SECURITIES AND
EXCHANGE
BOARD OF
[15 of 1992]
An Act to provide for the
establishment of a Board to protect the interests of investors in securities
and to promote the development of, and to regulate, the securities market and
for matters
connected therewith or incidental thereto.
Be it
enacted by Parliament in the Forty-third Year of the
Preliminary
1. Short title,
extent and commencement.
(1) This Act may be called the Securities
and Exchange Board of India Act, 1992.
(2) It extends to the whole of
(3) It shall be deemed to have come into force on the 30th day of January, 1992.
(1) In this Act, unless the context
otherwise requires, —
(a) “Board” means the Securities and
Exchange Board of India established under section 3;
(b) “Chairman” means the Chairman of the
Board;
[(ba) “collective investment scheme” means any scheme or arrangement
which satisfies the conditions specified in section 11AA;]
(c) “existing
Securities and Exchange Board” means the Securities and Exchange Board of India
constituted under the Resolution of the Government of India in the Department
of Economic Affairs No. 1(44) SE/86, dated the 12th day of April, 1988;
(d) “Fund” means the Fund constituted under
section 14;
(e) “member” means
a member of the Board and includes the Chairman;
(f) “notification”
means a notification published in the Official Gazette;
(g) “prescribed”
means prescribed by rules made under this Act;
(h) “regulations”
means the regulations made by the Board under this Act;
[(ha) “Reserve Bank” means the Reserve Bank of
India constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of
1934);]
(i) “securities” has the meaning assigned to it in section 2 of
the Securities Contracts (Regulation) Act, 1956 (42 of 1956).
[(2) Words and expressions used and not defined in this Act but defined in the Securities Contracts (Regulation) Act, 1956 (42 of 1956) [or the Depositories Act, 1996], shall have the meanings respectively assigned to them in that Act].
Establishment
of the Securities and
Exchange Board of
3. Establishment
and incorporation of Board.
(1) With effect from such date as the Central Government may, by
notification, appoint, there shall be established, for the purposes of this
Act, a Board by the name of the Securities and Exchange Board of India.
(2) The Board shall be a body corporate by the name aforesaid, having perpetual succession and a common seal, with power subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable, and to contract, and shall, by the said name, sue or be sued.
(3) The
head office of the Board shall be at
(4) The Board may establish offices at other
places in
(1) The Board shall consist of the following members, namely:—
(a) a Chairman;
(b) two members
from amongst the officials of the [Ministry] of the Central
Government dealing with Finance [and
administration of the Companies Act, 1956 (1 of 1956)];
(c) one member from
amongst the officials of [the Reserve Bank];
[(d) five other
members of whom at least three shall be the whole-time members,]to be
appointed by the Central Government.
(2) The general superintendence, direction and management of the affairs of the Board shall vest in a Board of members, which may exercise all powers and do all acts and things which may be exercised or done by the Board.
(3) Save
as otherwise determined by regulations, the Chairman shall also have powers of
general superintendence and direction of the affairs of the Board and may also
exercise all powers and do all acts and things which may be exercised or done
by that Board.
(4) The Chairman and members referred to in clauses (a) and (d) of
sub-section (1) shall be appointed by the Central Government and the members
referred to in clauses (b) and (c) of that sub-section shall be nominated by
the Central Government and the [Reserve Bank] respectively.
(5) The Chairman and the other members referred to in clauses (a)
and (d) of sub-section (1) shall be persons of ability, integrity and standing
who have shown capacity in dealing with problems relating to securities market
or have special knowledge or experience of law, finance, economics,
accountancy, administration or in any other discipline which, in the opinion of
the Central Government, shall be useful to the Board.
5. Term
of office and conditions of service of Chairman and members of the Board.
(1) The term of office and
other conditions of service of the Chairman and the members referred to in
clause (d) of sub-section (1) of section 4 shall be such as may be prescribed.
(2) Notwithstanding anything contained in sub-section (1), the
Central Government shall have the right to terminate the services of the
Chairman or a member appointed under clause (d) of sub-section (1) of section
4, at any time before the expiry of the period prescribed under sub-section
(1), by giving him notice of not less than three months in writing or three
months’ salary and allowances in lieu thereof, and the Chairman or a member, as
the case may be, shall also have the right to relinquish his office, at any
time before the expiry of the period prescribed under sub-section (1), by
giving to the Central Government notice of not less than three months in
writing.
6. Removal
of member from office.
[* * *] The Central Government shall remove a
member from office if he—
(a) is, or at any time has been, adjudicated
as insolvent;
(b) is of unsound mind and stands so
declared by a competent court;
(c) has been
convicted of an offence which, in the opinion of the Central Government,
involves a moral turpitude;
(d) [* * *]
(e) has, in the
opinion of the Central Government, so abused his position as to render his
continuation in office detrimental to the public interest :
Provided
that no member shall be removed under this clause unless he has been given a
reasonable opportunity of being heard in the matter.
(1) The Board shall meet at such times and places, and shall
observe such rules of procedure in regard to the transaction of business at its
meetings (including quorum at such meetings) as may be provided by regulations.
(2) The Chairman or, if for any reason, he is unable to attend a meeting of the Board, any other member chosen by the members present from amongst themselves at the meeting shall preside at the meeting.
(3) All questions which come up before any meeting of the Board
shall be decided by a majority votes of the members present and voting, and, in
the event of an equality of votes, the Chairman, or in his absence, the person
presiding, shall have a second or casting vote.
7A. [Member
not to participate in meetings in certain cases.
Any
member, who is a director of a company and who as such director has any direct
or indirect pecuniary interest in any matter coming up for consideration at a
meeting of the Board, shall, as soon as possible after relevant circumstances
have come to his knowledge, disclose the nature of his interest at such meeting
and such disclosure shall be recorded in the proceedings of the Board, and the
member shall not take any part in any deliberation or decision of the Board
with respect to that matter.]
8. Vacancies,
etc., not to invalidate proceedings of Board.
