SECURITIES CONTRACTS (REGULATION) ACT, 1956
(1) This Act may be called the Securities Contracts (Regulation) Act, 1956.
(2) It extents to the whole of India.
(3) It shall come into force on such date (20th February, 1957, vide S.R.O.528, dated the 16th February, see Gazette of India, Extraordinary, 1957, part II, Sec, p.549.} as the Central Government may, by notification in the Official Gazette, appoint.
In this Act, unless the context otherwise requires,-
(a) 'Contract' means a contract for or relating to the purchase or sale of securities;
1['(aa) "corporatisation" means the succession of a recognised stock exchange, being a body of individuals or a society registered under the Societies Registration Act, 1860 (21 of 1860), by another stock exchange, being a company incorporated for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities carried on by such individuals or society;
(ab) "demutualisation" means the segregation of ownership and management from the trading rights of the members of a recognised stock exchange in accordance with a scheme approved by the Securities and Exchange Board of India;]
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1[2A. Interpretation of certain words and expressions
Words and expressions used herein and not defined in this Act but defined in the Companies Act, 1956 (1 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) shall have the same meanings respectively assigned to them in those Acts.]
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6. Inserted by the Securities Laws (Second Amendment) Act, 1999.
(1) Any stock exchange, which is desirous of being recognised for the purposes of this Act, may make an application in the prescribed manner to the Central Government.
(2) Every application under sub-section (1) shall contain such particulars as may be prescribed , and shall be accompanied by a copy of the bye-laws of the stock exchange for the regulation and control of contracts and also a copy of the rules relating in general to the constitution of the stock exchange, and in particular, to-
(a) the governing body of such stock exchange, its constitution and powers of management and the manner in which the business is to be transacted;
(b) the powers and duties of the office bearers of the stock exchange;
(c) the admission into the stock exchan
(1) If the Central Government is satisfied, after making such inquiry as may be necessary in this behalf and after obtaining such to further information, if any, as it may require,-
(a) that the rules and bye-laws of a stock exchange applying for registration are in conformity with such conditions as may be prescribed with a view to ensure fair dealing and to protect investors;
(b) that the stock exchange is willing to comply with any other conditions (including conditions as to the number of members) which the Central Government, after consultation with the governing body of the stock exchange and having regard to the area served by the stock exchange and its standing and the nature of the securities dealt with by its, may impose for the purpose of carrying out the objects of this Act; and
1[4A. Corporatisation and demutualisation of stock exchanges.-
On and from the appointed date, all recognised stock exchanges (if not corporatised and demutualised before the appointed date) shall be corporatised and demutualised in accordance with the provisions contained in Section 4B:
Provided that the Securities and Exchange Board of India may, if it is satisfied that any recognised stock exchange was prevented by sufficient cause from being corporatised and demutualised on or after the appointed date, specify another appointed date in respect of that recognised stock exchange and such recognised stock exchange may continue as such before such appointed date.
Explanation.-- For the purposes of this Section, "appointed date" means the date which the Securities and Exchange Board of India ma
1[Section 4B - Procedure for corporatisation and demutualisation
(1) All recognised stock exchanges referred to in Section 4A shall, within such time as may be specified by the Securities and Exchange Board of India, submit a scheme for corporatisation and demutualisation for its approval:
Provided that the Securities and Exchange Board of India, may, by notification in the Official Gazette, specify name of the recognised stock exchange, which had already been corporatised and demutualised, and such stock exchange shall not be required to submit the scheme under this Section.
(2) On receipt of the scheme referred to in sub-Section (1), the Securities and Exchange Board of India may, after making such enquiry as may be necessary in this behalf and obtaining such further information, if any, as
1[5(1)].Withdrawal of recognition.-
(1) If the Central Government is of opinion that the recognition granted to a stock exchange under the provisions of this Act should, in the interest of the trade or in the public interest, be withdrawn, the Central Government may serve on the governing body of the stock exchange a written notice that the Central Government is considering the withdrawal of the recognition for the reasons stated in the notice, and after giving an opportunity to the governing body to be heard in the matter, the Central Government may withdraw, by notification in the Official Gazette, the recognition granted to the stock exchange;
Provided that no such withdrawal shall affect the validity of any contract entered into or made before the date of the notification, and the Central Government may, after consultation with the s
(1) Every recognised stock exchange shall furnish to the Central Government such periodical returns relating to its affairs as may be prescribed.
