The recognition of stock exchanges:

The SCRA, in Section 3 of the Act, has accommodated a

particular system which empowered the stock exchange of
being recognized by the Government to apply in the way
recommended by the act. The Procedures related with grant
of recognition by the Government to the stock trade are
clarified in Section 4 of the SCRA. At the same time, the
SEBI (Securities and Exchange Board of India) is additionally
engaged to offer recognition to the Stock Exchange. It is
unequivocally given by the SCRA that preceding grant of
acknowledgment to a stock exchange, the Central
Government must be fulfilled after appropriate request that
the bylaws and standing rules of a stock exchange applying
for enrollment are in congruity with the prescribed conditions
so as to guarantee reasonable managing and to security of
the enthusiasm of the financial specialists. The SCRA
additionally has accommodated different conditions for
recognition of stock trade which increase the Government
control and impedance, for example, conditions identified
with capabilities for enrollment of stock trades; manner in
which the contracts will be gone into and implemented as
between individuals; the portrayal of the Central Government
on every one of the stock excange by such number of people
not surpassing three as the Central Government may
nominate in his behalf; etc. These arrangements identified
with the Government control and obstruction fused in the
SCRA are intended for guaranteeing the insurance of the
enthusiasm of the financial investors.

Corporatisation and demutualisation of stock

exchanges:

The term Corporatisation, in the Section 2.(a)(a) of the

SCRA, embedded by the Security Laws (Amendment)
Act,2004, implies the succession of a recognised stock
exchange, being a collection of individual or a general public
enlisted under the Societies Registration Act,1860, by
another stock exchange, being an organization joined to
assist, directing or controlling the matter of buying, selling or
managing in securities carried on by such individual or
society. In plain words, it implies the change of a stock
exchange into a corporate substance constrained by offers
from its prior non-corporate structure.

Demutualization is the procedure in which a client-owned

mutual association or co-operative changes legal structure to
frame a business entity. "Demutualisation" as characterized
by Section 2.(ab) of the SCRA, embedded by the Security
Laws (Amendment) Act,2004, implies the isolation of
proprietorship and the executives from the exchanging rights
of individuals from a recognised stock exchange as per a plan
endorsed by the Securities and Exchange Board of India. The
procedure of demutualisation isolates possession,
exchanging, and management on a stock exchange.

The SCRA,1956 as amended by the Security Laws

(Amendment) Act,2004 provided for mandatory
corporatisation and demutualisation of the stock exchange by
the arrangements contained in Section 4(B) of the Act. The
Section 4(B) states that all recognised stock exchanges,
aside from the ones which have been advised by the SEBI in
the Official Gazette as of now corporatised and demutualised,
will present a plan for corporatisation and demutualisation
inside a period recommended by the SEBI.If the SEBI is
fulfilled that it would be in light of a legal concern for the
exchange and furthermore in the open intrigue, at that point
the SEBI approves the Scheme with or without alteration. A
recognised stock exchange, in regard of which the plan for
corporatisation and demutualisation has been endorsed, will
guarantee that something like fifty-one percent of its value
share capital is held by the public other than the investors
having exchanging rights. Such arrangement is
unquestionably effective for raising venture from general
public.
The corporatisation demutualisation of stock exchanges is
useful from the point of view of raising venture since it
guarantees expanded access to assets for capital speculation
raised by method for value contributions or private
speculation. Further, it prompts more noteworthy interest of
the financial experts in the administration of the stock
exchange and enables more noteworthy adaptability and
access to worldwide markets.

The Section-5 of the SCRA empowers the Central

Government to pull back the recognition granted to a stock
exchange under the arrangements of the said demonstration
in light of a legial concern for the exchange or the public
interest following the method given by the Act in such
manner.

Central Government’s control over the recognized

stock exchanges:

The SCRA has accommodated a few different arrangements

which reinforce the control of the Central Government and
SEBI over the working of recognized stock exchanges which
empowers the Government to take important activities to
guarantee raising of venture, secure the interest of the
exchange and open intrigue. Section6 of the SCRA requires
the recognized stock exchanges to outfit periodical results
back to the SEBI identifying with the undertakings of the
stock exchange. The SCRA enables the SEBI to coordinate
request and call for request report in connection to the
undertakings of any member of the stock exchange.