No
act or proceeding of the Board shall be invalid merely by reason of—
(a) any vacancy in, or any defect in the constitution of, the
Board; or
(b) any defect in the appointment of a person acting as a member
of the Board; or
(c) any irregularity in the procedure of the Board not affecting
the merits of the case.
9.
Officers and employees of
the Board.
(1) The Board may appoint such other officers and employees as it
considers necessary for the efficient discharge of its functions under this
Act.
(2) The term and other conditions of service of officers and
employees of the Board appointed under sub-section (1) shall be such as may be
determined by regulations.
Transfer
of assets, liabilities, etc., of the existing
Securities and Exchange Board to the Board
10. Transfer
of assets, liabilities, etc., of existing Securities and Exchange Board to the
Board.
(1) On and from the date of establishment of
the Board,—
(a) any reference
to the existing Securities and Exchange Board in any law other than this Act or
in any contract or other instrument shall be deemed as a reference to the
Board;
(b) all properties and assets, movable and immovable, of, or
belonging to, the existing Securities and Exchange Board, shall vest in the
Board;
(c) all rights and
liabilities of the existing Securities and Exchange Board shall be transferred to, and be the rights and
liabilities of, the Board;
(d) without prejudice to the provisions of
clause (c), all debts, obligations and liabilities incurred, all contracts entered
into and all matters and things engaged to be done by, with or for the existing
Securities and Exchange Board immediately before that date, for or in
connection with the purpose of the said existing Board shall be deemed to have
been incurred, entered into, or engaged to be done by, with or for, the Board;
(e) all sums of
money due to the existing Securities and Exchange Board immediately before that
date shall be deemed to be due to the Board;
(f) all suits and other legal proceedings
instituted or which could have been instituted by or against the existing
Securities and Exchange Board immediately before that date may be continued or
may be instituted by or against the Board; and
(g) every employee holding any office under
the existing Securities and Exchange Board immediately before that date shall
hold his office in the Board by the same tenure and upon the same terms and
conditions of service as respects remuneration, leave, provident fund,
retirement and other terminal benefits as he would have held such office if the
Board had not been established and shall continue to do so as an employee of
the Board or until the expiry of the period of six months from that date if
such employee opts not to be the employee of the Board within such period.
(2) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 o1947),or in any other law for the time being in force, absorption of any employee by the Board in its regular service under this section shall not entitle such employee to any compensation under that Act or other law and no such claim shall be entertained by any court, tribunal or other authority.
Powers
and Functions of the Board
(1) Subject
to the provisions of this Act, it shall be the duty of the Board to protect the
interests of investors in securities and to promote the development of, and to
regulate the securities market, by such measures as it thinks fit.
(2) Without prejudice to the generality of the foregoing provisions,
the measures referred to therein may provide for—
(a) regulating the
business in stock exchanges and any other securities markets;
(b) registering and regulating the working of
stock brokers, sub-brokers, share transfer agents, bankers to an issue,
trustees of trust deeds, registrars to an issue, merchant bankers,
underwriters, portfolio managers, investment advisers and such other
intermediaries who may be associated with securities markets in any manner;
[(ba) registering and regulating the working of
the depositories 2[,
participants], custodians of securities, foreign institutional investors,
credit rating agencies and such other intermediaries as the Board may, by
notification, specify in this behalf;]
(c) registering and
regulating the working of 3[venture
capital funds and collective investment schemes], including mutual funds;
(d) promoting and
regulating self-regulatory organisations;
(e) prohibiting
fraudulent and unfair trade practices relating to securities markets;
(f) promoting
investors’ education and training of intermediaries of securities markets;
(g) prohibiting
insider trading in securities;
(h) regulating
substantial acquisition of shares and take over of companies;
(i) calling for information from, undertaking inspection,
conducting inquiries and audits of the [stock exchanges, mutual funds, other
persons associated with the securities market], intermediaries and
self-regulatory organizations in the securities market;
[(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;]
(j) performing such
functions and exercising such powers under the provisions of [* * *] the
Securities Contracts (Regulation) Act, 1956 (42 of 1956), as may be delegated
to it by the Central Government;
(k) levying fees or
other charges for carrying out the purposes of this section;
(l) conducting
research for the above purposes;
[(la) calling from or furnishing to any such
agencies, as may be specified by the Board, such information as may be
considered necessary by it for the efficient discharge of its functions;]
(m) performing such
other functions as may be prescribed.
[(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 section 12) which intends to get its securities
listed on any recognized stock exchange where the Board has reasonable grounds
to believe that such company has been indulging in insider trading or
fraudulent and unfair trade practices relating to securities market.]
[(3) Notwithstanding anything contained in any other law for the time
being in force while exercising the powers under [clause (i) or clause (ia) of sub-section
(2) or sub-section (2A)], the Board shall have 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: —
(i) the discovery and
production of books of account and other documents, at such place and such time
as may be specified by the Board;
(ii) summoning and
enforcing the attendance of persons and examining them on oath;
(iii) inspection of any books, registers and
other documents of any person referred to in section 12, at any place;]
[(iv) inspection of any book, or register, or other document or
record of the company referred to in sub-section (2A);
(v) issuing commissions
for the examination of witnesses or documents.]