(2) Every recognised stock exchange and every member thereof shall maintain and preserve for such periods not exceeding five years such books of account, and other documents as the Central Government, after consultation with the stock exchange concerned, may prescribe in the interest of the trade or in the public interest, and such books of account, and other documents shall be subject to inspection at all reasonable times by the Central Government.
(3) Without prejudice to the provisions contained in sub-section (1) and (2), the Central Government, if it is satisfied that it is in the interest of the trade or in the public interest so to do, may order in writing,-
Every recognised stock exchange shall furnish the Central Government with a copy of the annual report, and such annual report shall contain such particulars as may be prescribed.
(1) A recognised stockexchange may make rules or amend any rules made by it to provide for all or anyof the following matters, namely---
(a) the restriction ofvoting rights to members only in respect of any matter placed before the stockexchange at any meeting;
(b) the regulation ofvoting rights in respect of any matter placed before the stock exchange at anymeeting so that such member may be entitled to have one vote only, irrespectiveof his share of the paid-upequity capital of the stock exchange;
(c) the restriction onthe right of a member to appoint another person as his proxy to attend and voteat a meeting of the stock exchange;
(d) such incidentalconsequential and supplementary matters as may be necessary to give effect toany of the matters sp
( 1) Where, after consultation with the governing bodies of stock exchanges generally or with the governing body of any stock exchange in particular, the Central Government is of opinion that it is necessary or expedient so to do, it may, by order in writing together with a statement of the reasons therefor, direct recognised stock exchanges generally or any recognised stock exchange in particular, as the case may be, to make any rules or to amend any rules already made in respect of all or any of the matters specified in sub -section ( 2) of section 3 within a period of1[two] months from the date of the order .
( 2) If any recognised stock exchange fails or neglects to comply with any order made under sub -section ( 1) within the period specified therein, the Central Government may make the rules for, or amend the rules made by, the recognised stock exchange, either in the form p
1[8A. Clearing corporation.-
(1) A recognised stock exchange may, with the prior approval of the Securities and Exchange Board of India, transfer the duties and functions of a clearing house to a clearing corporation, being a company incorporated under the Companies Act, 1956 (1 of 1956), for the purpose of -
(a) the periodical settlement of contracts and differences thereunder;
(b) the delivery of, and payment for, securities ;
(c) any other matter incidental to, or connected with, such transfer.
(2) Every clearing corporation shall, for the purpose of transfer of the duties and functions of a clearing house to a clearing corporation referred to in sub-Section (1), make bye-laws and submit the same to th
(1) Any recognised stockexchange may, subject to the previous approval of the Central Government, makebye-laws for the regulation andcontrol of contracts.
(2) In particular , andwithout prejudice to the generality of the foregoing power, such bye-lawsmay provide for-
(a) the opening andclosing of markets and the regulation of the hours of trade;
(b) a clearing house forthe periodical settlement of contracts and differences thereunder, the deliveryof and payment for securities, the passing on of delivery orders and theregulation and maintenance of such clearing house;
(c) the submission to theCentral Government by the clearing house as soon as may be after each periodicalsettlement of all or any of the following particulars as the Central Governmentm
(1) The Central Government may, either on a request in writing received by it in this behalf from the governing body of a recognised stock exchange or on its own motion, if it is satisfied after consultation with the governing body of the stock exchange that it is necessary or expedient so to do and after recording its reasons for so doing, make bye-laws for all or any of the matters specified in section 9 or amend any bye-laws made by such stock exchange under that section.
