Scra Act

SECURITIES CONTRACTS (REGULATION) ACT, 1956
[As amended by the Finance Act, 2017]
[42 OF 1956]
SECTIONS
PRELIMINARY
1. Short title, extent and commencement
2. Definitions
RECOGNISED STOCK EXCHANGES
3. Application for recognition of stock exchanges

4. Grant of recognition to stock exchanges.
4A. Corporatisation and demutualisation of stock exchanges
4B. Procedure for corporatisation and demutualisation
5. Withdrawal of recognition
6. Power of Central Government to call for periodical returns or direct inquiries to be
made
7. Annual reports to be furnished to Central Government by stock exchanges
7A. Power of recognised stock exchange to make rules restricting voting rights, etc
8. Power of Central Government to direct rules to be made or to make rules
8A. Clearing corporation
9. Power of recognised stock exchanges to make bye-laws
10. Power of Securities and Exchange Board of India to make or amend bye-laws of
recognised stock exchanges
11. Power of Central Government to supersede governing body of a recognised stock
exchange
12. Power to suspend business of recognised stock exchanges.
12A. Power to issue directions
13. Contracts in notified areas illegal in certain circumstances
13A. Additional trading floor
14. Contracts in notified areas to be void in certain circumstances
15. Members may not act as principals in certain circumstances
16. Power to prohibit contracts in certain cases
17. Licensing of dealers in securities in certain areas
17A. Public issue and listing of securities referred to in sub-clause (ie) of clause (h) of section 2
18. Exclusion of spot delivery contracts from sections 13, 14, 15 and 17
18A. Contracts in derivative
19. Stock exchanges other than recognised stock exchanges prohibited
20. Prohibition of options in securities
21. Conditions for listing
21A. Delisting of securities
22. Right of appeal against refusal of stock exchanges to list securities of public companies
22A. Right of appeal to Securities Appellate Tribunal against refusal of stock exchange to list securities of
public companies
22B. Procedure and powers of Securities Appellate Tribunal
22C. Right to legal representation
22D. Limitation
22E. Civil court not to have jurisdiction
22F. Appeal to Supreme Court
PENALTIES AND PROCEDURE

23. Penalties
23A. Penalty for failure to furnish information, return, etc.
23B. Penalty for failure by any person to enter into an agreement with clients
23C. Penalty for failure to redress investors’ grievances
23D. Penalty for failure to segregate securities or moneys of client or clients
23E. Penalty for failure to comply with provision of listing conditions or delisting conditions or grounds
23F. Penalty for excess dematerialisation or delivery of unlisted securities
23G. Penalty for failure to furnish periodical returns, etc.
23GA Penalty for failure to conduct business in accordance with rules, etc.
23H. Penalty for contravention where no separate penalty has been provided
23-I. Power to adjudicate
23J. Factors to be taken into account while adjudging quantum of penalty
23JA. Settlement of administrative and civil proceedings
23JB. Recovery of amounts
23JC Continuance of proceedings
23K. Crediting sums realised by way of penalties to Consolidated Fund of India
23L. Appeal to Securities Appellate Tribunal
23M. Offences
23N. Composition of certain offences
23-O. Power to grant immunity
24. Contravention by companies
25. Certain offences to be cognizable
26. Cognizance of offences by courts
26A. Establishment of Special Courts
26B. Offences triable by Special Courts
26C. Appeal and revision
26D. Application of Code to proceedings before Special Court
26E. Transitional Provisions
MISCELLANEOUS
27. Title to dividends
27A. Right to receive income from collective investment scheme
27B. Right to receive income from mutual fund
28. Act not to apply in certain cases
29. Protection of action taken in good faith
29A. Power to delegate
30. Power to make rules
30A. Special Provisions related to commodity derivatives
31. Power of Securities and Exchange Board of India to make regulations
32. Validation of certain acts
SECURITIES CONTRACTS (REGULATION) ACT, 1956
[42 OF 1956]
[4th September, 1956]
An Act to prevent undesirable transactions in securities by regulating the business of
dealing therein, 1[***] by providing for certain other matters connected therewith.
BE it enacted by Parliament in the Seventh Year of the Republic of India as follows:
PRELIMINARY
Short title, extent and commencement.