[(4) Without
prejudice to the provisions contained in sub-sections (1), (2), (2A) and (3)
and section 11B, the Board may, by an order, for reasons to be recorded in
writing, in the interests of investors or securities market, take any of the
following measures, either pending investigation or inquiry or on completion
of such investigation or inquiry, namely:—
(a) suspend the
trading of any security in a recognised stock
exchange;
(b) restrain persons from accessing the
securities market and prohibit any person associated with securities market to
buy, sell or deal in securities;
(c) suspend any office-bearer of any stock
exchange or self-regulatory organization from holding such position;
(d) impound and retain the proceeds or
securities in respect of any transaction which is under investigation;
(e) attach, after passing of an order on an application made for
approval by the Judicial Magistrate of the first class having jurisdiction, for
a period not exceeding one month, one or more bank account or accounts of any
intermediary or any person associated with the securities market in any manner
involved in violation of any of the provisions of this Act, or the rules or the
regulations made thereunder :
Provided that only the bank account or accounts or any transaction entered
therein, so far as it relates to the proceeds actually involved in violation of
any of the provisions of this Act, or the rules or the regulations made thereunder shall be allowed to be attached;
(f) direct any intermediary or any person
associated with the securities market in any manner not to dispose of or
alienate an asset forming part of any transaction which is under investigation
:
Provided that the Board may, without prejudice to the provisions contained in
sub-section (2) or sub-section (2A), take any of the measures specified in
clause (d) or clause (e) or clause (f), in respect of any listed public company
or a public company (not being intermediaries referred to in section 12) which
intends to get its securities listed on any recognised
stock exchange where the Board has reasonable grounds to believe that such
company has been indulging in insider trading or fraudulent and unfair trade
practices relating to securities market :
Provided further that the Board shall, either before or after
passing such orders, give an opportunity of hearing to such intermediaries or
persons concerned.]
11A. [Board to
regulate or prohibit issue of prospectus, 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 company
from issuing prospectus, any offer document, or advertisement soliciting money
from the public for the issue of securities;
(ii) specify the conditions subject to which
the prospectus, such offer document or advertisement, if not prohibited, may be
issued.
(2) Without prejudice to the provisions of section 21 of the
Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Board may specify
the requirements for listing and transfer of securities and other matters
incidental thereto.]
11AA. [Collective
investment scheme.
(1) Any scheme or arrangement which satisfies the conditions
referred to in sub-section (2) shall be a collective investment scheme.
(2) Any scheme or arrangement made or offered by any company under
which,—
(i) the
contributions, or payments made by the investors, by whatever name called, are
pooled and utilized for the purposes of the scheme or arrangement;
(ii) the
contributions or payments are made to such scheme or arrangement by the
investors with a view to receive profits, income, produce or property, whether
movable or immovable, from such scheme or arrangement;
(iii) the property,
contribution or investment forming part of scheme or arrangement, whether
identifiable or not, is managed on behalf of the investors;
(iv) the investors do
not have day-to-day control over the management and operation of the scheme or
arrangement.
(3) Notwithstanding anything contained in sub-section (2), any
scheme or arrangement—
(i) made or
offered by a co-operative society registered under the Co-operative Societies
Act, 1912 (2 of 1912) or a society being a society registered or deemed to be
registered under any law relating to co-operative societies for the time being
in force in any State;
(ii) under which deposits are accepted by
non-banking financial companies as defined in clause (f) of section 45-I of
the Reserve Bank of India Act, 1934 (2 of 1934);
(iii) being a contract
of insurance to which the Insurance Act, 1938 (4 of 1938), applies;
(iv) providing for any Scheme, Pension Scheme
or the Insurance Scheme framed under the Employees Provident Fund and
Miscellaneous Provisions Act, 1952 (19 of 1952);
(v) under which
deposits are accepted under section 58A of the Companies Act, 1956 (1 of 1956);
(vi) under which
deposits are accepted by a company declared as a Nidhi
or a mutual benefit society under section 620A of the Companies Act, 1956 (1 of
1956);
(vii) falling within the meaning of Chit
business as defined in clause (d) of section 2 of the Chit Fund Act, 1982 (40
of 1982);
(viii) under which
contributions made are in the nature of subscription to a mutual fund;shall not be a collective investment scheme.]
11B. Power to issue
directions.
Save as otherwise provided in
section 11, if after making or causing to be made an enquiry, the Board is
satisfied that it is necessary,—
(i) in the interest of investors, or orderly development of
securities market; or
(ii) to prevent the affairs of any
intermediary or other persons referred to in section 12 being conducted in a
manner detrimental to the interest of investors or securities market; or
(iii) to secure the
proper management of any such intermediary or person,
it may issue such directions,—
(a) to any person
or class of persons referred to in section 12, or associated with the
securities market; or
(b) to any company
in respect of matters specified in section 11A, as may be appropriate in the
interests of investors in securities and the securities market.
11C. [Investigation.
(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 persons associated with the
securities market and to report thereon to the Board.
(2) Without prejudice to the provisions of sections 235 to 241 of the Companies Act, 1956 (1 of 1956), it shall be the duty of every manager, managing director, officer and other employee of the company and every intermediary referred to in section 12 or every person associated with the securities market to preserve and to produce to the Investigating Authority or any person authorised by it in this behalf, all the books, registers, other documents and record of, or relating to, the company or, as the case may be, of or relating to, the intermediary or such person, which are in their custody or power.
(3) The Investigating Authority may require any intermediary or any person associated with securities market in any manner to furnish such information to, or produce such books, or registers, or other documents, or record before him or any person authorised by it in this behalf as it may consider necessary if the furnishing of such information or the production of such books, or registers, or other documents, or record is relevant or necessary for the purposes of its investigation.
(4) The Investigating Authority may keep in its custody any books, registers, other documents and record produced under sub-section (2) or sub-section (3) for six months and thereafter shall return the same to any intermediary or any person associated with securities market by whom or on whose behalf the books, registers, other documents and record are produced :
Provided that the Investigating Authority may call for any book, register, otherdocument and record if they are needed again :
Provided further that if the person on whose behalf the
books, registers, other documents and record are produced requires certified
copies of the books, registers, other documents and record produced before the
Investigating Authority, it shall give certified copies of such books, registers,
other documents and record to such person or on whose behalf the books,
registers, other documents and record were produced.
(5) Any person, directed to make an investigation under sub-section (1), may examine on oath, any manager, managing director, officer and other employee of any intermediary or any person associated with securities market in any manner, in relation to the affairs of his business and may administer an oath accordingly and for that purpose may require any of those persons to appear before it personally.
