SECURITIES AND EXCHANGE BOARD OF INDIA (AMENDMENT) ACT, 2002
(1) This Act may be called the Securities and Exchange Board of India (Amendment) Act, 2002.
(2) It shall be deemed to have come into force on the 29th day of October, 2002.
In section 2 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) (hereinafter referred to as the principal Act), in sub-section (1), after clause (h), the following clause shall be inserted, namely:--
'(ha) "Reserve Bank" means the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934);'.
In section 4 of the principal Act,--
(a) in sub-section (1),--
(i) in clause (b),--
(A) for the word "Ministries", the word "Ministry" shall be substituted;
(B) for the words "and Law", the words and figures "and administration of the Companies Act, 1956 (1 of 1956) " shall be substituted;
(ii) in clause (c), for the words and figures "the Reserve Bank of Indiaconstituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934)", the words"the Reserve Bank" shall be substituted;
(iii) for clause (d), the following clause shall be substituted, namely:--
"(d) five other members of whom at least three shall be
In section 11 of the principal Act,--
(a) in sub-section (2), after clause (i), the following clause shall be inserted, namely:--
"(ia) calling for information and record from any bank or any other authority or board or corporation established or constituted by or under any Central, State or Provincial Act in respect of any transaction in securities which is under investigation or inquiry by the Board;";
(b) after sub-section (2), the following sub-section shall be inserted, namely:--
"(2A) Without prejudice to the provisions contained in sub-section (2), the Board may take measures to undertake inspection of any book, or register, or other document or record of any listed public company or a public company (not being intermediaries referred to in s
For section 11A of the principal Act, the following section shall be substituted, namely:--
"11A. Board to regulate or prohibit issue of prospecuts, offer document or advertisement soliciting money for issue of securities.--
(1) Without prejudice to the provisions of the Companies Act, 1956 (1 of 1956), the Board may, for the protection of investors,--
(a) specify, by regulations --
(i) the matters relating to issue of capital, transfer of securities and other matters incidental thereto; and
(ii) the manner in which such matters shall be disclosed by the companies;
(b) by general or special orders--
(i) prohibit any
After section 11B of the principal Act, the following sections shall be inserted, namely:--
"11C. Investigations.--
(1) Where the Board has reasonable ground to believe that--
(a) the transactions in securities are being dealt with in a manner detrimental to the investors or the securities market; or
(b) any intermediary or any person associated with the securities market has violated any of the provisions of this Act or the rules or the regulations made or directions issued by the Board thereunder,
it may, at any time by order in writing, direct any person (hereafter in this section referred to as the Investigating Authority) specified in the order to investigate the affairs of such intermediary or perso
After Chapter V of the principal Act, the following Chapter shall be inserted, namely:--
"CHAPTER VA
PROHIBITION OF MANIPULATIVE AND DECEPTIVE DEVICES, INSIDER TRADING AND SUBSTANTIAL ACQUISITION OF SECURITIES OR CONTROL
12A. Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control.--
No person shall directly or indirectly --
(a) use or employ, in connection with the issue, purchase or sale of any securities listed or proposed to be listed on a recognised stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of this Act or the rules or the regulations made thereunder;
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In section 14 of the principal Act, in sub-section (1), clause (aa) shall be omitted.
In section 15A of the principal Act,--
(i) in clause (a), for the words "a penalty not exceeding one lakh and fifty thousand rupees for each such failure", the words "a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less" shall be substituted;
(ii) in clause (b), for the words "a penalty not exceeding five thousand rupees for every day during which such failure continues", the words "a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less" shall be substituted;
(iii) in clause (c), for the words "a penalty not exceeding ten thousand rupees for every day during which the failure continues", the words "a penalty of one lakh rupees for each day during which such failure cont
In section 15B of the principal Act, for the words "a penalty not exceeding five lakh rupees for every such failure", the words "a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less" shall be substituted.
