Securities and Exchange Board of India Act, 1992

(1) This Act may be called the Securities and Exchange Board of India Act, 1992. (2) It extents to the whole of India. (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; (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. (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 under this Act; (h) "regulations" means the regulations made by the Board under this Act; (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 Capital Issues (Control) Act, 1947, (29 of 1947) or the Securities Contracts (Regulation) Act, 1956, (42 of 1956) shall have the meanings respectively assigned to them in those Acts.

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 Bombay. (4) The Board may establish offices at other places in India

Board.- (1) The Board shall consist of the following members, namely:-- (a) a Chairman; (b) two members form amongst the officials of the Ministries of the Central Government dealing with Finance and Law; (c) one member form amongst the officials of the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934); (d) two other members, to be appointed by the Central Government. (2) The genial superintendence, direction and management of he 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 of India 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 haven 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.

conditions of service of Chairman and members of the Board.- (1) The term of officer and other condition 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 expire 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 expire of the period prescribed under sub-section (1), by giving to the Central Government notice of not less than three months in writing.

from office.- (1) 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) is appointed as a director of a company; (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 regulation. (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.

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.

The Board may appoint such other officers and employees as it considers necessary for the efficient discharge of its function under this Act. (2) The term and other conditions of service of officer and employees of the Board appointed under sub-section (1) shall be such as may be determined by regulations.

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 the be 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 al matters and things engaged to be done by, with or for the existing Securities and Exchange Board immediately before that date, for or in confection 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 expire 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 of 1947) 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.

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 exchange 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; (c) registering and regulating the working of collective investment schemes, including mutual funds; (d) promoting and regulating self-regulatory organizations; (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 exchange and intermediaries and self-regulatory organizations in the securities market; (j) performing such functions and exercising such powers under the provision of the Capital Issues (Control) Act, 1947 (29 of 1947) and 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; (m) performing such other function as may be prescribed.

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 rules 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, underwriter, 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. (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.

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; and (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.

audit.- (1) The Board shall maintain proper accounts and other relevant records and prepare and annual statement of accounts in such form as may be prescribed by the Central Government in consultation with the Comptroller and Auditor-General of India. (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.

(1) Without prejudice to the foregoing provisions of this Act, 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 express its views before any direction is given under this sub-section. (2) The decision of the Central Government whether a question is on of policy or not shall be final.

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 provision 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 suppression, 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 subsection (3), vest in the Central Government. (3) On the expiration of the period of suppression 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) 0f 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 suppression, take action under this sub-section. (4) The Central Government shall cause a notification issued under sub-section (10 and a full report of any action 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 program for the promotion and development the securities market, as the Central Government may, from time to time, require. (2) Without prejudice to the provision of sub-section (1), the Board shall, within sixty 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 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) N o appeal shall be admitted if it is preferred after the expire of the period prescribed therefor: Provided that an appeal may be admitted after the expire 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 peruse. (3) Every appeal made under this section shall be made in such form and 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.

Nothing in this Act shall exempt any person from any suit or other proceedings which might, apart from this Act, be brought against him.( Savings)

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).

No suit, prosecution or other legal proceedings shall lie against the Central Government 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 there under.

Whoever contrivances or attempts to contrivance or abets the contravention of the provisions of this Act or any rules of regulations made there under, shall be punishable with imprisonment for a term which may extend to one year, or with fine, or with both.(penalty)

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 or any other tax in respect of their wealth, income profits or gains derived.(Exception from tax on wealth and income)

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 with the previous sanction of the Central Government.(Cognizance of Offences by courts) (2) No court inferior to that of Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under this Act.

companies.- (1) Where an offence under this Act 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) Not withstanding 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 attribute to any neglect on the part of any 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.

If the Central Government is of the opinion that it is necessary or expedient so to do in public interest. it may by order published in the Official Gazette, exempt any person or class of persons buying or selling securities or otherwise dealing with the securities market from the operation of the provisions of sub-section (1) of section 12.

(1) The Central Government may be notification, make rules for carrying out the purposes of this Act In particular and without prejudice to the generality of the foregoing power such rules and 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) the conditions subject to which registration certificate is to be issued under sub-section (1) of section 12 (d) the manner in which the account of the Board shall be maintained under section (e) the form and the manner in which returns and report to be made to the Central Government under section 18. (f) any other manner which is to be or may be prescribed or in respect of which provision is to be or may be made by rules.

regulations.- (1) The Board may with the previous approval of the Central Government by notification make regulations consistent with this Act and the rules made there under 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 meeting of the Board and the procedure to be following at such meeting under sub-section (1) of section 7 including quorum necessary for the transaction of business (b) the term and other conditions of service of officers and employees of the Board under sub-section (2) of section 9 (c) the amount of fee to be paid for registration certificate and manner of suspension or cancellation of registration certificate under sub-section (2) (3) of section 1

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 expire of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation shall thereafter have effect in only 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.

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.

certain enactments.- The enactment's specified in Parts I and II of the Schedule to this Act shall be Amended in the manner specified therein and such Amendments shall take effect on the date of establishment of the board.

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 provision of this Act as many appear to be necessary for removing the difficulties. Provided that no order shall be made under this section after the expire 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 1922) is hereby repealed. (2) Notwithstanding such repeal anything done or any action taken under the said Ordinance shall be deemed to have done or taken under the corresponding provisions of this Act.