(6) If any person fails without reasonable cause or refuses—
(a) to produce to the Investigating
Authority or any person authorised by it in this
behalf any book, register, other document and record which is his duty under
sub-section (2) or sub-section (3) to produce; or
(b) to furnish any
information which is his duty under sub-section (3) to furnish; or
(c) to appear before the Investigating
Authority personally when required to do so under sub-section (5) or to answer
any question which is put to him by the Investigating Authority in pursuance of
that sub-section; or
(d) to sign the
notes of any examination referred to in sub-section (7),
he shall be punishable with imprisonment for
a term which may extend to one year, or with fine, which may extend to one crore rupees, or with both, and also with a further fine
which may extend to five lakh rupees for every day
after the first during which the failure or refusal continues.
(7) Notes of any examination under sub-section (5) shall be taken down in writing and shall be read over to, or by, and signed by, the person examined, and may thereafter be used in evidence against him.
(8) Where in the course of investigation, the Investigating Authority has reasonable ground to believe that the books, registers, other documents and record of, or relating to, any intermediary or any person associated with securities market in any manner, may be destroyed, mutilated, altered, falsified or secreted, the Investigating Authority may make an application to the Judicial Magistrate of the first class having jurisdiction for an order for the seizure of such books, registers, other documents and record.
(9) After considering the application and hearing the Investigating Authority, if necessary, the Magistrate may, by order, authorise the Investigating Authority—
(a) to enter, with
such assistance, as may be required, the place or places where such books,
registers, other documents and record are kept;
(b) to search that
place or those places in the manner specified in the order; and
(c) to seize books,
registers, other documents and record, it considers necessary for the purposes
of the investigation :
Provided that the Magistrate shall not authorise
seizure of books, registers, other documents and record, of any listed public
company or a public company (not being the intermediaries specified under
section 12) which intends to get its securities listed on any recognised stock exchange unless such company indulges in
insider trading or market manipulation.
(10) The Investigating Authority shall keep in
its custody the books, registers, other documents and record seized under this
section for such period not later than the conclusion of the investigation as
it considers necessary and thereafter shall return the same to the company or
the other body corporate, or, as the case may be, to the managing director or
the manager or any other person, from whose custody or power they were seized
and inform the Magistrate of such return :
Provided that the Investigating Authority may, before returning such books,
registers, other documents and record as aforesaid, place identification marks
on them or any part thereof.
(11) Save as otherwise provided in this section, every search or
seizure made under this section shall be carried out in accordance with the
provisions of the Code of Criminal Procedure, 1973 (2 of 1974) relating to
searches or seizures made under that Code.
11D. Cease and desist
proceedings.
If the Board finds, after
causing an inquiry to be made, that any person has violated, or is likely to
violate, any provisions of this Act, or any rules or regulations made thereunder, it may pass an order requiring such
person to cease and desist from committing or causing such violation :
Provided that the Board shall not pass such order in
respect of any listed public
to get its securities listed on any recognised
stock exchange unless the Board has reasonable grounds to believe that such
company has indulged in insider trading or market manipulation.]
Registration
Certificate
12. Registration
of stock brokers, sub-brokers, share transfer agents, etc.
(1) No stock broker,
sub-broker, share transfer agent, banker to an issue, trustee of trust deed,
registrar to an issue, merchant banker, underwriter, portfolio manager,
investment adviser and such other intermediary who may be associated with
securities market shall buy, sell or deal in securities except under, and in
accordance with, the conditions of a certificate of registration obtained from
the Board in accordance with the [regulations] made under this Act :
Provided that a person buying or selling securities
or otherwise dealing with the securities market as a stock broker, sub-broker,
share transfer agent, banker to an issue, trustee of trust deed, registrar to
an issue, merchant banker, under-writer, portfolio manager, investment adviser
and such other intermediary who may be associated with securities market
immediately before the establishment of the Board for which no registration
certificate was necessary prior to such establishment, may continue to do so
for a period of three months from such establishment or, if he has made an
application for such registration within the said period of three months, till
the disposal of such application :
[Provided
further that any certificate of registration, obtained immediately before
the commencement of the Securities Laws (Amendment) Act, 1995, shall be deemed
to have been obtained from the Board in accordance with the regulations
providing for such registration.
(1A) No depository, [participant,] custodian of securities, foreign
institutional investor, credit rating agency, or any other intermediary
associated with the securities market as the Board may by notification in this
behalf specify, shall buy or sell or deal in securities except under and in
accordance with the conditions of a certificate of registration obtained from
the Board in accordance with the regulations made under this Act :
Provided that a person buying or selling securities
or otherwise dealing with the securities market as a depository, [participant,]
custodian of securities, foreign institutional investor or credit rating agency
immediately before the commencement of the Securities Laws (Amendment) Act,
1995, for which no certificate of registration was required prior to such
commencement, may continue to buy or sell securities or otherwise deal with the
securities market until such time regulations are made under clause (d) of
sub-section (2) of section 30.
(1B) No person shall sponsor or cause to be sponsored or carry on or
caused to be carried on any venture capital funds or collective investment
schemes including mutual funds, unless he obtains a certificate of registration
from the Board in accordance with the regulations :
Provided that any person sponsoring or causing to be
sponsored, carrying or causing to be carried on any venture capital funds or
collective investment schemes operating in the securities market immediately
before the commencement of the Securities Laws (Amendment) Act, 1995, for which
no certificate of registration was required prior to such commencement, may
continue to operate till such time regulations are made under clause (d) of
sub-section (2) of section 30.]
(2) Every application for registration shall be in such manner and
on payment of such fees as may be determined by regulations.
(3) The Board may, by order, suspend or cancel a certificate of
registration in such manner as may be determined by regulations
:
Provided that no order under this sub-section shall be made
unless the person concerned has been given a reasonable opportunity of being
heard.
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;
(b) employ any device,
scheme or artifice to defraud in connection with issue or dealing in securities
which are listed or proposed to be listed on a recognised
stock exchange;
(c) engage in any act, practice, course of business
which operates or would operate as fraud or deceit upon any person, in
connection with the issue, dealing in securities which are listed or proposed
to be listed on a recognised stock exchange, in
contravention of the provisions of this Act or the rules or the regulations
made thereunder;
(d) engage in insider trading;
(e) deal in securities while in possession of
material or non-public information or communicate such material or non-public
information to any other person, in a manner which is in contravention of the
provisions of this Act or the rules or the regulations made thereunder;
(f) acquire control of
any company or securities more than the percentage of equity share capital of a
company whose securities are listed or proposed to be listed on a recognised stock exchange in contravention of the
regulations made under this Act.]
