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SECURITIES CONTRACTS (REGULATION) ACT

Ministry of Law and Justice

Act nº 42 of 1956


  • Amending Acts
  • Act nº 42 of 1956

Preamble

THE SECURITIES CONTRACTS (REGULATION) ACT, 1956

[Act, No.42 of 1956]

[4th September, 1956]

PREAMBLE

An Act to prevent undesirable transactions in securities by regulating the business of dealing therein, by1[***] providing for certain other matters connected therewith.

BE it enacted by Parliament in the Seventh Year of the Republic of India as follows:

1. The words "by prohibiting options and " omitted by the Securities Laws (Amendment) Act, 1995 w.e.f. 25.01.1995.


Section 1. Short title, extent and commencement

(1) This Act may be called the Securities Contracts (Regulation) Act, 1956.

(2) It extents to the whole of India.

(3) It shall come into force on such date (20th February, 1957, vide S.R.O.528, dated the 16th February, see Gazette of India, Extraordinary, 1957, part II, Sec, p.549.} as the Central Government may, by notification in the Official Gazette, appoint.

Section 2. Definitions

In this Act, unless the context otherwise requires,-

(a) 'Contract' means a contract for or relating to the purchase or sale of securities;

1 ['(aa) "corporatisation" means the succession of a recognised stock exchange, being a body of individuals or a society registered under the Societies Registration Act, 1860 (21 of 1860), by another stock exchange, being a company incorporated for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities carried on by such individuals or society;

(ab) "demutualisation" means the segregation of ownership and management from the trading rights of the members of a recognised stock exchange in accordance with a scheme approved by the Securities and Exchange Board of India;]

2 [3 [(ac)] "derivative" includes--

(A) a security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or contract for differences or any other form of security;

(B) a contact which derives its value from the prices, or index of prices, of underlying securities]]

(b) 'Government security' means a security created and issued, whether before or after the commencement of this Act, by the Central Government or a State Government for the purpose of raising a public loan and having one of the forms specified in clause (2) of section 2 of the Public Debt Act, 1944 (13 of 1944);

(c) 'member ' means a member of a recognised stock exchange;

(d) 'option in securities' means a contract for the purchase or sale of a right to buy or sell, or a right to buy and sell, securities in future, and includes a teji, a mandi, a teji mandi, a galli, a put, a call or a put and call in securities;

(e) 'prescribed' means prescribed by rules made under this Act;

(f) 'recognised stock exchange' means a stock exchange which is for the time being recognised by the Central Government under section 4;

(g) 'rules', with reference to the rules relating in general to the constitution and management of a stock exchange, includes, in the case of a stock exchange which is an incorporated association, its memorandum and articles of association;

4(ga) "scheme" means a scheme for corporatisation or demutualisation of a recognised stock exchange which may provide for-

(i) the issue of shares for a lawful consideration and provision of trading rights in lieu of membership cards of members of a recognised stock exchange;

(ii) the restrictions on voting rights;

(iii) the transfer of property, business, assets, rights, liabilities, recognitions, contracts of the recognised stock exchange, legal proceedings by, or against, the recognised stock exchange, whether in the name of the recognised stock exchange or any trustee or otherwise and any permission given to, or by, the recognised stock exchange;

(iv) the transfer of employees of a recognised stock exchange to another recognised stock exchange;

(v) any other matter required for the purpose of, or in connection with, the corporatisation or demutualisation, as the case may be, of the recognised stock exchange;';]

5 [6 [(gb)] "Securities Appellate Tribunal" means a Securities Appellate Tribunal established under sub-section (1) of section 15K of the Securities and Exchange Board of India Act, 1992 (15 of 1992)]

(h) 'securities' include-

(i) shares, scrips stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate;

7 [(ia) derivative;

(ib) units or any other instrument issued by any collective investment scheme to the investors in such schemes]

10[(ic) security receipt as defined in clause (zg) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;]

11[(id) units or any other such instrument issued to the investors under any mutual fund scheme;]

12[(ie) any certificate or instrument (by whatever name called), issued to an investor by any issuer being a special purpose distinct entity which possesses any debt or receivable, including mortgage debt, assigned to such entity, and acknowledging beneficial interest of such investor in such debt or receiveable including mortgage debt, as the case may be;]

(ii) Government securities; and

(iii) rights or interests in securities;

