Securities Contracts (Regulation) Act, 1956

Spot Delivery Contract

As per the Securities Contracts (Regulation) Act, 1956, a 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 dispatch of the securities or the remittance of money therefore through the post being executed 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.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2018, Q. 6A(iii) (Old syllabus).

Application for recognition of stock exchange

Section 3 of the Securities Contracts (Regulation) Act, 1956 lays down that any stock exchange, desirous of being recognized for the purposes of this Act may make an application in the prescribed manner to the Central Government.

Every application 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 its 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 membership, and the exclusion, suspension, expulsion and re-admission of members therefrom 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 authorized representatives and clerks.

Grant of recognition to stock exchange

Section 4 of the Securities Contracts (Regulation) Act, 1956 lays down that if the Central Government is satisfied (powers are exercisable by SEBI also) after making such inquiry as may be necessary in this behalf and after obtaining such 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 it, 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.

The conditions which the Central Government (powers are exercisable by SEBI also) may prescribe 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 exchange 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 whenever such audit is required by the Central Government.

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 situated, and such recognition shall have effect as from the date of its publication in the Gazette of India.

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.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 2A(ii) (Syllabus 2022).

(i)Section 5 of the Securities Contracts (Regulation) Act, 1956 lays down that if the Central Government is of opinion that the recognition granted to a stock exchange 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.

(ii)Section 5 of the Securities Contracts (Regulation) Act, 1956 prescribes that the withdrawal of recognition shall not 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.

Therefore, the contracts entered by the Old Age Regional Stock Exchange (OARSE) before the date of withdrawal of recognition will be valid.

(iii)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:

(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 dealings 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.

(iv)Every recognised stock exchange and every member thereof shall maintain and preserve for not exceeding five years such books of accounts, 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 to all reasonable times by SEBI.

(v)Section 12 of the Securities Contracts (Regulation) Act, 1956 states that if in the opinion of the Central Government, an emergency has arisen and for the purpose of meeting the emergency, the Central Government considers it expedient so to do, it may, by notification in the Official Gazette, for reasons to be set out therein, direct a recognised stock exchange to suspend such of its business for such period not exceeding seven days and subject to such conditions as may be specified in the notification, and if, in the opinion of the Central Government, the interest of the trade or the public interest requires that the period should be extended, may, by like notification extend the said period from time to time. However, where the period of suspension is to be extended beyond the first period, no notification extending the period of suspension shall be issued unless the governing body of the recognised stock exchange has been given an opportunity of being heard in the matter.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 1(a) (Syllabus 2022).

Various powers Central Government enjoying under the Securities Contracts (Regulation) Act, 1956 and the Rules and Regulations made thereafter are as follow:

i)To call for periodical returns or direct any inquiries to be made (Section 6): 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.

ii)To direct rules to be made or to make the rules (Sectio n 8): Section 8 deals with the power of Central Government to make rules or direct rules to be made in respect of recognised stock exchange.

iii)To Supersede governing body of a Recognised Stock Exchange (Sec tion 11): Where the Central Government is of opinion that the governing body of any recognised stock exchange should be superseded, then, it may, by notification in the Official Gazette, declare the governing body of such stock exchange to be superseded.

iv)To Suspend Business of a Recognised Stock Exchange (Sec tion 12): If in the opinion of the Central Government, an emergency has arisen and for the purpose of meeting the emergency, the Central Government considers it expedient so to do, it may, by notification in the Official Gazette, for reasons to be set out therein, direct a recognised stock exchange to suspend such of its business for such period not exceeding seven days and subject to such conditions as may be specified in the notification.

v)To prohibit contracts in certain cases (Sec tion 16): Section 16 stipulates that if the Central Government is of opinion that it is necessary to prevent undesirable speculation in specified securities in any State or area, it may, by notification in the Official Gazette, declare that no person in the State or area specified in the notification shall, save with the permission of the Central Government, enter into any contract for the sale or purchase of any security specified in the notification except to the extent and in the manner, if any, specified therein.

vi)To grant Immunity (Sec tion 23 O): The Central Government may, on recommendation by the SEBI, grant immunity from prosecution for any offence under Securities Contracts (Regulation) Act, 1956, or the rules or the regulations made thereunder or also from the imposition of any penalty under this Act with respect to the alleged violation.