Finance,
accounts and audit
13. Grants by the Central Government.
The Central Government may, after
due appropriation made by Parliament by law in this behalf, make to the Board
grants of such sums of money as that Government may think fit for being
utilized for the purposes of this Act.
(1) There shall be constituted a Fund to be
called the Securities and Exchange Board of India General Fund and there shall
be credited thereto—
(a) all grants, fees and charges received by the Board under
this Act;
[* * *]
(aa) [* * *]
(b)
all sums
received by the Board from such other sources as may be decided upon by the
Central Government.
(2) The Fund shall be applied for meeting—
(a) the salaries,
allowances and other remuneration of the members, officers and other employees
of the Board;
(b) the expenses of
the Board in the discharge of its functions under section 11;
(c) the expenses on
objects and for purposes authorised by this Act.
(1) The Board shall
maintain proper accounts and other relevant records and prepare an annual
statement of accounts in such form as may be prescribed by the Central
Government in consultation with the Comptroller and Auditor-General of
(2) The accounts of the Board shall be audited by the Comptroller
and Auditor-General of India at such intervals as may be specified by him and
any expenditure incurred in connection with such audit shall be payable by the
Board to the Comptroller and Auditor-General of India.
(3) The Comptroller and Auditor-General of India and any other
person appointed by him in connection with the audit of the accounts of the
Board shall have the same rights and privileges and authority in connection
with such audit as the Comptroller and Auditor-General generally has in
connection with the audit of the Government accounts and, in particular, shall
have the right to demand the production of books, accounts, connected vouchers
and other documents and papers and to inspect any of the offices of the Board.
(4) The accounts of the Board as certified by the Comptroller and
Auditor-General of India or any other person appointed by him in this behalf
together with the audit report thereon shall be forwarded annually to the
Central Government and that Government shall cause the same to be laid before
each House of Parliament.
Penalties
and adjudication
15A. Penalty for failure to
furnish information, return, etc.
If any person, who is required under this Act or any rules or
regulations made thereunder,—
(a) to furnish any
document, return or report to the Board, fails to furnish the same, 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];
(b) to file any return or furnish any
information, books or other documents within the time specified therefor in the regulations, fails to file return or
furnish the same within the time specified therefor
in the regulations, 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];
(c) to maintain
books of account or records, fails to maintain the same, 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].
15B. Penalty for
failure by any person to enter into agreement with clients.
If any person, who is registered as an intermediary and is required
under this Act or any rules or regulations made thereunder
to enter into an agreement with his client, fails to enter into such 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].
15C. [Penalty for
failure to redress investors’ grievances.
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.]
15D. Penalty for certain defaults in case of mutual funds.
If
any person, who is—
(a) required under this Act or any rules or regulations
made thereunder to obtain a certificate of
registration from the Board for sponsoring or carrying on any collective
investment scheme, including mutual funds, sponsors or carries on any
collective investment scheme, including mutual funds, without obtaining such
certificate of registration, he shall be liable to [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];
(b) registered with the Board as a
collective investment scheme, including mutual funds, for sponsoring or
carrying on any investment scheme, fails to comply with the terms and
conditions of certificate of registration, 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];
(c) registered with the Board as a
collective investment scheme, including mutual funds, fails to make an
application for listing of its schemes as provided for in the regulations
governing such listing, 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];
(d) registered as a collective investment
scheme, including mutual funds, fails to despatch
unit certificates of any scheme in the manner provided in the regulation
governing such despatch, 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];
(e) registered as a collective investment
scheme, including mutual funds, fails to refund the application monies paid by
the investors within the period specified in the regulations, 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];
(f) registered as a collective investment scheme, including
mutual funds, fails to invest money collected by such collective investment
schemes in the manner or within the period specified in the regulations, 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].
15E. Penalty for
failure to observe rules and regulations by an asset management company.
Where
any asset management company of a mutual fund registered under this Act, fails
to comply with any of the regulations providing for restrictions on the
activities of the asset management companies, such asset management company
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].
15F. Penalty for
default in case of stock brokers.
If
any person, who is registered as a stock broker under this Act,—
(a) fails to issue contract notes in the
form and manner specified by the stock exchange of which such broker is a
member, he shall be liable to a penalty not exceeding five times the amount for
which the contract note was required to be issued by that broker;
(b) fails to deliver any security or fails
to make payment of the amount due to the investor in the manner within the
period specified in the regulations, 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];
(c) charges an
amount of brokerage which is in excess of the brokerage specified in the
regulations, he shall be liable to [a penalty of one lakh
rupees] or five times the amount of brokerage charged in excess of the
specified brokerage, whichever is higher.
15G. Penalty for
insider trading.
If any insider who,—
(i) either on
his own behalf or on behalf of any other person, deals in securities of a body
corporate listed on any stock exchange on the basis of any unpublished
price-sensitive information; or
(ii) communicates
any unpublished price-sensitive information to any person, with or without his
request for such information except as required in the ordinary course of
business or under any law; or
(iii) counsels, or
procures for any other person to deal in any securities of any body corporate
on the basis of unpublished price-sensitive information,
shall be liable to a penalty [of
twenty-five crore rupees or three times the amount of
profits made out of insider trading, whichever is higher].
15H. Penalty for
non-disclosure of acquisition of shares and takeovers.
If
any person, who is required under this Act or any rules or regulations made thereunder, fails to,—
(i) disclose the aggregate of his shareholding in the body
corporate before he acquires any shares of that body corporate; or
(ii) make a public
announcement to acquire shares at a minimum price; or
[(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,]
he shall be liable to a penalty [of
twenty-five crore rupees or three times the amount of
profits made out of such failure, whichever is higher].
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 no 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.]