8 [(i) "spot delivery contract" means a contract which provides for,-

(a) actual delivery of securities and the payment of a price therefore either on the same day as the date of the contract or on the next day, the actual period taken for the despatch of the securities or the remittance of money therefore through the post being excluded from the computation of the period aforesaid if the parties to the contract do not reside in the same town or locality;

(b) transfer of the securities by the depository from the account of a beneficial owner to the account of another beneficial owner when such securities are dealt with by a depository;]

9 [(j) "stock exchange " means--

(a) any body of individuals, whether incorporated or not, constituted before corporatisation and demutualisation under sections 4A and 4B, or

(b) a body corporate incorporated under the Companies Act, 1956 whether under a scheme of corporatisation and demutualisation or otherwise,

for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities;'.]

1. Inserted vide The Securities Laws (Amendment) Act, 2004

2. Renumbered by The Securities Laws (Amendment) Act, 2004

3. Inserted by the Securities Laws (Amendment) Act, 1999 w.e.f. 22.02.2000

4. Inserted vide The Securities Laws (Amendment) Act, 2004

5. Renumbered by The Securities Laws (Amendment) Act, 2004

6. Inserted by the Securities Laws (Second Amendment) Act, 1999.

7. Inserted by the Securities Laws (Amendment) Act, 1999 w.e.f. 22.02.2000.

8. Substituted by the Depositories Act, 1996, w.r.e.f. 20.09.1995. Prior to its substitution clause (i) read as under:

"(i) 'spot delivery contract' means a contract which provides for the actual delivery of securities and the payment of a price therefore either on the same day as the date of the contract or on the next day, the actual period taken for the despatch of the securities or the remittance of money therefore through the post being excluded from the computation of the period aforesaid if the parties to the contract do not reside in the same town or locality"

9. Substituted for" 'stock exchange' means any body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities." by The Securities Laws (Amendment) Act, 2004

10. Inserted by the Securitisation and Reconstruction of Financial Assets and Enforcement by Security Interest Act, 2002 (w.e.f. 21-06-2002).

11. Inserted by the Securities Laws (Amendment) Act, 2004 (w.e.f. 12-10-2004).

12. Inserted by The Securities Contracts (Regulation) Amendment Act, 2007, dated 28.05.2007.


Section 2A. Interpretation of certain words and expressions

1[2A. Interpretation of certain words and expressions

Words and expressions used herein and not defined in this Act but defined in the Companies Act, 1956 (1 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) shall have the same meanings respectively assigned to them in those Acts.]

6. Inserted by the Securities Laws (Second Amendment) Act, 1999.


Section 3. Application for recognition of stock exchanges

(1) Any stock exchange, which is desirous of being recognised for the purposes of this Act, may make an application in the prescribed manner to the Central Government.

(2) Every application under sub-section (1) shall contain such particulars as may be prescribed, and shall be accompanied by a copy of the bye-laws of the stock exchange for the regulation and control of contracts and also a copy of the rules relating in general to the constitution of the stock exchange, and in particular, to

(a) the governing body of such stock exchange, its constitution and powers of management and the manner in which the business is to be transacted;

(b) the powers and duties of the office bearers of the stock exchange;

(c) the admission into the stock exchange of various classes of members, the qualifications for memberships, and the exclusion, suspension, expulsion and re-admission of members there from or thereinto;

(d) the procedure for the registration of partnerships as members of the stock exchange in cases where the rules provide for such membership; and the nomination and appointment of authorised representatives and clerks.

Section 4. Grant of recognition to stock exchanges

(1) If the Central Government is satisfied, after making such inquiry as may be necessary in this behalf and after obtaining such to further information, if any, as it may require,

(a) that the rules and bye-laws of a stock exchange applying for registration are in conformity with such conditions as may be prescribed with a view to ensure fair dealing and to protect investors;

(b) that the stock exchange is willing to comply with any other conditions (including conditions as to the number of members) which the Central Government, after consultation with the governing body of the stock exchange and having regard to the area served by the stock exchange and its standing and the nature of the securities dealt with by its, may impose for the purpose of carrying out the objects of this Act; and

(c) that it would be in the interest of the trade and also in the public interest to grant recognition to the stock exchange;

it may grant recognition to the stock exchange subject to the conditions imposed upon it as aforesaid and in such form as may be prescribed.