For section 15C of the principal Act, the following section shall be substituted, namely:--
"15C. If any listed company or any person who is registered as an intermediary, after having been called upon by the Board in writing, to redress the grievances of investors, fails to redress such grievances within the time specified by the Board, such company or intermediary shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less.".
In section 15D of the principal Act,--
(i) in clause (a), for the words "a penalty not exceeding ten thousand rupees for each day during which he carries on any such collective investment scheme including mutual funds, or ten lakh rupees, whichever is higher", the words "a penalty of one lakh rupees for each day during which he sponsors or carries on any such collective investment scheme including mutual funds, or one crore rupees, whichever is less" shall be substituted;
(ii) in clause (b), for the words "a penalty not exceeding ten thousand rupees for each day during which such failure continues or ten lakh rupees, whichever is higher", the words "a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less" shall be substituted;
(iii)
In section 15E of the principal Act, for the words "a penalty not exceeding five lakh rupees for each such failure", the words "a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less" shall be substituted.
In section 15F of the principal Act,--
(i) in clause (b), for the words "a penalty not exceeding five thousand rupees for each day during which such failure continues", the words "a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less" shall be substituted;
(ii) in clause (c), for the words "a penalty not exceeding five thousand rupees", the words "a penalty of one lakh rupees" shall be substituted.
In section 15G of the principal Act, for the words "not exceeding five lakh rupees", the words "twenty-five crore rupees or three times the amount of profits made out of insider trading, whichever is higher" shall be substituted.
In section 15H,--
(a) after clause (ii), the following clauses shall be inserted, namely:--
"(iii) make a public offer by sending letter of offer to the shareholders of the concerned company; or
(iv) make payment of consideration to the shareholders who sold their shares pursuant to letter of offer,";
(b) for the words "not exceeding five lakh rupees", the words "twenty-five crore rupees or three times the amount of profits made out of such failure, whichever is higher" shall be substituted.
After section 15H of the principal Act, the following sections shall be inserted, namely:--
" 15HA. Penalty for fraudulent and unfair trade practices.--
If any person indulges in fraudulent and unfair trade practices relating to securities, he shall be liable to a penalty of twenty-five crore rupees or three times the amount of profits made out of such practices, whichever is higher.
15HB. Penalty for contravention where Not Found separate penalty has been provided.--
Whoever fails to comply with any provision of this Act, the rules or the regulations made or directions issued by the Board thereunder for which no separate penalty has been provided, shall be liable to a penalty which may extend to one crore rupees.".
In section 15-I of the principal Act, in sub-section (1), for the word, figures and letter "and 15H", the figures, letters and word "15H, 15HA and 15HB" shall be substituted.
After section 15J of the principal Act, the following section shall be inserted, namely:--
"15JA. Crediting sums realized by way or penalties to Consolidated Fund of India.--
All sums realised by way of penalties under this Act shall be credited to the Consolidated Fund of India.".
For sections 15L and 15M of the principal Act, the following sections shall be substituted, namely:--
"15L. Composition of Securities Appellate Tribunal.--
A Securities Appellate Tribunal shall consist of a Presiding Officer and two other Members, to be appointed, by notification, by the Central Government:
Provided that the Securities Appellate Tribunal, consisting of one person only, established before the commencement of the Securities and Exchange Board of India (Amendment) Act, 2002, shall continue to exercise the jurisdiction, powers and authority conferred on it by or under this Act or any other law for the time being in force till two other Members are appointed under this section.
15M. Qualification for appointment as Presiding Officer or M
For section 15N of the principal Act, the following section shall be substituted, namely:--
"15N. Tenure of office of Presiding Officer and other Members of Securities Appellate Tribunal.--
The Presiding Officer and every other Member of a Securities Appellate Tribunal shall hold office for a term of five years from the date on which he enters upon his office and shall be eligible for re-appointment:
Provided that no person shall hold office as the Presiding Officer of the Securities Appellate Tribunal after he has attained the age of sixty-eight years:
Provided further that no person shall hold office as a Member of the Securities Appellate Tribunal after he has attained the age of sixty-two years.".