vii)To delegate (Sec tion 29A): Section 29A stipulates that the Central Government may, by order published in the Official Gazette, direct that the powers (except the power under section 30) exercisable by it under any provision of Securities Contracts (Regulation) Act, 1956 shall, in relation to such matters and subject to such conditions, if any, as may be specified in the order, be exercisable also by the SEBI or the Reserve Bank of India.

viii)Power to make Rules (Sec tion 30): Section 30 empowers the Central Government to make rules for the purpose of carrying into effect the objects of the Securities Contracts (Regulation) Act, 1956 by notification in the Official Gazette.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 2(b) (Syllabus 2022).

Section 7A of the Securities Contracts (Regulation) Act, 1956 stipulates that a recognised stock exchange may make rules or amend any rules made by it to provide for all or any of the following matters, namely –

(a)The restriction of voting rights to members only in respect of any matter placed before the stock exchange at any meeting;

(b)The regulation of voting rights in respect of any matter placed before the stock exchange at any meeting so that each member may be entitled to have one vote only, irrespective of his share of the paid-up equity capital of the stock exchange;

(c)The restriction on the right of a member to appoint another person as his proxy to attend and vote at a meeting of the stock exchange; and

(d)Such incidental, consequential and supplementary matters as may be necessary to give effect to any of the matters specified in clauses (a), (b) and (c).

No rules of a recognised stock exchange made or amended in relation to any matter referred in the above paragraph shall have effect until they have been approved by the Central Government and published by that Government in the Official Gazette and, in approving the rules so made or amended, the Central Government may make such modifications therein as it thinks fit, and on such publication, the rules as approved by the Central Government shall be deemed to have been validly made, notwithstanding anything to the contrary contained in the Companies Act, 2013. The powers have been delegated concurrently to SEBI also in this regard.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 5(a) (Old syllabus).

Section 8A(1) of the Securities Contracts (Regulation) Act, 1956 provides that a recognised stock exchange may, with the prior approval of SEBI, transfer the duties and functions of a clearing house to a clearing corporation, being a company incorporated under the Companies Act, 2013, 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.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 2A(iv) (Syllabus 2017).

Clearing Corporation

Section 8A(1) of the Securities Contracts (Regulation) Act, 1956 provides that a recognized stock exchange may with the prior approval of SEBI, transfer the duties and functions of a clearing house to a clearing corporation being a company incorporated under the Companies Act, 2013 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.

Sub-section (2) provides that 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 SEBI for its approval.

Sub-section (3) provides that SEBI 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 and approve transfer of the duties and functions of a clearing house to a clearing corporation.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 6A(iv) (Old syllabus).

Power of recognised stock exchanges to make/amend bye-laws

As per Section 9 of the Securities Contracts (Regulations ) Act, 1956 any recognized stock exchange may, subject to the previous approval of SEBI, make bye-laws for the regulation and control of contracts. In particular, and without prejudice to the generality of the foregoing power, such bye-laws may provide for:

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

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

(c)the regulation or prohibition of blank transfers;

(d)the number and classes of contracts in respect of which settlements shall be made or differences paid through the clearing house;

(e)the regulation, or prohibition of budlas or carry-over facilities;

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

(g)the determination and declaration of market rates, including the opening, closing, highest and lowest rates for securities;

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

(i)the method and procedure for the settlement of claims or disputes, including settlement by arbitration;

(j)the levy and recovery of fees, fines and penalties;

(k)the regulation of the course of business between parties to contracts in any capacity;

(l)the fixing of a scale of brokerage and other charges;

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

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

(o)the regulation of dealings by members for their own account;

(p)the separation of the functions of jobbers and brokers;

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

(r)the obligation of members to supply such information or explanation and to produce such documents relating to the business as the governing body may require.

Section 7A of the Securities Contracts (Regulation) Act, 1956, stipulates that a recognized stock exchange may make rules or amend any rules made by it to provide for all or any of the following matters, namely,

(a)the restriction of voting rights to members only in respect of any matter placed before the stock exchange at any meeting;

(b)the regulation of voting rights in respect of any matter placed before the stock exchange at any meeting so that each member may be entitled to have one vote only, irrespective of his share of the paid-up equity capital of the stock exchange;

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

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

Powers have been delegated concurrently to SEBI also.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 2(b) (Syllabus 2017).