1. (1) This Act may be called the Securities Contracts (Regulation) Act, 1956.
(2) It extends to the whole of India.
(3) It shall come into force on such date2 as the Central Government may, by notification in the
Official Gazette, appoint.
Definitions.
2. In this Act, unless the context otherwise requires,—
(a) “contract” means a contract for or relating to the purchase or sale of securities;
3
[(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;]
4 5
[ [(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 contract which derives its value from the prices, or index of prices, of underlying
securities;]
6
[(C) commodity derivatives; and
(D) such other instruments as may be declared by the Central Government to be
derivatives;]
(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 (18 of 1944);
1
Words “by prohibiting options and” omitted by the Securities Laws (Amendment) Act, 1995, w.e.f. 25-01-1995.
2
20-2-1957 vide SRO 528, dated 16-02-1957, published in the Gazette of India, Extra., Pt. II, Sec. 3, p. 549, dated
16-02-1957.
3
Inserted by the Securities Laws (Amendment) Act, 2004, Sec. 2, w.e.f. 12-10-2004.
4
5
Clause (aa) renumbered as clause (ac) by the Securities Laws (Amendment) Act, 2004, Sec. 2, w.r.e.f. 12 10-2004.
6
Inserted by Part II of Chapter VIII of the Finance Act 2015, w.e.f. 28.09.2015 vide Gazette Notification F. No.
1/9/SM/2015, Extraordinary, Pt. II, Sec. 3, Sub-section (ii) dated 28.08.2015.
7
[(bb) "goods" mean every kind of movable property other than actionable claims, money and
securities;
(bc) "commodity derivative" means a contract —
(i) for the delivery of such goods, as may be notified by the Central
Government in the Official Gazette, and which is not a ready delivery
contract; or
(ii)
for differences, which derives its value from prices or indices of prices of
such underlying goods or activities, services, rights, interests and events, as
may be notified by the Central Government, in consultation with the Board,
but does not include securities as referred to in sub-clauses (A) and (B) of
clause (ac);]
(c) “member” means a member of a recognised stock exchange;
8
[(ca) "non-transferable specific delivery contract" means a specific delivery contract, the rights
or liabilities under which or under any delivery order, railway receipt, bill of lading,
warehouse receipt or any other documents of title relating thereto are not transferable; ]
(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;
9
[(ea) "ready delivery contract" means a contract which provides for the delivery of goods and
the payment of a price therefor, either immediately, or within such period not exceeding eleven
days after the date of the contract and subject to such conditions as the Central Government may,
by notification in the Official Gazette, specify in respect of any goods, the period under such
contract not being capable of extension by the mutual consent of the parties thereto or otherwise:
Provided that where any such contract is performed either wholly or in part:
(I) by realisation of any sum of money being the difference between the contract rate
and the settlement rate or clearing rate or the rate of any offsetting contract; or
(II) by any other means whatsoever, and as a result of which the actual tendering of
the goods covered by the contract or payment of the full price therefor is
dispensed with, then such contract shall not be deemed to be a ready delivery
contract; ]
(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;
10
[(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;
7
8
9
10
Inserted by the Securities Laws (Amendment) Act, 2004, Sec. 2, w.r.e.f. 12-10-2004.
(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;]
11 12
[ [(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;
13
[(ia) derivative;
(ib) units or any other instrument issued by any collective investment scheme to the
investors in such schemes;]
14
[(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;]
15
[(id) units or any other such instrument issued to the investors under any mutual
fund scheme;]
16
[Explanation.—For the removal of doubts, it is hereby declared that
11
Inserted by the Securities Laws (Second Amendment) Act, 1999, Sec 2, w.e.f. 16-12-1999.
12
Clause (ga) renumbered as clause (gb) by the Securities Laws (Amendment) Act, 2004, Sec 2, w.r.e.f. 12-10-
2004.
13
14
Inserted by the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002, Sec. 41 and Schedule, w.r.e.f. 21-6-2002.
15
16
Inserted by the Securities and Insurance Laws (Amendment and Validation) Act, 2010, Sec 4, w.r.e.f. 09-04-2010.