In section 15-O of the principal Act,--
(a) for the words "Presiding Officer of a Securities Appellate Tribunal", the words "Presiding Officer and other Members of a Securities Appellate Tribunal" shall be substituted;
(b) in the proviso, for the words "said Presiding Officers", the words "Presiding Officer and other Members of a Securities Appellate Tribunal" shall be substituted.
In section 15P of the principal Act, for the words "office of the Presiding Officer", the words "the office of the Presiding Officer or any other Member," shall be substituted.
In section 15Q of the principal Act, --
(a) in sub-section (1),--
(i) for the words "Presiding Officer of a Securities Appellate Tribunal", the words "the Presiding Officer or any other Member of a Securities Appellate Tribunal" shall be substituted;
(ii) in the proviso, for the words "the said Presiding Officer", the words "the Presiding Officer or any other Member" shall be substituted;
(b) in sub-section (2), for the words "Presiding Officer" at both the places where they occur, the words "Presiding Officer or any other Member" shall be substituted;
(c) in sub-section (3), for the words "aforesaid Presiding Officer", the words "the Presiding Officer or any other Member" shall be substituted.
In section 15R of the principal Act, for the words "Presiding Officer", the words "Presiding Officer or a Member" shall be substituted.
For section 15X of the principal Act, the following section shall be substituted, namely:--
"15X. Presiding Officer, Members and staff of Securities Appellate Tribunals to be public servants.--
The Presiding Officer, Members and other officers and employees of a Securities Appellate Tribunal shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code.".
For section 15Z of the principal Act, the following section shall be substituted, namely:--
"15Z. Appeal to Supreme Court.--
Any person aggrieved by any decision or order of the Securities Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of communication of the decision or order of the Securities Appellate Tribunal to him on any question of law arising out of such order:
Provided that the Supreme Court may, if it is satisfied that the applicant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.".
In section 24 of the principal Act, --
(a) in sub-section (1),'for the words "one year, or with fine, or with both", the words "ten years, or with fine, which may extend to twenty-five crore rupees or with both" shall be substituted;
(b) in sub-section (2), for the words "three years or with fine which shall not be less than two thousand rupees but which may extend to ten thousand rupees or with both", the words "ten years or with fine, which may extend to twenty-five crore rupees or with both" shall be substituted.
After section 24 of the principal Act, the following sections shall be inserted, namely:--
"24A. Composition of certain offences.--
Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act, not being an offence punishable with imprisonment only, or with imprisonment and also with fine, may either before or after the institution of any proceeding, be compounded by a Securities Appellate Tribunal or a court before which such proceedings are pending.
24B. Power to grant immunity.--
(1) The Central Government may, on recommendation by the Board, if the Central Government is satisfied, that any person, who is alleged to have violated any of the provisions of this Act or the rules or the
In section 26 of the principal Act, in sub-section (2), for the words "a Metropolitan Magistrate or a Judicial Magistrate of the first class", the words " a Court of Session" shall be substituted.
In section 29 of the principal Act, in sub-section (2),--
(i) in clause (db) for the words "Presiding Officers", the words "Presiding Officers, Members" shall be substituted;
(ii) in clause (dc), for the words "Presiding Officers", the words "Presiding Officers, or other Members" shall be substituted.
(1) The Securities and Exchange Board of India (Amendment) Ordinance, 2002 (Ord. 6 of 2002), is hereby repealed.
(2) Notwithstanding the repeal of the Securities and Exchange Board of India (Amendment) Ordinance, 2002 (Ord. 6 of 2002), anything done or any action taken under the principal Act as amended by the said Ordinance, shall be deemed to have been done or taken under the principal Act, as amended by this Act.
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