(1) For the purpose of adjudging under sections 15A, 15B, 15C,
15D, 15E, 15F, 15G [,15H, 15HA and 15HB],
the Board shall appoint any officer not below the rank of a Division Chief 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 satisfied
that the person has failed to comply with the provisions of any of the sections
specified in sub-section (1), he may impose such penalty as he thinks fit in
accordance with the provisions of any of those sections.
15J. Factors to be taken into account by the adjudicating officer.
While
adjudging quantum of penalty under section 15-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.
15JA. [Crediting sums realised
by way of penalties to Consolidated Fund of
All
sums realised by way of penalties under this Act
shall be credited to the Consolidated Fund of India.]
Establishment,
jurisdiction, authority and
procedure of Appellate Tribunal
15K. Establishment
of Securities Appellate Tribunals.
(1) The Central Government shall by
notification, establish one or more Appellate Tribunals to be known as the
Securities Appellate Tribunal to exercise the jurisdiction, powers and authority
conferred on such Tribunal by or under this Act [or any other law for the time
being in force].
(2) The Central Government shall also specify in the notification
referred to in sub-section (1) the matters and places in relation to which the
Securities Appellate Tribunal may exercise jurisdiction.
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 Member of Securities Appellate Tribunal.
(1) A person shall not be qualified for appointment as the
Presiding Officer of a Securities Appellate Tribunal unless he is a sitting or
retired Judge of the Supreme Court or a sitting or retired Chief Justice of a
High Court:
Provided that the Presiding Officer of the Securities Appellate Tribunal shall
be appointed by the Central Government in consultation with the Chief Justice
of India or his nominee.
(2) A person shall not be qualified for appointment as member of a
Securities Appellate Tribunal unless he is a person of ability, integrity and
standing who has shown capacity in dealing with problems relating to securities
market and has qualification and experience of corporate law, securities laws,
finance, economics or accountancy:
Provided that a member of the Board or any person holding a post at senior
management level equivalent to Executive Director in the Board shall not be
appointed as Presiding Officer or Member of a Securities Appellate Tribunal
during his service or tenure as such with the Board or within two years from
the date on which he ceases to hold office as such in the Board.]
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.]
15-O. Salary and
allowances and other terms and conditions of service of Presiding Officers.
The
salary and allowances payable to and the other terms and conditions of service
including pension, gratuity and other retirement benefits of the [Presiding
Officer and other Members] of a Securities Appellate Tribunal shall be
such as may be prescribed :
Provided that neither the salary and allowances nor the other terms and
conditions of service of the [Presiding Officer and other Members of a
Securities Appellate Tribunal] shall be varied to their disadvantage
after appointment.
If,
for reason other than temporary absence, any vacancy occurs in the [office
of the Presiding Officer or any other Member] of a Securities Appellate
Tribunal, then the Central Government shall appoint another person in
accordance with the provisions of this Act to fill the vacancy and the
proceedings may be continued before the Securities Appellate Tribunal from the stage at which the vacancy is
filled.
(1) The [Presiding
Officer or any other Member] of a Securities Appellate Tribunal may, by
notice in writing under his hand addressed to the Central Government, resign
his office :
Provided that [the Presiding Officer or any other Member] shall,
unless he is permitted by the Central Government to relinquish his office
sooner, continue to hold office, until the expiry of three months from the date
of receipt of such notice or until a person duly appointed as his successor
enters upon his office or until the expiry of his term of office, whichever is
the earliest.
(2) The [Presiding Officer or any other Member] of a
Securities Appellate Tribunal shall not be removed from his office except by an
order by the Central Government on the ground of proved misbehaviour
or incapacity after an inquiry made by a Judge of the Supreme Court, in which
the [Presiding Officer or any other Member] concerned has been
informed of the charges against him and given a reasonable opportunity of being
heard in respect of these charges.
(3) The Central Government may, by rules, regulate the procedure
for the investigation of misbehaviour or incapacity
of the [Presiding Officer or any other Member].
15R. Orders constituting Appellate Tribunal to be final and not to
invalidate its proceedings.
No order of the Central Government appointing any person as the [Presiding
Officer or a Member] of a Securities Appellate Tribunal shall be called
in question in any manner, and no act or proceeding before a Securities
Appellate Tribunal shall be called in question in any manner on the ground
merely of any defect in the constitution of a Securities Appellate Tribunal.
15S. Staff of the
Securities Appellate Tribunal.
(1) The Central Government shall provide the Securities Appellate
Tribunal with such officers and employees as that Government may think fit.
(2) The officers and employees of the Securities Appellate Tribunal
shall discharge their functions under general superintendence of the Presiding
Officer.
(3) The salaries and allowances and other conditions of service of
the officers and employees of the Securities Appellate Tribunal shall be such
as may be prescribed.
15T. Appeal to the Securities Appellate Tribunal.
[(1)
Save as provided in sub-section (2), any person aggrieved,—
(a) by an order of the Board made, on and
after the commencement of the Securities Laws (Second Amendment) Act, 1999,
under this Act, or the rules or regulations made thereunder;
or
(b) by an order
made by an adjudicating officer under this Act,
may prefer an appeal to a Securities Appellate
Tribunal having jurisdiction in the matter.
(2) No appeal shall lie to the Securities Appellate Tribunal from an order made—
(a) by the Board on
and after the commencement of the Securities Laws (Second Amendment) Act, 1999;
(b) by an
adjudicating officer,
with the consent of the parties.]
(3) 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 made by
the [Board or the] Adjudicating Officer [, as the case may be,] is
received by him 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 days if
it is satisfied that there was sufficient cause for not filing it within that
period.
(4) On receipt of an appeal under sub-section (1), the Securities
Appellate Tribunal may, after giving the parties to the appeal, an opportunity
of being heard, pass such orders thereon as it thinks fit, confirming,
modifying or setting aside the order appealed against.
(5) The Securities Appellate Tribunal shall send a copy of every
order made by it to the [Board, the] parties to the appeal and to the concerned
Adjudicating Officer.
(6) The appeal filed before the Securities Appellate Tribunal
under sub-section (1) shall be dealt with by it as expeditiously as possible
and endeavour shall be made by it to dispose of the
appeal finally within six months from the date of receipt of the appeal.