(2) Where in pursuance of this section any bye-laws have been made or amended, the due-laws so made or amended shall be published in the Gazette of India and also in the Official Gazette of the State in which the principal office of the recognised stock exchange is situate, and on the publication thereof in the Gazette of India, the bye-laws so made or amended shall have effect as if they had been made or amen
(1) Without prejudice toany other powers vested in the Central Government under this Act, where theCentral Government is of opinion that the governing body of any recognised stockexchange should be superseded, then, notwithstanding anything contained in anyother law for the time being in force, the Central Government may serve on thegoverning body a written notice that the Central Government is considering thesupersession of the governing body for the reasons specified in the notice andafter giving an opportunity to the governing body to be heard in the matter itmay, by notification in the Official Gazette, declare the governing body of suchstock exchange to be superseded, and may appoint any person or persons toexercise and perform all the powers and duties of the governing body, and, wheremore persons than one are appointed, may appoint one of such persons to be thechairman and another to be the vice-chairmanthereof.
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If in the opinion of the Central Government an emergency has risen and for the purpose of meeting the emergency the Central Government considers it expedient so to do, it may, by notification in the Official Gazette, for reasons to be set out therein, direct a recognised stock exchange to suspend such of its business for such period not exceeding seven days and subject to such conditions as may be specified in the notification, and, if, in the opinion of the Central Government, the interest of the trade or the public interest requires that the period should be extended, may, by like notification extend the said period from time to time:
Provided that where the period of suspension is to be extended beyond the first period, no notification extending the period of suspension shall be issued unless the governing body of the recognised association has been given an opportunity of being
1[12A. Power to issue directions
If, after making or causing to be made an inquiry, the Securities and Exchange Board of India is satisfied that it is necessary -
( a) in the interest of investors, or orderly development of securities market; or
( b) to prevent the affairs of any recognised stock exchange, or, clearing corporation, or such other agency or person, providing trading or clearing or settlement facility in respect of securities, being conducted in a manner detrimental to the interests of investors or securities market; or
( c) to secure the proper management of any such stock exchange or clearing corporation or agency or person, referred to in clause ( b),
it may issue such directions, -
If the Central Government is satisfied, having regard to the nature or the volume of transactions in securities in any1[State or States or area], that is necessary so to do, it may, by notification in the Official Gazette, declare this section to apply to such1[State or States or area], and thereupon every contract in such1[State or States or area] which is entered into after the date of the notification otherwise than2[between members of a recognised stock exchange or recognized stock exchanges] in such1[State or States or area] or though or with such member shall be illegal.
3[Provided that any contract entered into between members of two or more recognised stock exchanges in such State or States or area, shall-
(i) be subject to such terms and conditions as may be stipulated by the respective stock exchanges with prior approval of Sec
1 [13A. Additional trading floor
A stock exchange may establish additional trading floor with the prior approvalof the Securities and Exchange Board of India in accordance with the terms andconditions stipulated by the said Board.
Explanation: For the purposes of this section, " additional tradingfloor" means a trading ring or trading facility offered by a recognised stockexchange outside its area of operation to enable the investors to buy and sellsecurities through such trading floor under the regulatory framework of thatstock exchange]
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1. Inserted by the Securities Laws (Amendment) Act, 1995 w.e.f.25.01.1995.
(1) Any contract entered into any State or area specified in the notification under section 13 which is in contravention of any of the bye-laws specified in that behalf under clause (a) of sub-section (3) of section 9 shall be void-
(i) as respects the rights of any member of the recognised stock exchange who has entered into such contract in contravention of any such bye-law, and also
(ii) as respects the rights of any other person who has knowingly participated in the transaction entailing such contravention.