As per Section 9 of the Securities Contracts (Regulation ) Act, 1956 any recognized stock exchange may, subject to the previous approval of SEBI, make bye-laws for the regulation and control of contracts. In particular, and without prejudice to the generality of the foregoing power, such bye-laws may provide for:

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

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

(c)the regulation or prohibition of blank transfers;

(d)the number and classes of contracts in respect of which settlements shall be made or differences paid through the clearing house;

(e)the regulation, or prohibition of budlas or carry-over facilities;

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

(g)the determination and declaration of market rates, including the opening, closing, highest and lowest rates for securities;

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

(i)the method and procedure for the settlement of claims or disputes, including settlement by arbitration;

(j)the levy and recovery of fees, fines and penalties;

(k)the regulation of the course of business between parties to contracts in any capacity;

(l)the fixing of a scale of brokerage and other charges;

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

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

(o)the regulation of dealings by members for their own account;

(p)the separation of the functions of jobbers and brokers;

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

(r)the obligation of members to supply such information or explanation and to produce such documents relating to the business as the governing body may require.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 5(c) (Old syllabus).

SEBI may, either on a request in writing received by it in this behalf from the governing body of a recognized stock exchange or on its motion, if is satisfied after consultation with the governing body of the stock exchange that it is necessary or expedient so to do and after recording its reasons for so doing make or amend any bye-laws made by such stock exchange.

Where, any bye-laws have been made or amended, the bye laws so made or amended shall be published in the Gazette of India and also in the official Gazette of State in which the principal office of the recognised stock exchange is situated and, on the publication thereof in the Gazette of India, the bye laws so made or amended shall have effect as if they had been made or amended by the recognized stock exchange concerned.

Where the governing body of a recognized stock exchange objects to any bye-laws made or amended by the SEBI on it is motion, it may, within two months of the publication thereof in the gazette of India apply to SEBI for revision thereof and SEBI may, after giving an opportunity to the governing body of the stock exchange to be heard in the matter, revise the bye-laws so made or amended, and where any bye-laws so made or amended and are revised as a result of any action taken, shall be published and will become effective as prescribed.

The making or the amendment or revision of any bye-laws shall in all cases be subject to the condition of previous publication. However, if SEBI is satisfied in any case that in the interest of the trade or in public interest any bye-laws should be made, amended or revised immediately, it may, by order, in writing specifying the reasons thereof, dispense with the condition of previous publication.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 5(c) (Old syllabus).

As per Section 22 of the Securities Contracts (Regulation) Act, 1956 and the Rules made thereafter, where a recognised stock exchange refuses to list the securities of any public company or collective investment scheme, the company or the scheme shall be entitled to be furnished with reasons for such refusal, and may:

(a)within 15 days from the date on which the reasons for such refusal are furnished to it, or

(b)where the stock exchange has omitted or failed to dispose of, within the time specified in the Companies Act (hereafter in this section referred to as the “specified time”), the application for permission for the shares or debentures to be dealt with on the stock exchange,

within fifteen days from the date of expiry of the specified time, or within such further period, not exceeding one month, as the Central Government may, on sufficient cause being shown, allow,

appeal to the Central Government against such refusal, omission or failure, as the case may be, and thereupon, the Central Government may, after giving the stock exchange an opportunity of being heard,

i)vary or set aside the decision of the stock exchange, or

ii)where the stock exchange has omitted or failed to dispose of the application within the specified time, grant or refuse the permission,

and where the Central Government sets aside the decision of the recognised stock exchange or grants the permission, the stock exchange shall act in conformity with the orders of the Central Government.

However, no appeal shall be preferred against refusal, omission or failure, as the case may be, under this section on and after the commencement of the Securities Laws (Second Amendment) Act, 1999.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 2(c) (Syllabus 2022).

