Securities Contracts
Lesson 1 (Regulation) Act, 1956
Key Concepts One Learning Objectives
Should Know
To understand:
Lesson Outline
I. Securities Contracts
(Regulation) Act, 1956
II. Securities Contracts
(Regulations) Rules,1957
2 Lesson 1
Regulatory Framework
SECURITIES CONTRACTS (REGULATION) ACT, 1956
INTRODUCTION
Lesson 1 3
Securities Contracts (Regulation) Act, 1956 (SCRA) A Birds Eye View (Regulation) Act, 1956
SCRA
KEY DEFINITIONS
Securities
4 Lesson 1
Contract
Spot Delivery Contract
Stock Exchange
Recognised Stock Exchange
Government security
Derivative
Lesson 1 5
Securities Appellate Tribunal
Member
NON-APPLICABILITY
6 Lesson 1
RECOGNITION OF STOCK EXCHANGES
Section 3 Section 4 Section 5
Application for recognition of stock exchange
Grant of recognition to stock exchange
Lesson 1 7
Withdrawal of recognition
POWERS OF CENTRAL GOVERNMENT
8 Lesson 1
To call for periodical returns and make direct enquiries
To Direct Rules or make Rules
Lesson 1 9
To Supersede governing bodies of a recognised stock exchange
To Suspend business of Recognised Stock Exchange
To Prohibit Contracts in Certain Cases
10 Lesson 1
To Grant Immunity
To Delegate or to Make Rules
Power to Delegate
Section 29A
Power to Make Rules
Section 30
Lesson 1 11
POWERS OF RECOGNISED STOCK EXCHANGE
To make Rules restricting voting rights etc.
12 Lesson 1
To make Bye-laws
Lesson 1 13
PUNISHMENTS FOR CONTRAVENTIONS
CASE LAWS
1. 21.02.2020
Tribunal
For list
but status of the directors/ promoters of the company are required to be considered on the date of the
passing of the order on the listing application.
Facts of the case
Dissemination Board -
SEBI Circular for Exclusively listed companies of De-recognized/Non-operational/exited Stock
Exchanges placed in the Dissemination Board (DB)
14 Lesson 1
SAT ORDER
2. 03.12.2019
Stock
Facts of the case
SAT ORDER
Lesson 1 15
CLEARING CORPORATION
Role of Clearing Corporation
Clearing
Corporations
16 Lesson 1
POWERS OF THE SEBI
[Section 12A] [Section 23 -I] [Section 31]
[Section 10]
To make or amend Bye-laws of Recognised Stock Exchanges
To Issue Directions
Lesson 1 17
Explanation
To make Regulations
18 Lesson 1
To adjudicate
Extracts from SEBI Order dated 20th August 2020 in the matter of The Orissa Minerals Development Co. Ltd.
[ADJUDICATION ORDER NO. Order/GR/KG/2020-21/8680-8682]
SEBI Adjudication Order:
Section 23-I of the SC(R) Act, 1956
Powers of SEBI not to apply to International Financial Services Centre.
ADDITIONAL TRADING FLOOR
Lesson 1 19
LICENSING OF DEALERS IN CERTAIN AREAS
PUBLIC ISSUE AND LISTING OF SECURITIES
mutatis mutandis
CONTRACTS IN DERIVATIVES
STOCK EXCHANGES OTHER THAN RECOGNISED STOCK EXCHANGES PROHIBITED
20 Lesson 1
LISTING OF SECURITIES
Conditions for Listing
Extracts from SEBI Order dated 20th August 2020 in the matter of The Orissa Minerals Development Co. Ltd.
[ADJUDICATION ORDER NO. Order/GR/KG/2020-21/8680-8682]
read with Section 21 of Securities Contracts (Regulation) Act, 1956
DELISTING OF SECURITIES
RIGHT TO APPEAL
Right of appeal to Central Government against refusal of stock exchanges to list securities of
public companies
Lesson 1 21
Right of appeal to Securities Appellate Tribunal (SAT) against refusal to list securities of public
companies by Stock exchanges
Procedure and Powers of Securities Appellate Tribunal
22 Lesson 1
Right to Legal Representation
Limitation
Civil Court not to have jurisdiction
Appeal to Supreme Court
PENALTIES AND PROCEDURES
Lesson 1 23
Section Contravention Penalty
24 Lesson 1
CASE LAWS
1 20.08.2020 Dr. Satish Chandra, Ms. Sucharita Das
and The Orissa Minerals Development Co.
The disclosures were made by The Orissa Minerals Development Co. Ltd. to stock exchanges belatedly
each after a period of more than 24 hours since the time of their receipt by OMDC.
Facts of the case:
Order:
Section 23A(a)* of the Securities Contracts (Regulation) Act, 1956
* Section 23A(a) deals with Penalty for failure to furnish information, return, etc
Factors to be taken into account while adjudging the quantum of penalty by the Adjudicating
Lesson 1 25
Settlement of administrative and civil proceedings
Recovery of amounts
Modes of recovery
Explanation 1
26 Lesson 1
Explanation 2
Explanation 3
Continuance of Proceedings
Explanation.
Crediting sum realised by way of penalties to Consolidated Fund of India
Appeal to Securities Appellate Tribunal
Lesson 1 27
Extracts from SAT Order dated 25th February 2019 in the matter of Synergy Cosmetics (Exim) Limited vs. BSE Limited
[Appeal No. 469 of 2018]
Section 23L of the Securities Contracts (Regulation) Act, 1956.
Offences
28 Lesson 1
Composition of certain offences
Contravention by companies
Certain offences to be cognizable
Cognizance of offences by courts
Establishment of Special Courts
Offences triable by Special Courts
Lesson 1 29
Appeal and Revision
Application of code to proceeding before Special Court
Transitional provisions
MISCELLANEOUS PROVISIONS
Entitlement of the Investors to Dividend declared by the Company
Explanation.
Right to Receive Income from Collective Investment Scheme
30 Lesson 1
Explanation
Right to receive Income from Mutual Fund
Lesson 1 31
Protection of action taken in good faith
Special Provisions related to Commodity Derivatives
Validation of certain Acts
II. SECURITIES CONTRACTS (REGULATION) RULES, 1957
32 Lesson 1
REQUIREMENTS OF LISTING OF SECURITIES WITH RECOGNISED STOCK EXCHANGES
Rule 19(1)
Lesson 1 33
Rule 19(2)
Rule 19(2)(b)
34 Lesson 1
Conditions precedent to submission of application for listing by Stock Exchange
inter alia
Lesson 1 35
36 Lesson 1
Application for listing of new securities
Suspension or withdrawal of admission to dealings in securities on stock exchange
Lesson 1 37
Minimum Shareholding
Explanation :
DELISTING OF SECURITIES
38 Lesson 1
Question: Whether a stock exchange on its own can delist any security thereon?
Answer:
ROLE OF COMPANY SECRETARY
company secretaries
Lesson 1 39
LESSON ROUND-UP
GLOSSARY
Stock Exchange
Admission to Dealing
Listed Company
Appointed date
Commodity Derivative
Clearing
40 Lesson 1
TEST YOURSELF
(These are meant for recapitulation only. Answer to these questions are not to be submitted for evaluation.)
LIST OF FURTHER READINGS
OTHER REFERENCES (Including Websites/Video Links)