(2) Nothing in sub-section (1) shall be construed to affect the right of any person other than a member of the stock exchange to enforce any such contract or to recover any sum under or in respect of such contract if such person had no knowledge that the transaction was in contravent
No member of a recognised stock exchange shall in respect of any securities enter into any contract as a principal with any person other than a member of a recognised stock exchange, unless he has secured the consent or authority of such person and discloses in the note, memorandum or agreement of sale or purchase that he is acting as a principal;
Provided that where the member has secured the consent or authority of such person otherwise than in writing he shall secure written confirmation by such persons of such consent or authority within three days from the date of the contract;
Provided further that no such written consent or authority of such person shall be necessary for closing out any outstanding contract entered into by such person in accordance with the bye-laws, if the member discloses in the note, memorandum or agreement o
(1) If the Central Government is of opinion that it is necessary to prevent undesirable speculation in specified securities in any State or area, it may, by notification in the Official Gazette, declare that no person in the State or area specified in the notification shall, save with the permission of the Central Government, enter into any contract for the sale or purchase of any security specified in the notification except to the extent and in the manner, if any, specified therein.
(2) All contracts in contravention of the provisions of sub-section (1) entered into after the date of the notification issued thereunder shall be illegal.
(1) Subject to the provisions of sub-section (3) and to the other provisions contained in this Act, no person shall carry on or purport to carry on, whether on his own behalf of any other person, the business if dealing securities in any State or area to which section 13 has not been declared to apply and to which the Central Government may, by notification in the Official Gazette, declare this section to apply, except under the authority of a licence granted by the Central Government in this behalf.
(2) No notification under sub-section (1) shall be issued with respect to any State or area unless the Central Government is satisfied, having regard to the manner in which securities are being dealt with in such State or area, that it is desirable or expedient in the interest of the trade or in the public interest that such dealings should be regulated by a system of licensing.
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1[17A. Public issue and listing of securities referred to in sub-clause (ie) of clause (h) of section 2.--
(1) Without prejudice to the provisions contained in this Act or any other law for the time being in force, no securities of the nature referred to in sub-clause (ie) of clause (h) of section 2 shall be offered to the public or listed on any recognised stock exchange unless the issuer fulfils such eligibility criteria and complies with such other requirements as may be specified by regulations made by the Securities and Exchange Board of India.
(2) Every issuer referred to in sub-clause (ie) of clause (h) of section 2 intending to offer the certificates or instruments referred therein to the public shall make an application, before issuing the offer document to the public, to one or more recognised stock exchanges for permission for
(1) Nothing contained in sections 13, 14,15 and 17 shall apply to spot delivery contracts.
(2) Notwithstanding anything contained in sub-section (1), if the Central Government is of opinion that in the interest of the trade or in the public interest it is expedient to regulate and control the business of delaying in spot delivery contracts also in any State or area (whether section 13 has been declared to apply to the State or area or not), it may, by notification in the Official Gazette, declare that the provisions of section 17 shall also apply to such State or area in respect of spot delivery contracts generally or in respect of spot delivery contracts for the sale or purchase of such securities as may be specified in the notification, and may also specify the manner in which, and the extent to which, the provisions of that section shall so apply.
1 [18A. Contracts in derivatives
Notwithstanding anything contained in any other law for the lime being in force, contracts in derivative shall be legal and valid if such contracts are--
(a) traded on a recognised stock exchange;
(b) settled on the clearing house of the recognised stock exchange, in accordance with the rules and bye-laws of such stock exchange.]
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1. Inserted by the Securities Laws (Amendment) Act, 1999 w.e.f. 22.02.2000.
(1) No person shall, except with the permission of the Central Government, organise or assist in organising or be a member of any stock exchange (other than a recognised stock exchange ) for purpose of assisting in, entering into or performing any contracts in securities.
(2) This section shall come into force in any State or area on such date as the Central Government may, by notification in the Official Gazette, appoint.
20.1[***]
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1. Omitted by the Securities Laws (Amendment) Act, 1995 w.e.f. 25.01.1995. Prior to its omission section 20 read as under:
"Prohibition of options in securities.-(1) Notwithstanding anything contained in this Act or in any other law for the time being in force, all options in securities entered into after the commencement of this Act shall be illegal.
(2) Any option in securities which has been entered into before such commencement and which remains to be performed, whether wholly or in part, after such commencement, shall, to that extent, become void."
