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.)

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