Section 7 of the Act requires yearly reports to be submitted

by the stock exchanges to the Central Government. The
Section 8 of the SCRA further engages the Central
Government to make rules, direct a stock exchange to make
any standard or make alteration of officially existing tenets
identified with the undertakings of the stock exchange as the
legislature may esteem fit. The SCRA has accommodated
different arrangements approving the Central Government
and SEBI to direct, control and meddle with various
undertakings and parts of the recognized Stock Exchanges
for the assurance of premiums of the financial specialists.

Provisions related with Listing of Securities:

The SCRA additionally contains arrangements identified with
listin of securities to the Securities Exchange. listing implies a
admission of securities of any joined organization focal and
state government, quasi-govermental and other financial
foundations, partnerships, and so on to dealings on a
recognized stock exchange. The most vital objectives of
listing are to give ready-made attractiveness and confer
liquidity and free debatability to stocks and shares,
guarantee appropriate supervision and control of dealings in
that and ensure the interest of investors and the overall
population. As listed securities are authoritatively exchanged,
the liquidity of venture by the financial specialists is very
much guaranteed.

Section 21 of the SCRA states that where securities are listed

on the use of any individual in any recognized stock
exchange, such individual will conform to the states of the
posting concurrence with that stock exchange. A recognized
stock exchange may delist the securities as given by the
Section 21A of the follow up on any of the grounds
recommended under the demonstration in the wake of giving
a sensible chance of being heard to the individual influenced
by such activity.
Conclusion
SCRA is a decree allowing the direct and indirect control of all
aspects of trading and securities trading, as well as the
prevention of unwanted transactions on securities. Among
other things, the SCRA Act of 1956, which provided for
government recognition of scholarships, the inclusion of their
activities, the demutualization and proper control of the
functions and affairs of stock exchanges in the interest of
investors, contributed good and weak development with an
advantageous form to deal with security. Investments have
been made as a result of these provisions

Introduction

In the instant case of Securities and Exchange Board of India v. M/s. Opee

Stock-Link Ltd. & Anr.[1], the Supreme Court explored certain

irregularities/illegalities in the Initial Public Offerings (“IPO”) of two

companies, viz., Jet Airways Limited and Infrastructure Development

Finance Company Limited.

Facts

Jet Airways Limited and Infrastructure Development Finance Company

Limited issued certain shares of an IPO that were oversubscribed. This

decision has been brought to the attention of the Securities and Exchange

Board of India ("SEBI"). During the investigation, SEBI representatives

found that hundreds of account holders were unwittingly selected by non-

market transactions as small shareholders. This is in direct conflict with

Section 12A (a), (b), (c) of the SEBI Act 1992 and Rules 3 and 4 (1) of the

Securities and Exchange Board of India (Prohibition of Unfair Titles). .

Markets) from 2003.

Decision of the Whole Time Member and the Adjudicating Officer of

the SEBI, and Securities Appellate Tribunal

Investigations by SEBI officials revealed that several shares had been

fraudulently acquired at a price well below the market price before the date

of the dematerialized list, without knowing the price of these shares.

through OTC transactions. They also concluded that the demographic

accounts with which these purchases were made were not authentic and

were used for the benefit of a person who financed these false

demographic accounts. In addition, the signatures of the holders of these

accounts were inconsistent and the registered addresses of the account

holders were consistent. These facts hit the truth of the transaction. The

interests of the small investors were damaged, these actions were reserved

for them. As a result, the respondent was fined.

On appeal to the Securities Appellate Tribunal ("SAT"), there was no

specific order that the findings of the full-time member and the SEBI board

member were incorrect. However, both the titular and the SEBI arbitrator's

order were quashed.

Decision of the Supreme Court

The complainant complained to the Supreme Court. The Apex Court
pointed out that IPOs were below the market price before being listed on
Demat accounts with the same designation addresses and bearing several
inconsistent signatures, thus depriving small investors of their exposure to
equities and causing loss. unjust enrichment. The appointment of the SAT
was therefore canceled and the appointment of the full-time member and
the SEBI referee confirmed.

The Court also concluded that the Securities Contracts (Regulatory Law)
Act, 1956, which governs IPO offers, is a special law that governs the
operation of recognized exchanges and prevents transactions in unwanted
securities. General Provisions of the Contracts Act of 1872 and the Sale of
Goods Act, 1930, in areas specifically dealt with by SCRA.