Chapter VI of the Securities and Insurance Laws (Amendment and Validation) Act, 2010, read as under :
"CHAPTER VI
MISCELLANEOUS
6. Validation.—Notwithstanding anything contained in any judgment, decree or order of any Court, Tribunal or
other authority, the provisions of section 2 of the Insurance Act, 1938 (4 of 1938) or section 2 of the Securities
Contracts (Regulation) Act, 1956 (42 of 1956) or section 12 of the Securities and Exchange Board of India Act, 1992
(15 of 1992), as amended by this Act, shall have and shall be deemed to always have effect for all purposes as if
the provisions of the said Acts, as amended by this Act, had been in force at all material times and accordingly, any
unit linked insurance policy or scrips or any such instrument or unit, by whatever name called, issued or purported
to have been issued at any time before the 9th day of April, 2010, shall be deemed and always deemed to have
been validly issued and shall not be called in question in any court of law or other authority solely on the ground
that it was issued without a certificate of registration under any law for the time being in force or without
following any procedure under any law for the time being in force, by an insurer or any other person.
7. Repeal and savings.—(1) The Securities and Insurance Laws (Amendment and Validation) Ordinance, 2010 (Ord.
3 of 2010) is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken under the Reserve Bank of India Act, 1934 (2
"securities" shall not include any unit linked insurance policy or scrips or any
such instrument or unit, by whatever name called, which provides a combined
benefit risk on the life of the persons and investment by such persons and
issued by an insurer referred to in clause (9) of section 2 of the Insurance Act,
1938 (4 of 1938);]
17
[(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 receivable,
including mortgage debt, as the case may be;]
18
[(ii) Government securities;
(iia) such other instruments as may be declared19 by the Central
Government to be securities; and]
(iii) rights or interest in securities;
20
[(ha) "specific delivery contract" means a commodity derivative which provides for the actual
delivery of specific qualities or types of goods during a specified future period at a price
fixed thereby or to be fixed in the manner thereby agreed and in which the names of both
the buyer and the seller are mentioned;]
21
[(i) “spot delivery contract” means a contract which provides for,-
(a) actual delivery of securities and the payment of a price therefor 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 therefor 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;]
22
[(j) “stock exchange” means -
(a) any body of individuals, whether incorporated or not, constituted before
corporatisation and demutualisation under sections 4A and 4B, or
of 1934) or the Insurance Act, 1938 (4 of 1938) or the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or
the Securities and Exchange Board of India Act, 1992 (15 of 1992), as amended by the said Ordinance, shall be
deemed to have been done or taken under the corresponding provisions of those Acts, as amended by this Act."
17
Inserted by the Securities Contracts (Regulation) Amendment Act, 2007, Sec 2, w.e.f. 28-5-2007.
18
Substituted by Securities and Exchange Board of India Act, 1992, Sec 33 and Schedule, Pt II, for sub-clause (ii),
w.r.e.f. 30-01-1992.
19
"Onshore Rupee Bonds" issued by multilateral institutions like the Asian Development Bank and the
International Finance Corporation declared as 'securities' vide Gazette Notification No. S. O. 1978 (E) F. No.
1/45/EM/2013, dated 01.08.2014.
20
21
Substituted by the Depositories Act, 1996, Sec 30 and Schedule, Pt. III, 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 therefor 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 therefor 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;’
22
Substituted by the Securities Laws (Amendment) Act, 2004, Sec 2, w.r.e.f. 12-10-2004. Prior to its
substitution, clause (j) read as under:—
‘(j) “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.’
(b) a body corporate incorporated under the Companies Act, 1956 (1 of 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.]
23
[(k) "transferable specific delivery contract" means a specific delivery contract which is not a
non-transferable specific delivery contract and which is subject to such conditions relating
to its transferability as the Central Government may by notification in the Official Gazette,
specify in this behalf. ]
24
[Interpretation of certain words and expressions.
2A. 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.]
RECOGNISED STOCK EXCHANGES

Application for recognition of stock exchanges.
3. (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. 25
(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 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 authorised representatives and clerks.
Grant of recognition to stock exchanges.

4. (1) If the Central Government 26 is satisfied, 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
23
24
25
Powers are exercisable by SEBI also vide S. O. 672 (E), Dated 13-09-1994, published in the Gazette of India,
Extra., Pt. II, Section 3 (ii), Dated 13-09-1994.
26
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.