1[21. Conditions for listing
Where securities are listed on the application of any person if any recognised stock exchange, such person shall comply with the conditions of the listing agreement with that stock exchange
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1. Substituted by the Securities Laws (Amendment) Act, 1995 w.e.f. 25.01.1995. Prior to its substitution section 21 read as under:
"Power to compel listing of securities by public companies.- Notwithstanding anything contained in any other law for the time being in force, if the Central Government is of opinion, having regard to the nature of the securities issued by any public company regard to the nature of the securities issued by any public company as defined in the Companies Act, 1956 (1 of 1956), or
1[21A. Delisting of securities
(1) A recognised stock exchange may delist the securities, after recording the reasons therefor, from any recognised stock exchange on any of the ground or grounds as may be prescribed under this Act:
Provided that the securities of a company shall not be delisted unless the company concerned has been given a reasonable opportunity of being heard.
(2) A listed company or an aggrieved investor may file an appeal before the Securities Appellate Tribunal against the decision of the recognised stock exchange delisting the securities within fifteen days from the date of the decision of the recognised stock exchange delisting the securities and the provisions of Sections 22B to 22E of this Act, shall apply, as far as may be, to such appeals:
Where a recognised stock exchange acting in pursuance of any power givento it by its bye-laws, refuses tolist the securities of any public company 1 [or collective investmentscheme], the company 1 [or scheme] shall be entitled to be furnishedwith the reasons for such refusal, and may,-
(a) within fifteen days from the date on which the reasons for suchrefusal are furnished to it, or
(b) where the stock exchange has omitted or failed to dispose of, withinthe time specified in sub section (1) of section 73 of the Companies Act,1956 (1of 1956) (hereafter in this section referred to as the "specifiedtime"), the application for permission for the shares or debentures to bedealt with on the stock exchange, within fifteen days from the date of expiry ofspecified time or within such further period, not exceeding one month, as theCentral Governme
1[ '22A. Right of appeal to Securities Appellate Tribunal against refusal of stock exchange to list securities of public companies
(1) Where a recognised stock exchange, acting in pursuance of any power given to it by its bye-laws, refuses to list the securities of any company, the company shall be entitled to be furnished with reasons for such refusal, and may,--
(a) within fifteen days from the date on which the reasons for such refusal are furnished to it, or
(b) where the stock exchange has omitted or failed to dispose of, within the time specified in sub-section (M) of section 73 of the Companies Act, 1956 (1 of 1956) (hereafter in this section referred to as the "specified time"), the application for permission for the shares or debentures to be dealt with on the stock exchange, within
(1) The Securities Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, subject to the other provisions of this Act and of any rules, the Securities Appellate Tribunal shall have powers to regulate their own, procedure including the places at which they shall have their sittings.
(2) The Securities Appellate Tribunal shall have, for the purpose of discharging their functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, (5 of 1908) while trying a suit, in respect of the following matters, namely: --
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery and p
The appellant may either appear in person or authorise one or more chartered accountants or company secretaries or cost accountants or legal practitioners or any of its officers to present his or its case before the Securities Appellate Tribunal.
Explanation.--For the purposes of this section,--
(a) "chartered accountant" means a chartered accountant as defined in clause (&) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 )38 of 1949) and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;
(b) "company secretary" means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 (56 of 1980) and who has obtained a certificate of practice under sub-section (1) of section 6 of that
The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be, apply to an appeal made to a Securities Appellate Tribunal.
No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Securities Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act. '
1 [22F.Appeal to Supreme Court.-
Anyperson aggrieved by any decision or order of the Securities Appellate Tribunalmay file an appeal to the Supreme Court within sixty days from the date ofcommunication of the decision or order of the Securities Appellate Tribunal tohim on any question of law arising out of such order:
Providedthat the Supreme Court may, if it is satisfied that the appellant was preventedby sufficient cause from filing the appeal within the said period, allow it tobe filed within a further period not exceeding sixty days.".]