(2) The conditions which the Central Government may prescribe under clause (a) of sub-section (1) for the grant of recognition to the stock exchanges may include, among other matters, conditions relating to,

(i) the qualifications for membership of stock exchanges;

(ii) the manner in which contracts shall be entered into and enforced as between members;

(iii) the representation of the Central Government on each of the stock exchanges by such number of persons not exceeding three as the Central Government may nominate in this behalf; and

(iv) the maintenance of accounts of members and their audit by Chartered accountants wherever such audit is required by the Central Government.

(3) Every grant of recognition to a stock exchange under this section shall be published in the Gazette of India and also in the Official Gazette of the State in which the principal office of the stock exchange is situate, and such recognition shall have effect as from the date of its publication in the Gazette of India.

(4) No application for the grant of recognition shall be refused except after giving an opportunity to the stock exchange concerned to be heard in the matter; and the reasons for such refusal shall be communicated to the stock exchange in writing.

(5) No rules of a recognised stock exchange relating to any of the matters specified in sub-section (2) of section 3 shall be amended except with the approval of the Central Government.

Section 4A. Corporatisation and demutualisation of stock exchanges

1[4A. Corporatisation and demutualisation of stock exchanges.-

On and from the appointed date, all recognised stock exchanges (if not corporatised and demutualised before the appointed date) shall be corporatised and demutualised in accordance with the provisions contained in Section 4B:

Provided that the Securities and Exchange Board of India may, if it is satisfied that any recognised stock exchange was prevented by sufficient cause from being corporatised and demutualised on or after the appointed date, specify another appointed date in respect of that recognised stock exchange and such recognised stock exchange may continue as such before such appointed date.

Explanation.-- For the purposes of this Section, "appointed date" means the date which the Securities and Exchange Board of India may, by notification in the Official Gazette, appoint and different appointed dates may be appointed for different recognised stock exchanges]

1. Inserted vide The Securities Laws (Amendment) Act, 2004


Section 4B. Procedure for corporatisation and demutualisation

1[Section 4B - Procedure for corporatisation and demutualisation

(1) All recognised stock exchanges referred to in Section 4A shall, within such time as may be specified by the Securities and Exchange Board of India, submit a scheme for corporatisation and demutualisation for its approval:

Provided that the Securities and Exchange Board of India, may, by notification in the Official Gazette, specify name of the recognised stock exchange, which had already been corporatised and demutualised, and such stock exchange shall not be required to submit the scheme under this Section.

(2) On receipt of the scheme referred to in sub-Section (1), the Securities and Exchange Board of India may, after making such enquiry as may be necessary in this behalf and obtaining such further information, if any, as it may require and if it is satisfied that it would be in the interest of the trade and also in the public interest, approve the scheme with or without modification.

(3) No scheme under sub-Section (2) shall be approved by the Securities and Exchange Board of India if the issue of shares for a lawful consideration or provision of trading rights in lieu of membership card of the members of a recognised stock exchange or payment of dividends to members have been proposed out of any reserves or assets of that stock exchange.

(4) Where the scheme is approved under sub-Section (2), the scheme so approved shall be published immediately by -

(a) the Securities and Exchange Board of India in the Official Gazette;

(b) the recognised stock exchange in such two daily newspapers circulating in India, as may be specified by the Securities and Exchange Board of India,

and upon such publication, notwithstanding anything to the contrary contained in this Act or any other law for the time being in force or any agreement, award, judgment, decree or other instrument for the time being in force, the scheme shall have effect and be binding on all persons and authorities including all members, creditors, depositors and employees of the recognised stock exchange and on all persons having any contract, right, power, obligation or liability with, against, over, to, or in connection with, the recognised stock exchange or its members.

(5) Where the Securities and Exchange Board of India is satisfied that it would not be in the interest of the trade and also in the public interest to approve the scheme under sub-Section (2), it may, by an order, reject the scheme and such order of rejection shall be published by it in the Official Gazette:

Provided that the Securities and Exchange Board of India shall give a reasonable opportunity of being heard to all the persons concerned and the recognised stock exchange concerned before passing an order rejecting the scheme.

(6) The Securities and Exchange Board of India may, while approving the scheme under sub-Section (2), by an order in writing, restrict-

(a) the voting rights of the shareholders who are also stock brokers of the recognised stock exchange;

(b) the right of shareholders or a stock broker of the recognised stock exchange to appoint the representatives on the governing board of the stock exchange;

(c) the maximum number of representatives of the stock brokers of the recognised stock exchange to be appointed on the governing board of the recognised stock exchange, which shall not exceed one-fourth of the total strength of the governing board.

