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SECURITIES AND EXCHANGE BOARD OF INDIA ACT

Ministry of Law and Justice

Act nº 15 of 1992


  • Chapter I
  • Chapter II
  • Chapter III
  • Chapter IV
  • Chapter V
  • Chapter VA. Prohibition of Manipulative and Deceptive Devices, Insider Trading and Substantial Acquisition of Securities Or Control
  • Chapter VI
  • Chapter VIA. Penalties and Adjudication
  • Chapter VIB. Establishment, Jurisdiction, Authority and Procedure of Appellate Tribunal
  • Chapter VII
  • Schedules
  • Amending Acts
  • Act nº 15 of 1992

Preamble

THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

[Act, No. 15 of 1992]

[4th April, 1992]

PREAMBLE

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 Republic of India as follows:

Chapter I

Section 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 India.

(3) It shall be deemed to have come into force on the 30th day of January, 1992.

Section 2. Definitions

(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;

1[(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. l(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;

2[(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.

3[(2) Words and expression used and not defined in this Act but defined in4[the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the Depositories Act, 1996 (22 of 1996)] shall have the meanings respectively assigned to them in that Act.]

1. Inserted by Act 31 of 1999, section 11 (w.e.f. 22-2-2000).

2. Inserted by Act 59 of 2002, section 2 (w.r.e.f. 29-10-2002).

3. Substituted by Act 9 of 1995, section 2, for sub-section (2) (w.r.e.f. 25-1-1995).

4. Substituted by Act 22 of 1996, section 30 and Schedule, for "The Securities Contracts (Regulation) Act, 1956 (42 of 1956)" (w.r.e.f. 20-9-1995).


Chapter II

Section 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 Bombay.

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

Section 4. Management of the Board

(1) The Board shall consist of the following members, namely:-

(a) a Chairman;

(b) two members from amongst the officials of the 1 [Ministry] of the Central Government dealing with Finance 2 [and administration of the Companies Act, 1956 (1 of 1956)];

(c) one member from amongst the officials of 3 [the Reserve Bank];

4 [(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 subsection (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 5 [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.

1. Substituted by Act 59 of 2002, section 3, for "Ministries" (w.r.e.f. 29-10-2002).

2. Substituted by Act 59 of 2002, section 3, for "and law".

3. Substituted by Act 59 of 2002, section 3, for "the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934)" (w.r.e.f. 29-10-2002).

4. Substituted by Act 59 of 2002, section 3, for clause "(d) two other members" (w.r.e.f. 29-10-2002).

5. Substituted by Act 59 of 2002, section 3, for "Reserve Bank of India" (w.r.e.f. 29-10-2002).


Section 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.

Section 6. Removal of member 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;

2[***]

(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. Brackets and figure "(1)" omitted by Act 9 of 1995, section 3 (w.r.e.f. 25-1-1995).

2. Clause (d) omitted by Act 9 of 1995, section 3 (w.r.e.f. 25-1-1995).


Section 7. Meetings

(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 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.

Section 7A. Member not to participate in meetings in certain cases

1 [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.]

1. Inserted by Act 9 of 1995, section 4 (w.r.e.f. 25-1-1995).


Section 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.

Section 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.

Chapter III

Section 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 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.