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1.Substituted vide The Securities Laws (Amendment) Act, 2004. Prior text was " Anyperson aggrieved by any decision or order of the Securities Appellate Tribunalmay file an appeal to the
(1) Any person who-
(a) without reasonable excuse (the burden of proving which shall be on him) fails to comply with any requisition made under sub-section (4) of section 6; or
(b) enters into any contract in contravention of any of the provisions contained in section 13 or section 16; or
(c) contravenes the provisions contained in 6[section 17 or section 17A], or section 19;
1[(d) enters into any contract in derivative in contravention of section 18A or the rules made under section 30.]
(e) owns or keeps a place other than that of a recognised stock exchange which is used for the purpose of entering into or performing any contracts in contravention of any of the provisions of this Act and knowingly permi
1[23A. Penalty for failure to furnish information, return, etc.
Any person, who is required under this Act or any rules made thereunder, -
(a) to furnish any information, document, books, returns or report to a recognised stock exchange, fails to furnish the same within the time specified therefor in the listing agreement or conditions or bye-laws of the recognised stock exchange, 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 for each such failure;
(b) to maintain books of account or records, as per the listing agreement or conditions, or bye-laws of a recognised stock exchange, fails to maintain the same, shall be liable to a penalty of one lakh rupees for each day during which such failure continues or
1[Section 23B - Penalty for failure by any person to enter into an agreement with clients
If any person, who is required under this Act or any bye-laws of a recognised stock exchange made thereunder, to enter into an agreement with his client, fails to enter into such an agreement, he 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 for every such failure.]
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1. Inserted vide The Securities Laws (Amendment) Act, 2004
1[Section 23C - Penalty for failure to redress Investors grievances
If any stock broker or sub-broker or a company whose securities are listed or proposed to be listed in a recognised stock exchange, after having been called upon by the Securities and Exchange Board of India or a recognised stock exchange in writing, to redress the grievances of the investors, fails to redress such grievances within the time stipulated by the Securities and Exchange Board of India or a recognised stock exchange, he or it 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.]
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1. Inserted vide The Securities Laws (Amendment) Act, 2004
1[Section 23D - Penalty for failure to segregate securities or moneys of client or clients
If any person, who is registered under Section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) as a stock broker or sub-broker, fails to segregate securities or moneys of the client or clients or uses the securities or moneys of a client or clients for self or for any other client, he shall be liable to a penalty not exceeding one crore rupees.]
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1. Inserted vide The Securities Laws (Amendment) Act, 2004
1[Section 23E - Penalty for failure to comply with provision of listing conditions or delisting conditions or grounds
If a company or any person managing collective investment scheme or mutual fund, fails to comply with the listing conditions or delisting conditions or grounds or commits a breach thereof, it or he shall be liable to a penalty not exceeding twenty-five crore rupees.]
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1. Inserted vide The Securities Laws (Amendment) Act, 2004
1[Section 23G - Penalty for failure to furnish periodical returns, etc.
If a recognised stock exchange fails or neglects to furnish periodical returns to the Securities and Exchange Board of India or fails or neglects to make or amend its rules or bye-laws as directed by the Securities and Exchange Board of India or fails to comply with directions issued by the Securities and Exchange Board of India, such recognised stock exchange shall be liable to a penalty which may extend to twenty-five crore rupees.]
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1. Inserted vide The Securities Laws (Amendment) Act, 2004
1[Section 23H - Penalty for contravention where no separate penalty has been provided
Whoever fails to comply with any provision of this Act, the rules or articles or bye-laws or the regulations of the recognised stock exchange or directions issued by the Securities and Exchange Board of India for which no separate penalty has been provided, shall be liable to a penalty which may extend to one crore rupees.]
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1. Inserted vide The Securities Laws (Amendment) Act, 2004
1[Section 23I - Power to adjudicate
(1) For the purpose of adjudging under Sections 23A, 23B, 23C, 23D, 23E, 23F, 23G and 23H, the Securities and Exchange Board of India shall appoint any officer not below the rank of a Division Chief of the Securities and Exchange Board of India to be an adjudicating officer for holding an inquiry in the prescribed manner after giving any person concerned a reasonable opportunity of being heard for the purpose of imposing any penalty.