(7) The order made under sub-Section (6) shall be published in the Official Gazette and on the publication thereof, the order shall, notwithstanding anything to the contrary contained in the Companies Act, 1956 (1 of 1956), or any other law for the time being in force, have full effect.

(8) Every recognised stock exchange, in respect of which the scheme for corporatisation or demutualisation has been approved under sub-Section (2), shall, either by fresh issue of equity shares to the public or in any other manner as may be specified by the regulations made by the Securities and Exchange Board of India, ensure that at least fifty-one per cent. of its equity share capital is held, within twelve months from the date of publication of the order under sub-Section (7), by the public other than shareholders having trading rights:

Provided that the Securities and Exchange Board of India may, on sufficient cause being shown to it and in the public interest, extend the said period by another twelve months.'.]

1. Inserted vide The Securities Laws (Amendment) Act, 2004


Section 5. Withdrawal of recognition

1[5(1)].Withdrawal of recognition.-

(1) If the Central Government is of opinion that the recognition granted to a stock exchange under the provisions of this Act should, in the interest of the trade or in the public interest, be withdrawn, the Central Government may serve on the governing body of the stock exchange a written notice that the Central Government is considering the withdrawal of the recognition for the reasons stated in the notice, and after giving an opportunity to the governing body to be heard in the matter, the Central Government may withdraw, by notification in the Official Gazette, the recognition granted to the stock exchange;

Provided that no such withdrawal shall affect the validity of any contract entered into or made before the date of the notification, and the Central Government may, after consultation with the stock exchange, make such provision as it deems fit in the notification of withdrawal or in any subsequent notification similarly published for the due performance of any contracts outstanding on that date.

2[(2) Where the recognised stock exchange has not been corporatised or demutualised or it fails to submit the scheme referred to in sub-Section (1) of Section 4B within the specified time therefor or the scheme has been rejected by the Securities and Exchange Board of India under sub-Section (5) of Section 4B, the recognition granted to such stock exchange under Section 4, shall, notwithstanding anything to the contrary contained in this Act, stand withdrawn and the Central Government shall publish, by notification in the Official Gazette, such withdrawal of recognition:

Provided that no such withdrawal shall affect the validity of any contract entered into or made before the date of the notification, and the Securities and Exchange Board of India may, after consultation with the stock exchange, make such provisions as it deems fit in the order rejecting the scheme published in the Official Gazette under sub-Section (5) of Section 4B." .]

1. Renumbered vide The Securities Laws (Amendment) Act, 2004

2. Inserted vide The Securities Laws (Amendment) Act, 2004


Section 6. Power of Central Government to call for periodical returns or direct inquiries to be made

(1) Every recognised stock exchange shall furnish to the Central Government such periodical returns relating to its affairs as may be prescribed.

(2) Every recognised stock exchange and every member thereof shall maintain and preserve for such periods not exceeding five years such books of account, and other documents as the Central Government, after consultation with the stock exchange concerned, may prescribe in the interest of the trade or in the public interest, and such books of account, and other documents shall be subject to inspection at all reasonable times by the Central Government.

(3) Without prejudice to the provisions contained in sub-section (1) and (2), the Central Government, if it is satisfied that it is in the interest of the trade or in the public interest so to do, may order in writing,

(a) call upon a recognised stock exchange or any member thereof to furnish in writing such information or explanation relating to the affairs of the stock exchange or of the member in relation to the stock exchange as the Central Government may require; or

(b) appoint one or more persons to make an inquiry in the prescribed manner in relation to the affairs of the governing body of a stock exchange or the affairs of any of the members of the stock exchange in relation to the stock exchange and submit a report of the result if such inquiry to the Central Government within such time as may be specified in the order or, in the case of an inquiry in relation to the affairs of any of the members of a stock exchange, direct the governing body to make the inquiry and submit its report to the Central Government

(4) Where an inquiry in relation to the affairs of a recognised stock exchange or the affairs of any of its members in relation to the stock exchange has been undertaken under sub-section (3),

(a) every director, manager, secretary or other officer of such stock exchange;

(b) every member of such stock exchange;

(c) if the member of the stock exchange is a firm, every partner, manager, secretary or other officer of the firm; and

(d) every other person or body of persons who has had dealing in the course of business with any of the persons mentioned in clauses (a), (b) and (c), whether directly or indirectly;

shall be bound to produce before the authority making the inquiry all such books of account, and other documents in his custody or power relating to or having a bearing on the subject-matter of such inquiry and also to furnish the authorities within such time as may be specified with any such statement or information relating thereto as may be required of him.

