or trading volume of such securities, or a high
concentration of the trading in such securities.), and ordering the shares of
such listed company to be changed to full-delivery shares, (Taiwan). In
addition, Taiwan has put in place a trigger alert system which cautions
investors if any abnormal trading price or volume in the market is detected
by the Taiwan Stock Exchange, and such situation reaches certain preset
criteria.

21
The Indian mutual fund industry finds itself in an economic landscape
which has undergone rapid changes over the past three years. The industry
achieved a high-water mark when it doubled its AUM from Rs. 3.6 trillion
in FY2007 to Rs. 6.13 trillion in FY2010 – clocking an impressive growth
rate of 16.2% per year. Since, then the Indian economy (coupled with the
emerging economies) has faced a slowdown – the most severe of which are
happening as this report is being written. From an average GDP growth rate
of 8-9% during the 2008-2011 years, the Indian economy is now growing at
a lacklustre 4.8% growth rate in Q2 2013. Coupled with a steep decline in
the value of the Indian rupee, the mutual fund industry now finds itself in a
capricious global economic environment. However, there is strong reason to
believe that the Indian mutual fund industry has not yet seen its global peak
and if proper measures are taken, the industry could get back on its former
growth path.

The 10 largest American firms listed on the NYSE, and the 10 largest firms
listed on the Bourse de Paris. Insider trading and financial data were hand
collected from the local stock exchanges securities commissions… Data
were collected for the two years 2006 and 2007, thus after implementation
of the market abuse directive and insider trading requirements disclosure in
France. The 10 first listed US and French firms are classified by stock
market capitalization in 2005. We collected French insider trading
information from the AMF decision and financial information web site. And
we collected US insider trading information from the SEC form 4 as
reported by statement of changes in beneficial ownership. The information
reported for all the transactions are: name of the company, transaction date,
announcement date, transaction type (sell, buy), number of shares traded,
price transaction and the insider position in the firm (director, officer, 10%
owner). We exclude any transaction in derivatives, options exercise, stock
grants, transfer and maintain only common stock purchases or sales.
 CHAPTER -6 FINDINGS

 SEBI has issued a Lot of restrains and Rules to protect every individual investor.

FCA new Scores platform is a very Aggressive Step towards Digitalizing and
making the whole process seamless.


FCA Has lot a Responsibilities which they cover despite having a lot of obstacles
as well as SEBI.

It reveals that there is significant association between SEBI and all the brokers,
Exchanges and even the advisory firms.

India's legal framework for investor protection may be found to be
complex and filled with multiple legislations and regulations. This
complexity can make it challenging for investors to navigate the legal
system and seek redress.

The role and effectiveness of the Securities and Exchange Board of India
(SEBI) in regulating and protecting investors may be a key finding. It
may reveal the extent to which SEBI can effectively monitor and enforce
investor protection measures.

A comparative analysis may reveal variations in corporate governance
practices among different sectors and companies. Some sectors and firms
may adhere to higher standards of corporate governance, while others
may lag behind.

Comparative analysis with other countries may highlight that India's
investor protection laws might be on par with or lag behind international
standards. This can provide a global perspective on the effectiveness of
the legal framework.

These findings can serve as a foundation for further research and

policymaking to strengthen investor protection in India. They can also
guide reforms and improvements in the legal framework and regulatory
practices to enhance investor confidence and promote economic growth.

23

20
 CHAPTER -7 SUGGESTIONS OR RECOMMENDATIONS

Here are some key suggestions and recommendations that could emerge
from such an analysis:

1. Strengthen Enforcement Mechanisms: Enhance the effectiveness of

enforcement mechanisms to ensure timely and efficient resolution of
investor grievances. This may involve streamlining legal processes and
increasing the penalties for fraudulent activities.

2. Clearer Legal Provisions: Clarify and simplify legal provisions to make

them more accessible and understandable for investors. Ambiguities and
complex legal language can deter investors from seeking legal remedies.

3. Greater Transparency: Promote greater transparency in corporate

governance practices, financial reporting, and disclosures. Ensure that
companies adhere to high standards of transparency and accountability.

4. Whistleblower Protection: Implement robust whistleblower protection

mechanisms to encourage individuals to report corporate wrongdoing
without fear of retaliation. This can play a crucial role in uncovering
financial misconduct.

5. Strengthening Regulatory Bodies: Provide regulatory authorities like

SEBI with more autonomy and resources to effectively oversee the financial
markets and take swift action against non-compliance.

6. Class Action Lawsuits: Introduce provisions for class-action lawsuits,

allowing a group of investors to collectively seek legal redress in cases of
corporate fraud or misconduct.

7. International Best Practices: Benchmark India's investor protection laws

against international best practices. Identify successful models from other
countries and consider adopting relevant aspects into the Indian legal
framework.

8. Investor Education and Awareness: Invest in investor education and

awareness programs to empower investors with knowledge about their
rights and responsibilities. Informed investors are better equipped to protect
their interests.

9. Online Investor Redressal: Develop an efficient online platform for

investor grievance redressal, making it easier for investors to lodge
complaints and track their resolution.
10. Protection of Minority Shareholders: Strengthen the legal protection for
minority shareholders, who are often more vulnerable to corporate
malpractices. Ensure that their interests are adequately safeguarded.

11. Improve Corporate Governance: Encourage companies to adopt and

adhere to best corporate governance practices, including independent
directors, audit committees, and effective risk management mechanisms.

12. Regular Regulatory Updates: Ensure that the legal framework and
regulations are updated regularly to address evolving challenges in the
financial markets and technology-driven innovations.

13. Government and Industry Collaboration: Foster collaboration between

the government, industry associations, and regulatory bodies to develop a
comprehensive approach to investor protection.

14. Legal Aid and Support: Enhance access to legal aid and support for
investors, especially small investors who may not have the resources to
navigate the legal system effectively.

15. Periodic Reviews: Conduct periodic reviews of investor protection laws to

assess their impact and identify areas for improvement. Such reviews can
lead to necessary amendments and reforms.

These suggestions and recommendations can serve as a starting point for

policymakers, regulatory authorities, and legal experts to enhance the
investor protection framework in India. Implementing these measures can
help build trust and confidence in the financial markets, attracting more
domestic and foreign investments.

22
25
 CHAPTER -8 CONCLUSION

Both India and UK have made sufficient efforts and have come a long way
through amendments to protect their investor. While most of the
mechanisms are same both countries, they differ in how they operate. India
does not have a financial Service Compensation Scheme. This scheme
provides protection to investors in case the financial firms fail to pay and in
doing that increase investor confidence and encourages others to take up the
role of investors.

Following Brexit, the HM Treasury drafted the Financial Services and

Markets act 2000 (EU Exit) Regulation 2019 which amends the FSMA
2000 so that UK’s financial services framework continue to operate
effectively. Among other things, amendments were being made to

 Regulated and prohibited activities
 Permission to carry on regulated activities
Performance of regulated activities.

The growing concern for investors will result in better coverage and better
protection for them and through various amendments and regulations both
these countries are looking at better ways to protect investor.
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 Websites:

 www.wikipedia.org
 www.investor SEBI/FCA.in
 www.iasplus.com www.ssrn.com
www.edusanchar.com