ST Ltd. has right to appeal to Securities Appellate Tribunal (SAT) against refusal of stock exchanges to list securities of public companies. As per Regulation 22A of Securities Contracts (Regulation) Act, 1956, where a recognized stock exchange, acting in pursuance of any power given to it by its bye-laws, refuses to list the securities of any company, the company shall be entitled to be furnished with reasons for such refusal, it may

(a)Within 15 days from the date on which the reasons for such refusal are furnished to it, or

(b)Where the stock exchange has omitted or failed to dispose of, within the time specified in section 40 of the Companies Act, 2013, the application for permission for the shares or debentures to be dealt with on the stock exchange, within fifteen days from the date of expiry of the specified time or within such further period, not exceeding one month as the Securities Appellate Tribunal may, on sufficient cause being shown, allow appeal to the SAT having jurisdiction in the matter against such refusal, omission or failure, the Securities Appellate Tribunal may, after giving the stock exchange, an opportunity of being heard, -

(i)vary or set aside the decision of the stock exchange; or

(ii)where the stock exchange has omitted or failed to dispose of the application within the specified time, grant or refuse the permission,

and where the SAT sets aside the decision of the recognized stock exchange or grants the permission, the stock exchange shall act in conformity with the orders of the Securities Appellate Tribunal.

Every appeal shall be in such form and be accompanied by such fee as may be prescribed. The Securities Appellate Tribunal shall send a copy of every order made by it to the SEBI and parties to the appeal.

The appeal filed before the SAT shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within six months from the date of receipt of the appeal.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 1(b) (Syllabus 2017).

Under the Securities Contracts (Regulation) Act, 1956, penalties imposed under Section 23C, Section 23D and Section 23E are as follows:

(i)Section 23C:

If any stock broker or sub-broker or a listed company or proposed listed company fails to redress investors’ grievances within the time stipulated by SEBI or a recognised stock exchange, he or it shall be liable to a penalty which shall not be less than 1 lakh rupees but which may extend to 1 lakh rupees for each day during which such failure continues subject to a maximum of 1 crore rupees.

(ii)Section 23D:

If any person, who is registered under section 12 of the SEBI Act, 1992 as a stock broker or sub-broker, fails to segregate securities or moneys of the client or clients or uses the securities or moneys of a client or clients for self or for any other client, he shall be liable to a penalty which shall not be less than 1 lakh rupees but which may extend to 1 crore rupees.

(iii)Section 23E:

If a company or any person managing collective investment scheme or mutual fund or real estate investment trust or infrastructure investment trust or alternative investment fund, fails to comply with the listing conditions or delisting conditions or grounds or commits a breach thereof, it or he shall be liable to a penalty which shall not be less than 5 lakh rupees but which may extend to 25 crore rupees.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2026, Q. 2(c) (Syllabus 2022).

(i)Section 23L of the Securities Contracts (Regulation) Act, 1956 stipulates that any person aggrieved, by the order or decision of the recognised stock exchange or the adjudicating officer or any order made by the Securities and Exchange Board of India under or sub-section

(3)of section 23-I, may prefer an appeal before Securities Appellate Tribunal (SAT).

Therefore, under this case, Gelwel Ltd. is eligible to file an appeal against the penalty order issued by Bombay Stock Exchange.

(ii)The appeal by Gelwel Ltd. should be filed with Securities Appellate Tribunal (SAT) within a period of forty-five days from the date on which a copy of the order or decision is received by the appellant and it shall be in such form and be accompanied by such fees as may be prescribed.

As the penalty order from stock exchange was received by Gelwel Ltd. on 10th December 2024. Therefore, the appeal should be filed within 45 days from the date of receipt of order. However, the SAT may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period.

(iii)Every appeal filed before the Securities Appellate Tribunal shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within six months from the date of receipt of the appeal.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 3(b) (Syllabus 2022).

In accordance with Section 23 of the Securities Contracts (Regulation) Act, 1956, any person who might be found guilty of offences under section 23 of the Securities Contracts (Regulation) Act, 1956, shall, without prejudice to any award of penalty by the Adjudicating Officer or the SEBI under the Securities Contracts (Regulation) Act, 1956, on conviction, be punishable with imprisonment for a term which may extend to ten years or with fine, which may extend to twenty five crore rupees, or with both.

i.According to Section 23A (b) of the Securities Contracts (Regulation) Act, 1956

Contravention : Any person who fails to maintain books of account or records, as per the listing agreement or conditions, or bye laws of a recognized stock exchange.