Section 7. Annual reports to be furnished to the Central Government by stock exchanges

Every recognised stock exchange shall furnish the Central Government with a copy of the annual report, and such annual report shall contain such particulars as may be prescribed.

Section 7A. Power of recognized stock exchange to make rules restricting voting rights, etc.

(1) A recognised stockexchange may make rules or amend any rules made by it to provide for all or anyof the following matters, namely---

(a) the restriction ofvoting rights to members only in respect of any matter placed before the stockexchange at any meeting;

(b) the regulation ofvoting rights in respect of any matter placed before the stock exchange at anymeeting so that such member may be entitled to have one vote only, irrespectiveof his share of the paid-upequity capital of the stock exchange;

(c) the restriction onthe right of a member to appoint another person as his proxy to attend and voteat a meeting of the stock exchange;

(d) such incidentalconsequential and supplementary matters as may be necessary to give effect toany of the matters specified in clauses (a),(b) and (c).

(2) No rules of arecognised stock exchange made or amended in relation to any matter referred toin clauses (a) to (d)of sub-section (1) shallhave effect until they have been approved by the Central Government andpublished by that Government in the Official Gazette and, in approving the rulesso made or amended, the Central Government may make such modifications thereinas it thinks fit, and on such publication, the rules as approved by the CentralGovernment shall be deemed to have been validly made, notwithstanding anythingto the contrary contained in the Companies Act, 1956 (1 of 1956.).".]

1. Inserted by theSecurities Contracts (Regulation) Amendment Act, 1959, w.e.f. 08-12-1959.


Section 8. Power of Central Government to direct rules to be made or to make rules

( 1) Where, after consultation with the governing bodies of stock exchanges generally or with the governing body of any stock exchange in particular, the Central Government is of opinion that it is necessary or expedient so to do, it may, by order in writing together with a statement of the reasons therefor, direct recognised stock exchanges generally or any recognised stock exchange in particular, as the case may be, to make any rules or to amend any rules already made in respect of all or any of the matters specified in sub -section ( 2) of section 3 within a period of1[two] months from the date of the order .

( 2) If any recognised stock exchange fails or neglects to comply with any order made under sub -section ( 1) within the period specified therein, the Central Government may make the rules for, or amend the rules made by, the recognised stock exchange, either in the form proposed in the order or with such modifications thereof as may be agreed to between the stock exchange and the Central Government .

( 3) Where in pursuance of this section any rules have been made or amended, the rules so made or amended shall be published in the Gazette of India and also in the Official Gazette or Gazettes of the State or States in which the principal office or offices of the recognised stock exchange or exchanges is or are situate, and on the publication thereof in the Gazette of India, the rules so made or amended shall, notwithstanding anything to the contrary contained in the Companies Act, 1956 (I of 1956), or in any other law for the time being in force, have effect, as if they had been made or amended by the recognised stock exchange or stock exchanges, as the case may be .

1. Substituted for "six" by the Securities Laws (Amendment) Act, 1995 w.e.f. 25.01.1995.


Section 8A. Clearing corporation

1[8A. Clearing corporation.-

(1) A recognised stock exchange may, with the prior approval of the Securities and Exchange Board of India, transfer the duties and functions of a clearing house to a clearing corporation, being a company incorporated under the Companies Act, 1956 (1 of 1956), for the purpose of -

(a) the periodical settlement of contracts and differences thereunder;

(b) the delivery of, and payment for, securities ;

(c) any other matter incidental to, or connected with, such transfer.

(2) Every clearing corporation shall, for the purpose of transfer of the duties and functions of a clearing house to a clearing corporation referred to in sub-Section (1), make bye-laws and submit the same to the Securities and Exchange Board of India for its approval.

(3) The Securities and Exchange Board of India may, on being satisfied that it is in the interest of the trade and also in the public interest to transfer the duties and functions of a clearing house to a clearing corporation, grant approval to the bye-laws submitted to it under sub-Section (2) and approve transfer of the duties and functions of a clearing house to a clearing corporation referred to in sub-Section (1).