15U. Procedure and
powers of the Securities Appellate Tribunal.
(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 purposes
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 production of documents;
(c) receiving
evidence on affidavits;
(d) issuing
commissions for the examination of witnesses or documents;
(e) reviewing its
decisions;
(f) dismissing an
application for default or deciding it ex parte ;
(g) setting aside any order of dismissal
of any application for default or any order passed by it ex parte
;
(h) any other
matter which may be prescribed.
(3) Every proceeding before the Securities Appellate Tribunal
shall be deemed to be a judicial proceeding within the meaning of sections 193
and 228, and for the purposes of section 196 of the Indian Penal Code (45 of
1860), and the Securities Appellate Tribunal shall be deemed to be a civil
court for all the purposes of section 195 and Chapter XXVI of the Code of
Criminal Procedure, 1973 (2 of 1974).
15V. Right to legal
representation.
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 definedinclause(b) 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
Act;
(c) “cost accountant” means a cost
accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost
and Works Accountants Act, 1959 (23 of 1959) and who has obtained a certificate
of practice under sub-section (1) of section 6 of that Act;
(d) “legal
practitioner” means an advocate, vakil or any
attorney of any High Court, and includes a pleader in practice.]
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.
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 (45 of 1860).]
15Y. Civil Court not
to have jurisdiction.
No
civil court shall have jurisdiction to entertain any suit or proceeding in
respect of any matter which an adjudicating officer appointed under this Act or
a Securities Appellate Tribunal constituted under this Act 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.
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.
Miscellaneous
16. Power
of Central Government to issue directions.
(1) Without
prejudice to the foregoing provisions of this Act [or the Depositories Act,
1996], the Board shall, in exercise of its powers or the performance of its
functions under this Act, be bound by such directions on questions of policy as
the Central Government may give in writing to it from time to time :
Provided that the Board shall, as far as practicable, be given an opportunity to before any
direction is given under this sub-section.
(2) The decision of the Central Government whether a question is
one of policy or not shall be final.
17. Power
of Central Government to supersede the Board.
(1)
If at any time the Central
Government is of opinion—
(a) that on account
of grave emergency, the Board is unable to discharge the functions and duties
imposed on it by or under the provisions of this Act; or
(b) that the Board has persistently made
default in complying with any direction issued by the Central Government under
this Act or in the discharge of the functions and duties imposed on it by or
under the provisions of this Act and as a result of such default the financial
position of the Board or the administration of the Board has deteriorated; or
(c) that
circumstances exist which render it necessary in the public interest so to do,the
Central Government may, by notification, supersede the Board for such period,
not exceeding six months, as may be specified in the notification.
(2) Upon the publication of a notification under sub-section (1)
superseding the Board,—
(a) all the members
shall, as from the date of supersession, vacate their
offices as such;
(b) all the powers, functions and duties
which may, by or under the provisions of this Act, be exercised or discharged
by or on behalf of the Board, shall until the Board is reconstituted under
sub-section (3), be exercised and discharged by such person or persons as the
Central Government may direct; and
(c) all property owned or controlled by
the Board shall, until the Board is reconstituted under sub-section (3), vest
in the Central Government.
(3) On the expiration of the period of supersession
specified in the notification issued under sub-section (1), the Central
Government may reconstitute the Board by a fresh appointment and in such case
any person or persons who vacated their offices under clause (a) of sub-section
(2), shall not be deemed disqualified for appointment :
Provided that the Central Government may, at any time, before the expiration of
the period of supersession, take action under this
sub-section.
(4) The Central Government shall cause a notification issued under
sub-section (1) and a full report of any action taken under this section and
the circumstances leading to such action to be laid before each House of
Parliament at the earliest.
(1) The Board
shall furnish to the Central Government at such time and in such form and
manner as may be prescribed or as the Central Government may direct, such
returns and statements and such particulars in regard to any proposed or existing
programme for the promotion and development of the
securities market, as the Central Government may, from time to time, require.
(2) Without prejudice to the provisions of sub-section (1), the
Board shall, within [ninety] days after the end of each financial year, submit
to the Central Government a report in such form, as may be prescribed, giving a
true and full account of its activities, policy and programmes
during the previous financial year.
(3) A copy of the report received under sub-section (2) shall be
laid, as soon as may be after it is received, before each House of Parliament.
The
Board may, by general or special order in writing delegate to any member,
officer of the Board or any other person subject to such conditions, if any, as
may be specified in the order, such of its powers and functions under this Act
(except the powers under section 29) as it may deem necessary.
(1) Any person aggrieved by
an order of the Board made [, before the commencement of the Securities Laws
(Second Amendment) Act, 1999,] under this Act, or the rules or regulations made
thereunder may prefer an appeal to the Central
Government within such time as may be prescribed.
(2) No appeal shall be admitted if it is preferred after the expiry
of the period prescribed therefor :
Provided that an appeal may be admitted after the expiry of the period
prescribed therefor if the appellant satisfies the
Central Government that he had sufficient cause for not preferring the appeal
within the prescribed period.
(3) Every appeal made under this section shall be made in such
form and shall be accompanied by a copy of the order appealed against and by
such fees as may be prescribed.
(4) The procedure for disposing of an appeal shall be such as may
be prescribed :
Provided that before disposing of an appeal, the appellant shall be given a
reasonable opportunity of being heard.
No
order passed by the Board [or the Adjudicating Officer] under this Act shall be
appealable except as provided in [section 15T or]
section 20 and no civil court shall have jurisdiction in respect of any matter
which the Board [or the Adjudicating Officer] is empowered by, or under, this
Act to pass any order 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
order passed by the Board [or the Adjudicating Officer] by, or under, this
Act.]
Nothing
in this Act shall exempt any person from any suit or other proceedings, which
might, apart from this Act, be brought against him.
22. Members,
officers and employees of the Board to be public servants.