(2) The conditions which the Central Government27 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 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.
(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 as of
the stock exchange is situate, and such recognition shall have effect as from the date of its
publication in the Gazette of India.28
(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. 29
(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. 30
31[Corporatisation and demutualisation of stock exchanges.

4A. 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.
27
28
29
30
31
Inserted by the Securities Laws (Amendment) Act, 2004, Sec 3, w.r.e.f. 12-10-2004.
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.]
32[Procedure for corporatisation and demutualisation.
4B. (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 reognised 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;
32
(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 33, 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.]
Withdrawal of recognition.
5. 34[(1)] If the Central Government35 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.
36
[(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.]
33
See Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012, w.e.f. 20-
06-2012 notified vide Gazette Notification No. LAD-NRO/GN/2012-13/07/13546, Extra., Pt. III, Section 4, dtd 20-
06-2012.
34
Section 5 renumbered as sub-section (1) by the Securities Laws (Amendment) Act, 2004, Sec 4, w.r.e.f. 12-10-
2004.
35
36
Power of Central Government to call for periodical returns or direct inquiries to be made.
6. (1) Every recognised stock exchange shall furnish to the 37[Securities and Exchange Board of
India] 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 38[by the Securities and Exchange Board of India].
(3) Without prejudice to the provisions contained in sub-sections (1) and (2), the
39
[Securities and Exchange Board of India], if it is satisfied that it is in the interest of the trade or
in the public interest so to do, may, by 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 40[Securities and Exchange Board of India] 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 of
such inquiry to the 41[Securities and Exchange Board of India] 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 42[Securities and Exchange Board of India].
(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 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
37
Substituted for "Central Government" by Securities and Exchange Board of India Act, 1992, Sec 33 and Schedule,
Pt II, w.r.e.f. 30-01-1992.
38
Substituted for "by the Central Government" by Securities and Exchange Board of India Act, 1992, Sec 33 and
Schedule, Pt II, w.r.e.f. 30-01-1992.
39
Substituted for "Central Government" by the Securities and Exchange Board of India Act, 1992, Sec 33 and
40
41
42
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.
43Annual reports to be furnished to Central Government by stock exchanges.
7. 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.
44[Power of recognised stock exchange to make rules restricting voting rights, etc.
7A. (1) 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;
(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).
(2) No rules of a recognised stock exchange made or amended in relation to any matter referred
to in clauses (a) to (d) of sub-section (1) shall have effect until they have been approved by the
Central Government45 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, 1956 (1 of 1956).]
Power of Central Government46 to direct rules to be made or to make rules.

8. (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 of 47[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
43
44
Inserted by Securities Contracts (Regulation) Amendment Act, 1959 (Act No. 49 of 1959), Sec 2, w.e.f. 08-12-
1959.
45
46
47
Substituted for “six months” by the Securities Laws (Amendment) Act, 1995, Sec 19, w.e.f. 25-01-1995.
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 (1 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.
48[Clearing corporation.
8A. (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 the 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.]
Power of recognised stock exchanges to make bye-laws.
9. (1) Any recognised stock exchange may, subject to the previous approval of the 49[Securities
and Exchange Board of India], make bye-laws for the regulation and control of contracts.
(2) 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;
48
49
(c) the submission to the 50[Securities and Exchange Board of India] by the clearing house as
soon as may be after each periodical settlement of all or any of the following particulars as
the 51[Securities and Exchange Board of India] may, from time to time, require, namely:—
(i) the total number of each category of security carried over from one settlement period
to another;
(ii) the total number of each category of security, contracts in respect of which have been
squared up during the course of each settlement period;
(iii) the total number of each category of security actually delivered at each clearing;
(d) the publication by the clearing house of all or any of the particulars submitted to the
52
[Securities and Exchange Board of India] under clause (c) subject to the directions, if
any, issued by the 53[Securities and Exchange Board of India] in this behalf;
(e) the regulation or prohibition of blank transfers;
(f) the number and classes of contracts in respect of which settlements shall be made or
differences paid through the clearing house;
(g) the regulation, or prohibition of budlas or carry-over facilities; (h) the fixing, altering or
postponing of days for settlements;
(i) the determination and declaration of market rates, including the opening, closing highest
and lowest rates for securities;
(j) the terms, conditions and 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, rescission and termination, of
contracts, including contracts between members or between a member 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 buyer or 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 taravani business including the placing of limitations thereon;
(m) 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;
(n) the method and procedure for the settlement of claims or disputes, including settlement by
arbitration;
(o) the levy and recovery of fees, fines and penalties;
(p) the regulation of the course of business between parties to contracts in any capacity;
(q) the fixing of a scale of brokerage and other charges;
(r) the making, comparing, settling and closing of bargains;
50
51
52
53
(s) the emergencies in trade which may arise, whether as a result of pool or syndicated
operations or cornering or otherwise, and the exercise of powers in such emergencies,
including the power to fix maximum and minimum prices for securities;
(t) the regulation of dealings by members for their own account; (u) the separation of the
functions of jobbers and brokers;
(v) the limitations on the volume of trade done by any individual member in exceptional
circumstances;
(w) 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.