(2) While holding an inquiry, the adjudicating officer shall have power to summon and enforce the attendance of any person acquainted with the facts and circumstances of the case to give evidence or to produce any document, which in the opinion of the adjudicating officer, may be useful for or relevant to the subject-matter of the inquiry and if, on such inquiry, he is sat
1[Section 23J - Factors to be taken into account by the adjudicating officer
While adjudging the quantum of penalty under Section 23-I, the adjudicating officer shall have due regard to the following factors, namely:-
(a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default;
(b) the amount of loss caused to an investor or group of investors as a result of the default ;
(c) the repetitive nature of the default.]
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1. Inserted vide The Securities Laws (Amendment) Act, 2004
1[Section 23K - Crediting sum realised by way of 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.]
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1. Inserted vide The Securities Laws (Amendment) Act, 2004
1[Section 23L - Appeal to Securities Appellate Tribunal
(1) Any person aggrieved, by the order or decision of the recognised stock exchange or the adjudicating officer or any order made by the Securities and Exchange Board of India under Section 4B, may prefer an appeal before the Securities Appellate Tribunal and the provisions of Sections 22B, 22C, 22D and 22E of this Act, shall apply, as far as may be, to such appeals.
(2) Every appeal under sub-Section (1) shall be filed within a period of forty-five days from the date on which a copy of the order or decision is received by the appellant and it shall be in such form and be accompanied by such fee as may be prescribed:
Provided that the Securities Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five d
1[Section 23M - Offences
(1) Without prejudice to any award of penalty by the adjudicating officer under this Act, if any person contravenes or attempts to contravene or abets the contravention of the provisions of this Act or of any rules or regulations or bye-laws made thereunder, for which no punishment is provided elsewhere in this Act, he shall be punishable with imprisonment for a term which may extend to ten years, or with fine, which may extend to twenty-five crore rupees or with both.
(2) If any person fails to pay the penalty imposed by the adjudicating officer or fails to comply with any of his directions or orders, he shall be punishable with imprisonment for a term which shall not be less than one month but which may extend to ten years, or with fine, which may extend to twenty-five crore rupees, or with both.]
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1[Section 23N - 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.]
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1. Inserted vide The Securities Laws (Amendment) Act, 2004
1[Section 23O - 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 regulations made thereunder, has made a full and true disclosure in respect of alleged violation, grant to such person, subject to such conditions as it may think fit to impose, immunity from prosecution for any offence under this Act, or the rules or the regulations made thereunder or also from the imposition of any penalty under this Act with respect to the alleged violation:
Provided that no such immunity shall be granted by the Central Government in cases where the proceedings for the prosecution for any such offence have been instituted
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(1) Where an offence has been committed by a company, every person who, at the time when the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence, and shall be liable to be proceeded against and punished accordingly;
Provided that nothing contained in this sub -section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence .
(2) Notwithstanding anything contained in sub -section ( 1), where an offence under this Act has been committed by a company and is proved that the offence has been committed with the consent or connivance of, or
Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (5 of 1898), any offence punishable under1[sub-section (1) of ]section 23 shall be deemed to be cognizable offence within the meaning of that Code.
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1. Omitted by the The Securities Laws (Amendment) Act, 2004
1[26.Cognizance of offences by courts
(1) No court shall take cognizance of any offence punishable under this Act or any rules or regulations or bye-laws made thereunder, save on a complaint made by the Central Government or State Government or the Securities and Exchange Board of India or a recognised stock exchange or by any person.
(2) No court inferior to that of a Court of Session shall try any offence punishable under this Act."]
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1. Section 26 substituted vide The Securities Laws (Amendment) Act, 2004. Prior text was "No court inferior to that of a presidency magistrate or a magistrate of the first class shall take cognizable of or try any offence punishable under this Act"
(1) It shall be lawful for the holder of any security whose name appears on the books of the company issuing the said security to receive and retain any dividend declared by the company in respect thereof for any year, notwithstanding that the said security has already been transferred by him for consideration, unless the transferee who claims the dividend from the transferor has lodged the security and all other documents relating to the transfer which may be required by the company with the company for being registered in his name within fifteen days of the date on which the dividend became due.