All
members, officers and other employees of the Board shall be deemed, when acting
or purporting to act in pursuance of any of the provisions of this Act, to be
public servants within the meaning of section 21 of the Indian Penal Code (45
of 1860).
23. Protection
of action taken in good faith.
No
suit, prosecution or other legal proceedings shall lie against the Central
Government [or Board] or any officer of the Central Government or any member,
officer or other employee of the Board for anything which is in good faith done
or intended to be done under this Act or the rules or regulations made thereunder.
24.
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 made thereunder,
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].
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.
(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 the 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 before the date of receipt of application for grant of such
immunity:
Provided further that recommendation of the Board under this
sub-section shall not be binding upon the Central Government.
(2) An immunity granted to a person under sub-section (1) may, at
any time, be withdrawn by the Central Government, if it is satisfied that such
person had, in the course of the proceedings, not complied with the condition
on which the immunity was granted or had given false evidence, and thereupon
such person may be tried for the offence with respect to which the immunity was
granted or for any other offence of which he appears to have been guilty in
connection with the contravention and shall also become liable to the
imposition of any penalty under this Act to which such person would have been
liable, had not such immunity been granted.]
25. Exemption
from tax on wealth and income.
Notwithstanding
anything contained in the Wealth-tax Act, 1957 (27 of 1957), the Income-tax
Act, 1961 (43 of 1961) or any other enactment for the time being in force
relating to tax on wealth, income, profits or gains—
(a) the Board;
(b) the existing Securities and Exchange Board from the date of its constitution to the date of establishment of the Board,shall not be liable to pay
wealth-tax,
income-tax or any other tax in respect of their wealth, income, profits or
gains derived.
26. Cognizance of offences by courts.
(1) No court shall take
cognizance of any offence punishable under this Act or any rules or regulations
made thereunder, save on a complaint made by the
Board [* * *].
(2) No court inferior to that of [a Court of Session]
shall try any offence punishable under this Act.
27. Offences by companies.
(1) Where
an offence under this Act has been committed by a company, every person who at
the time 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 had 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 it is proved that
the offence has been committed with the consent or connivance of, or is
attributable to any neglect on the part of, any director, manager, secretary or
other officer of the company, such director, manager, secretary or other officer
shall also be deemed to be guilty of the offence and shall be liable to be
proceeded against and punished accordingly.
Explanation : For the purposes of this section,—
(a) “company” means
any body corporate and includes a firm or other association of individuals; and
(b) “director”, in relation to a firm,
means a partner in the firm.
[Omitted by the Securities Laws (Amendment) Act, 1995, w.e.f. 25-1-1995.]
(1) The
Central Government may, by notification, make rules for carrying out the
purposes of this Act.
(2) In particular, and without prejudice to the generality of the
foregoing power, such rules may provide for all or any of the following
matters, namely :—
(a) the term of office and other
conditions of service of the Chairman and the members under sub-section (1) of
section 5;
(b) the additional functions that may be
performed by the Board under section 11;
(c) [* * *]
(d) the manner in which the accounts of
the Board shall be maintained under section 15;
[(da) the manner of
inquiry under sub-section (1) of section 15-I;
(db) the salaries and allowances and other terms and conditions of
service of the [Presiding Officers,
Members] and other officers and employees of the Securities Appellate
Tribunal under section 15-O and sub-section (3) of section 15S;
(dc) the procedure for the investigation of misbehaviour or incapacity of the [Presiding Officers, or other
Members] of the Securities Appellate Tribunal under sub-section
(3) of section 15Q;
(dd) the form in which an appeal may be filed
before the Securities Appellate Tribunal under section 15T and the fees payable
in respect of such appeal;]
(e) the form and the manner in which
returns and report to be made to the Central Government under section 18;
(f) any other matter which is to be, or
may be, prescribed, or in respect of which provision is to be, or may be, made
by rules.
30. Power to make regulations.
(1) The Board may, ***] by
notification, make regulations consistent with this Act and the rules made thereunder to carry out the purposes of this Act.
(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 times and
places of meetings of the Board and the procedure to be followed at such
meetings under sub-section (1) of section 7 including quorum necessary for the
transaction of business;
(b) the terms and
other conditions of service of officers and employees of the Board under
sub-section (2) of section 9;
[(c) the matters
relating to issue of capital, transfer of securities and other matters
incidental thereto and the manner in which such matters shall be disclosed by
the companies under section 11A;
(d) the conditions subject to which
certificate of registration is to be issued, the amount of fee to be paid for
certificate of registration and the manner of suspension or cancellation of
certificate of registration under section 12.]
31. Rules
and regulations to be laid before Parliament.
Every
rule and every regulation made under this Act shall be laid, as soon as may be
after it is made, before each House of Parliament, while it is in session, for
a total period of thirty days which may be comprised in one session or in two
or more successive sessions, and if, before the expiry of the session
immediately following the session or the successive sessions aforesaid, both
Houses agree in making any modification in the rule or regulation or both
Houses agree that the rule or regulation should not be made, the rule or
regulation shall thereafter have effect only in such modified form or be of no
effect, as the case may be; so, however, that any such modification or
annulment shall be without prejudice to the validity of anything previously
done under that rule or regulation.
32. Application
of other laws not barred.
The
provisions of this Act shall be in addition to, and not in derogation of, the
provisions of any other law for the time being in force.
33. Amendment
of certain enactments.
[Repealed by Repealing & Amending Act, 2001.]
34 Power
to remove difficulties.
(1) If any difficulty
arises in giving effect to the provisions of this Act, the Central Government
may, by order, published in the Official Gazette, make such provisions not
inconsistent with the provisions of this Act as may appear to be necessary for
removing the difficulty:
Provided that no order shall be made under this
section after the expiry of five years from the commencement of this Act.
(2) Every order made under this section shall be laid, as soon as
may be after it is made, before each House of Parliament.
(1) The
Securities and Exchange Board of India Ordinance, 1992 (Ord.
5 of 1992), is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken
under the said Ordinance, shall be deemed to have been
done or taken under the corresponding provisions of this Act.
[See section 33]
[Repealed by Repealing & Amending Act,
2001]