(3) The bye-laws made under this section may—
(a) specify the bye-laws the contravention of which shall make a contract entered into
otherwise than in accordance with the bye-laws void under sub-section (1) of section 14;
(b) provide that the contravention of any of the bye-laws shall render the member concerned
liable to one or more of the following punishments, namely:—
(i) fine,
(ii) expulsion from membership,
(iii) suspension from membership for a specified period,
(iv) any other penalty of a like nature not involving the payment of money.
(4) Any bye-laws made under this section shall be subject to such conditions in regard to
previous publication as may be prescribed, and, when approved by the 54[Securities and
Exchange Board of India], shall be published in the Gazette of India and also in the Official
Gazette of the State in which the principal office of the recognised stock exchange is situate, and
shall have effect as from the date of its publication in the Gazette of India:
Provided that if the 55[Securities and Exchange Board of India] is satisfied in any case that in the
interest of the trade or in the public interest any bye-law should be made immediately, it may, by
order in writing specifying the reasons therefor, dispense with the condition of previous
publication.
Power of 56[Securities and Exchange Board of India] to make or amend bye-laws of

recognised stock exchanges.
10. (1) The 57[Securities and Exchange Board of India] may, either on a request in writing
received by it in this behalf from the governing body of a recognised stock exchange or on its
own motion, if it 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 bye-
laws for all or any of the matters specified in section 9 or amend any bye-laws made by such
stock exchange under that section.
54
55
56
57
(2) Where in pursuance of this section 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
the State in which the principal office of the recognised stock exchange is situate, 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 recognised stock exchange concerned.
(3) Notwithstanding anything contained in this section, where the governing body of a
recognised stock exchange objects to any bye-laws made or amended under this section by the
58
[Securities and Exchange Board of India] on its own motion, it may, within 59[two months] of
the publication thereof in the Gazette of India under sub-section (2), apply to the 60[Securities
and Exchange Board of India] for revision thereof, and the 61[Securities and Exchange Board of
India] 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, anywhere any bye-laws so made or
amended are revised as a result of any action taken under this sub-section, the bye-laws so
revised shall be published and shall become effective as provided in sub-section (2).
(4) The making or the amendment or revision of any bye-laws under this section shall in all
cases be subject to the condition of previous publication :
Provided that if the 62[Securities and Exchange Board of India] is satisfied in any case that in the
interest of the trade or in the public interest any bye-laws should be made, amended or revised
immediately, it may, by order in writing specifying the reasons therefor, dispense with the
condition of previous publication.
Power of Central Government63 to supersede governing body of a recognised stock
exchange.
11. (1) Without prejudice to any other powers vested in the Central Government under this Act,
where the Central Government is of opinion that the governing body of any recognised stock
exchange should be superseded, then, notwithstanding anything contained in any other law for
the time being in force, in the Central Government may serve on the governing body a written
notice that the Central Government is considering the supersession of the governing body for the
reasons specified in the notice and after giving an opportunity to the governing body to be heard
in the matter, it may, by notification in the Official Gazette, declare the governing body of such
stock exchange to be superseded, and may appoint any person or persons to exercise and
perform all the powers and duties of the governing body, and, where more persons than one are
appointed, may appoint one of such persons to be the chairman and another to be the vice-
chairman thereof.