(4) The provisions of Sections 4, 5, 6, 7, 8, 9, 10, 11 and 12 shall, as far as may be, apply to a clearing corporation referred to in sub-Section (1) as they apply in relation to a recognised stock exchange.".]

1. Inserted vide The Securities Laws (Amendment) Act, 2004


Section 9. Power of recognised stock exchanges to make byelaws

(1) Any recognised stockexchange may, subject to the previous approval of the Central Government, makebye-laws for the regulation andcontrol of contracts.

(2) In particular, andwithout prejudice to the generality of the foregoing power, such bye-lawsmay provide for-

(a) the opening andclosing of markets and the regulation of the hours of trade;

(b) a clearing house forthe periodical settlement of contracts and differences thereunder, the deliveryof and payment for securities, the passing on of delivery orders and theregulation and maintenance of such clearing house;

(c) the submission to theCentral Government by the clearing house as soon as may be after each periodicalsettlement of all or any of the following particulars as the Central Governmentmay, from time to time, require, namely;-

(i) the total number ofeach category of security carried over from one settlement period to another;

(ii) the total number ofeach category of security, contracts in respect of which have been squared upduring the course of each settlement period;

(iii) the total number ofeach category of security actually delivered at each clearing;

(d) the publication bythe clearing house of all or any of the particulars submitted to the CentralGovernment under clause (c) subject to the directions, if any, issued by theCentral Government in this behalf;

(e) the regulation orprohibition of blank transfers;

(f) the number andclasses of contracts in respect of which settlements shall be made ordifferences paid through the clearing house;

(g) the regulation, orprohibition of budlas or carry-overfacilities;

(h) the fixing, altering or postponing of days for settlements;

(i) the determination anddeclaration of market rates, including the opening, closing, highest and lowestrates for securities;

(j) the terms, conditionsand incidents of contracts, including the prescription of margin requirements,if any, and conditions relating thereto, and the forms of contracts in writing;

(k) the regulation of the entering into, making, performance, rescissionand termination, of contracts, including contracts between members or between amember and his constituent or between a member and a person who is not a member,and the consequences of default or insolvency on the part of a seller or buyeror intermediary, the consequences of a breach or omission by a seller or buyer,and the responsibility of members who are not parties to such contracts;

(l) the regulation of taravanibusiness including the placing of limitations thereon;

(m) the listing ofsecurities on the stock exchange, the inclusion of any security for the purposeof dealings and the suspension or withdrawal of any such securities, and thesuspension or prohibition of trading in any specified securities;

(n) the method andprocedure for the settlement of claims or disputes, including settlement byarbitration;

(o) the levy and recoveryof fees, fines and penalties;

(p) the regulation of thecourse of business between parties to contracts in any capacity;

(q) the fixing of a scaleof brokerage and other chargers;

(r) the making,comparing, settling and closing of bargains;

(s) the emergencies intrade which may arise, whether as a result of pool or syndicated operations orcornering or otherwise, and the exercise of powers in such emergencies,including the power to fix maximum and minimum prices for securities;

(t) the regulation ofdealings by members for their own account;

(u) the separation of thefunctions of the jobbers and brokers;

(v) the limitations onthe volume of trade done by any individual member in exceptional circumstances;

(w) the obligation ofmembers to supply such information or explanation and to produce such documentsrelating to the business as the governing body may require.

(3) The bye-lawsmade under this section may-

(a) specify the bye-lawsthe contravention of which shall make a contract entered into otherwise than inaccordance with the bye-laws voidunder sub-section (1) of section14;

(b) provide that thecontravention of any of the bye-lawsshall render the member concerned liable to one or more of the followingpunishments, namely:-

(i) fine;

(ii) expulsion frommembership;

(iii) suspension frommembership for a specified period;

(iv) any other penalty ofa like nature not involving the payment of money.

(4) Any bye-lawsmade under this section shall be subject to such conditions in regard toprevious publication as may be prescribed, and when approved by the CentralGovernment, shall be published in the Gazette of India and also in the OfficialGazette of the State in which the principal office of the recognised stockexchange is situate, and shall have effect as from the date of its publicationin the Gazette of India;

Provided that if the Central Government is satisfied in any case that inthe interest of the trade or in the public interest any bye-lawshould be made immediately, it may, by order in writing specifying the reasonstherefor, dispense with the condition of previous publication.