Penalty : Penalty shall be not less than 1 lakh rupees but may extend to 1 lakh rupees for each day during which such failure continues, subject to a maximum of 1 crore rupees.

ii.According to Section 23 F of the Securities Contracts (Regulation) Act, 1956

Contravention : If any issuer makes an excess dematerialization or delivery of unlisted securities.

Penalty : Penalty shall not be less than 5 lakh rupees which may extend to 25 crores rupees.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 1(b) (Syllabus 2022).

Section 23L of the Securities Contracts (Regulation) Act, 1956 stipulates that any person aggrieved, by the order or decision of the recognized stock exchange or the adjudicating officer or any order made by the Securities and Exchange Board of India, may prefer an appeal before the Securities Appellate Tribunal.

Every appeal shall be filed within a period of forty-five days from the date on which a copy of the order or decision is received by the appellant and it shall be in such form and be accompanied by such fee as may be prescribed. However, the Securities Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period.

On receipt of an appeal the Securities Appellate Tribunal may, after giving the parties to the appeal, an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against.

The Securities Appellant Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned adjudicating officer. The appeal filed before the Securities Appellate Tribunal shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within six months from the date of receipt of the appeal.

The appeal may be preferred before the Securities Appellate Tribunal as per the procedure laid down under the Securities Contracts (Regulation) (Appeal to Securities Appellate Tribunal) Rules, 2000.

Further, Section 15T of the SEBI Act, 1992 provides that, any person aggrieved, by an order of the SEBI or by an order made by an adjudicating officer may prefer an appeal to a Securities Appellate Tribunal having jurisdiction in the matter.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 2(d) (Syllabus 2022).

According to section 23A of the Securities Contracts (Regulation) Act, 1956, any person, who is required under this Act or any rules made thereunder,—

(a)to furnish any information, document, books, returns or report to a recognised stock exchange or to the SEBI, fails to furnish the same within the time specified therefor in the listing agreement or conditions or bye-laws of the recognised stock exchange or the Act or rules made thereunder, shall be liable to a penalty which shall not be less than ₹1 lakh but which may extend to ₹ 1 lakh for each day during which such failure continues subject to a maximum of ₹ 1 crore for each such failure.

(b)to maintain books of account or records, as per the listing agreement or conditions, or bye- laws of a recognised stock exchange, fails to maintain the same, shall be liable to a penalty which shall not be less than ₹ 1 lakh but which may extend to ₹ 1 lakh for each day during which such failure continues subject to a maximum of ₹ 1 crore.

The answer will not differ as the penalty provisions are same in both the cases in the present scenario, if the information sought by stock exchange or SEBI.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2023, Q. 2(d) (Syllabus 2017).

Section 23JB of the Securities Contracts (Regulation) Act, 1956 deals with recovery of amounts. If a person fails to pay the penalty imposed under this Act or fails to comply with a direction of disgorgement order issued under section 12A or fails to pay any fees due to the SEBI, the Recovery Officer may draw up under his signature a statement in the specified form specifying the amount due from the person and shall proceed to recover from such person the amount specified in the certificate by one or more of the following modes, namely:—

(a)attachment and sale of the person's movable property;

(b)attachment of the person's bank accounts;

(c)attachment and sale of the person's immovable property;

(d)arrest of the person and his detention in prison;

(e)appointing a receiver for the management of the person's movable and immovable properties.

The Recovery Officer shall be empowered to seek the assistance of the local district administration while exercising the powers as stated above. Therefore, Adjudicating Officer can exercise any of the above recourses for recovery of amount from Akhilesh. Alternate Answer

The recourses available with Adjudicating Officer for Recovery of amount for violation of the provisions of Insider Trading Regulations of SEBI are covered under Section 28A of the SEBI Act, 1992.