Explanation. - The period specified in this section shall be extended-
(i) in case of death of the transferee, by the actual period taken by his legal representative to establish his claim to the dividend;
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1 [27A. Right to receive income from collective investment scheme
(1) It shall be lawful for the holder of any securities, being units or other instruments issued by the collective investment scheme, whose name appears on the books of the collective investment scheme issuing the said security to receive and retain any income in respect of units or other instruments issued by the collective investment scheme declared by the collective investment scheme in respect thereof for any year, notwithstanding that the said security, being units or other instruments issued by the collective investment scheme, has already been transferred by him for consideration, unless the transferee who claims the income in respect of units or other instruments issued by the collective investment scheme from the transfer or has lodged the security and all other documents relating to the transfer which may
1["27B. Right to receive income from mutual fund
(1) It shall be lawful for the holder of any securities, being units or other instruments issued by any mutual fund, whose name appears on the books of the mutual fund issuing the said security to receive and retain any income in respect of units or other instruments issued by the mutual fund declared by the mutual fund in respect thereof for any year, notwithstanding that the said security, being units or other instruments issued by the mutual fund, has already been transferred by him for consideration, unless the transferee who claims the income in respect of units or other instruments issued by the mutual fund from the transferor has lodged the security and all other documents relating to the transfer which may be required by the mutual fund with the mutual fund for being registered in his name within fifteen days of the date on w
1 [28.Act not to apply in certain cases
(1) The provisions ofthis Act shall not apply to---
(a)theGovernment, the Reserve Bank of India, any local authority or any corporationset up by a special law or any person who has effected any transaction with orthrough the agency of any such authority as is referred to in this clause;
(b) any convertible bondor share warrant or any option or right in relation thereto, in so far as itentitles the person in whose favour any of the foregoing has been issued toobtain at his option from the company or other body corporate issuing the sameor from any of its shareholders or duly appointed agents shares of the companyor other body corporate whether by conversion of the bond or warrant orotherwise, on the basis of the price agreed upon when the same was issued.
No suit, prosecution or other legal proceeding whatsoever shall lie in any court against the governing body or any member, office bearer or servant of any recognised stock exchange or against any person or persons appointed under sub-section (1) of section 11 for anything which is in good faith done or intended to be done in pursuance of this Act or of any rules or bye-laws made thereunder.
1 [29A. power to delegate
TheCentral Government may, by order published in the Official Gazette, direct thatthe powers (except the power under section 30) exercisable by it underany provision of this Act shall, in relation to such matters andsubjectto such conditions, if any, as may be specified in the order, be exercisablealso by the Securities and Exchange Board of India or the Reserve Bankof India constituted under section 3 of the Reserve Bankof India Act, 1934.]
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1. Substitutedby the Securities Laws (Amendment) Act, 1999 w.e.f. 22.02.2000. Prior to itssubstitution, section 29A read as under:
"Powerto delegate. - The Central Government may, by order published in theOfficial Gazette, direct that the powers exercisable b
(1) The Central Government may, by notification in the Official Gazette, make rules for the purpose of carrying into effect the objects of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for,-
(a) the manner in which applications may be made, the particulars which they should contain and the levy of a fee in respect of such applications;
(b) the manner in which any inquiry for the purpose of recognizing any stock exchange may be made, the conditions which may be imposed for the grant of such recognition, including conditions as to the admission of members if the stock exchange concerned is to be the only recognised stock exchange in the area; and the form in which such recognition shall be granted;
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1[31.Power of Securities and Exchange Board of India to make regulations.
(1) Without prejudice to the provisions contained in section 30 of the Securities and Exchange Board of India Act, 1992, the Securities and Exchange Board of India, may, by notification in the Official Gazette, make regulations consistent with the provisions of this Act and the rules made thereunder to carry out the purposes of this Act.
2[(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely: --
(a) the manner, in which at least fifty-one per cent, of equity share capital of a recognised stock exchange is held within twelve months from the date of publication of the order under sub-section (7) of section 4B by the p
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