Section 28A of the Securities and Exchange Board of India Act, 1992, provides that if a person fails to pay the penalty imposed under this Act or fails to comply with any direction of the SEBI for refund of monies or fails to comply with a direction of disgorgement order issued under section 11B or fails to pay any fees due to the SEBI, the Recovery Officer may draw up under his signature a statement in the specified form specifying the amount due from the person and shall proceed to recover from such person the amount specified in the certificate by one or more of the following modes, namely:—

(a)attachment and sale of the person's movable property;

(b)attachment of the person's bank accounts;

(c)attachment and sale of the person's immovable property;

(d)arrest of the person and his detention in prison;

(e)appointing a receiver for the management of the person's movable and immovable properties.

The Recovery Officer shall be empowered to seek the assistance of the local district administration while exercising the powers as stated above. Therefore, Adjudicating Officer can exercise any of the above recourses for recovery of amount from Akhilesh.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2022, Q. 2A(i) (Syllabus 2017).

The statement is not correct as Section 23J of the Securities Contracts (Regulation) Act, 1956 provides for the factors to be taken into account by the adjudicating office. While adjudging the quantum of penalty, the adjudicating officer shall have due regard to the following factors:

(a)the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default;

(b)the amount of loss caused to an investor or group of investors as a result of the default;

(c)the repetitive nature of the default.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 6(c) (Old syllabus).

Section 27A (1) of the Securities Contracts (Regulation) Act, 1956 provides that it shall be lawful for the holder of any securities, being units or other instruments issued by the collective investment scheme, whose name appears on the books of the collective investment scheme issuing the said security to receive and retain any income in respect of units or other instruments issued by the collective investment scheme declared by the collective investment scheme in respect thereof for any year, though the said security, being units or other instruments issued by the collective investment scheme, has already been transferred by him for consideration, unless the transferee who claims the income in respect of units or other instruments issued by the collective investment scheme from the transfer or has lodged the security and all other documents relating to the transfer which may be required by the collective investment scheme with the collective investment scheme for being registered in his name within fifteen days of the date on which the income in respect of units or other instruments issued by the collective investment scheme became due.

In view of the above-

(i)Mr. Mukharjee is entitled to retain the income received by him as the transferee has lodged an instrument for transfer one month after the date on which the income became due.

(ii)The answer in the second case would differ. The holder i.e. Mr. Mukharjee, cannot receive and retain the income since the instrument for transfer was lodged with the company within the statutory period of 15 days by the transferee. Accordingly, the transferee would be entitled to receive the income on these securities. However, section 27A(1) will not affect the right of transferee to enforce his rights, if any, against the transferor or any other person if the CIS refuses to register, the transfer of the security in the name of the transferee.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 3(c) (Syllabus 2017).

Rule 17 of the Securities Contracts (Regulation) Rules, 1957 provides that every recognised stock exchange shall before the 31st day of January in each year or within such extended time as SEBI may, from time to time, allow, furnish to SEBI annually with a report about its activities during the proceeding calendar year, which shall inter alia contain detailed information about the following matters:

(a)Changes in rules and bye-laws, if any;

(b)Changes in the composition of the governing body;

(c)Any new sub-committees set up and changes in the composition of existing ones;

(d)Admissions, re-admissions, deaths or resignations of members;

(e)Disciplinary action against members;

(f)Arbitration of disputes (nature and number) between members and non-members;

(g)Defaults;

(h)Action taken to combat any emergency in trade;

(i)Securities listed and de-listed; and

(j)Securities brought on or removed from the forward list.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 5(c) (Old syllabus).

(i)In terms of Rule 19A (1) of the Securities Contracts (Regulation) Rules, 1957, every listed public sector company which has public shareholding below twenty-five per cent. on the commencement of the Securities Contracts (Regulation) (Second Amendment) Rules, 2018, shall increase its public shareholding to at least twenty-five per cent, within a period of 3 years from the date of such commencement, in the manner specified by the SEBI.

Jethana Ltd. is having minimum public shareholding of 15% in 2018 which requires to be increased with in a period of 3 years from the date of such commencement of the Securities Contracts (Regulation) (Second Amendment) Rules, 2018.

(ii)Minimum public Shareholding : Rule 19A (1) of the Securities Contracts (Regulation) Rules, 1957 stipulates that every listed company shall maintain public shareholding of at least twenty-five per-cent. Sub rule (2) provides that where the public shareholding in a listed company falls below twenty five per cent. at any time, such company shall bring the public shareholding to twenty five per cent. within a maximum period of 12 months from the date of such fall in the manner specified by the SEBI.

However, every listed public sector company whose public shareholding falls below twenty five per-cent. at any time after the commencement of the Securities Contracts (Regulation) (Second Amendment) Rules, 2018, shall increase its public shareholding to at least twenty five per-cent, within a period of 2 years from such fall, in the manner specified by the SEBI.

(iii)The Central Government may, in public interest, exempt any listed entity in which the Central Government or State Government or public sector company, either individually or in any combination with other, hold directly or indirectly, majority of the shares or voting rights or control of such listed entity, from any or all of the provisions of rule 19A.

(iv)Application for listing of new securities: Rule 19(4) of the Securities Contracts (Regulation) Rules, 1957 stipulates that an application for listing shall be necessary in respect of the following:

a.all new issues of any class or kind of securities of a company to be offered to the public.

b.all further issues of any class or kind of securities of a company if such class or kind of securities of the company are already listed on a recognised stock exchange.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 2(a) (Syllabus 2022).

Rule 19A (1) of the Securities Contracts (Regulations) Rules, 1957 (‘SCRR’) stipulates that every listed company other than public sector company shall maintain public shareholding of at least 25%.

Provided that any listed company which has public shareholding below twenty five per cent, on the commencement of the Securities Contracts (Regulation) (Amendment) Rules, 2014, shall increase its public shareholding to at least twenty five per cent, within a period of four years from the date of such commencement, in the manner specified by the Securities and Exchange Board of India.

Explanation : For the purposes of this sub-rule, a company whose securities has been listed pursuant to an offer and allotment made to public in terms of clause (b) of sub-rule (2) of rule 19, shall maintain minimum twenty five per cent, public shareholding from the date on which the public shareholding in the company reaches the level of twenty five percent in terms of said sub-clause.

Where the public shareholding in a listed company falls below twenty five per cent at any time, such company shall bring the public shareholding to twenty five per cent within a maximum period of twelve months from the date of such fall in the manner specified by the SEBI.

Where the public shareholding in a listed company falls below 25% in consequence to SCRR Amendment Rules, 2015, such company shall increase its shareholding to atleast 25%, in the manner specified by SEBI within a period of three years, as the case may be, from the date of notification of:

(a)the Depository Receipts Scheme, 2014, in cases where the public shareholding falls below 25% as a result of such Scheme;

(b)SEBI (Share Based Employee Benefits) Regulations, 2014, in cases where the public shareholding falls below 25%, as a result of such regulations.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 5(a) (Old syllabus).

The continuous listing requirment has been prescribed under Rule 19A(1) of the Securities Contracts (Regulation) Rules ("SCRR"), 1957, which stipulates that every listed company other than public sector company shall maintain public shareholding of at least 25%. However, any listed company which has public shareholding below 25%, shall increase its public shareholding to at least twenty five per cent, within a period of four years from the date of commencement of amendment to the said rules in 2014, in the manner specified by SEBI.

SEBI has vide its Circular dated November 30, 2015 and February 22, 2018 has prescribed the various methods that may be used by a listed entity to achieve compliance with the minimum public shareholding requirements mandated under rules 19(2) (b) and 19A of the SCRR read with regulation 38 of the SEBI Listing Regulations, 2015. The following are the various methods :

(i)Issuance of shares to public through prospectus;

(ii)Offer for sale of shares held by promoters to public through prospectus;

(iii)Sale of shares held by promoters through the secondary market in terms of SEBI circular CIR/MRD/DP/05/2012 dated February 1, 2012;

(iv)Institutional Placement Programme (IPP) in terms of Chapter VIIIA of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009;

(v)Rights Issue to public shareholders, with promoter/promoter group shareholders forgoing their entitlement to equity shares that may arise from such issue;

(vi)Bonus Issues to public shareholders, with promoter/promoter group shareholders forgoing their entitlement to equity shares that may arise from such issue;

(vii)Sale of shares held by the promoters/promoter group up to 2% of the total paid-up equity share capital of the listed entity in the open market, subject to the conditions specified.

(viii)Allotment of eligible securities through Qualified Institutions Placement in terms of Chapter VIII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2018, Q. 2(a) (Syllabus 2017).