(2) On the publication of a notification in the Official Gazette under sub-section (1), the
following consequences shall ensue, namely:—
58
59
Substituted for “six months” by the Securities Laws (Amendment) Act, 1995, Sec 20, w.e.f. 25-01-1995.
60
61
62
63
(a) the members of the governing body which has been superseded shall, as from the date of
the notification of supersession, cease to hold office as such members;
(b) the person or persons appointed under sub-section (1) may exercise and perform all the
powers and duties of the governing body which has been superseded;
(c) all such property of the recognised stock exchange as the person or persons appointed
under sub-section (1) may, by order in writing, specify in this behalf as being necessary
for the purpose of enabling him or them to carry on the business of the stock exchange,
shall vest in such person or persons.
(3) Notwithstanding anything to the contrary contained in any law or the rules or bye-laws of the
recognised stock exchange the governing body of which is superseded under sub-section (1), the
person or persons appointed under that sub-section shall hold office for such period as may be
specified in the notification published under that sub-section and the Central Government may
from time to time, by like notification, vary such period.
(4) The Central Government may at any time before the determination of the period of office of
any person or persons appointed under this section call upon the recognised stock exchange to
re-constitute the governing body in accordance with its rules and on such re-constitution all the
property of the recognised stock exchange which has vested in, or was in the possession of, the
person or persons appointed under sub-section (1), shall re-vest or vest, as the case may be, in
the governing body so re-constituted:
Provided that until a governing body is so re-constituted, the person or persons appointed under
sub-section (1) shall continue to exercise and perform their powers and duties.
Power to suspend business of recognised stock exchanges. 64

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, 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 :
Provided that 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
65
[recognised stock exchange] has been given an opportunity of being heard in the matter.
66[Power to issue directions.
12A. 67[(1)]If, after making or causing to be made an inquiry, the Securities and Exchange
Board of India is satisfied that it is necessary—
(a) in the interest of investors, or orderly development of securities market; or
(b) to prevent the affairs of any recognised stock exchange or clearing corporation, or such
other agency or person, providing trading or clearing or settlement facility in respect of
securities, being conducted in a manner detrimental to the interests of investors or
64
65
Substituted by the Repealing and Amending Act, 1974 (Act No. 56 of 1974), Sec 3 and Sch II, for "recognized
association" w.e.f. 20-12-1974.
66
67
Renumbered by the Finance Act, 2018 w.e.f. 08-03-2019.
securities market; or
(c) to secure the proper management of any such stock exchange or clearing corporation or
agency or person, referred to in clause (b),
it may issue such directions,—
(i) to any stock exchange or clearing corporation or agency or person referred to in clause (b)
or any person or class of persons associated with the securities market; or
(ii) to any company whose securities are listed or proposed to be listed in a recognised stock
exchange,
as may be appropriate in the interests of investors in securities and the securities market.]
68
[Explanation. — For the removal of doubts, it is hereby declared that power to issue directions
under this section shall include and always be deemed to have been included the power to direct
any person, who made profit or averted loss by indulging in any transaction or activity in
contravention of the provisions of this Act or regulations made thereunder, to disgorge an
amount equivalent to the wrongful gain made or loss averted by such contravention.]
69
[(2) Without prejudice to the provisions of sub-section (1) and section 23-I, the Securities and
Exchange Board of India may, by an order, for reasons to be recorded in writing, levy penalty
under sections 23A, 23B, 23C, 23D, 23E, 23F, 23G, 23GA and 23H after holding an inquiry in
the prescribed manner.]
CONTRACTS AND OPTIONS IN SECURITIES

Contracts in notified areas illegal in certain circumstances.
13. If the Central Government70 is satisfied, having regard to the nature or the volume of
transactions in securities in any 71[State or States or area] that it is necessary so to do, it may, by
notification in the Official Gazette, declared this section to apply to such 72[State or States or
area], and thereupon every contract in such 73[State or States or area] which is entered into after
the date of the notification otherwise than 74[between members of a recognised stock exchange
or recognised stock exchanges] in such 75[State or States or area] or through or with such
member shall be illegal :
76[Provided that any contract entered into between members of two or more recognised stock
exchanges in such State or States or area, shall—
(i) be subject to such terms and conditions as may be stipulated by the respective stock
exchanges with prior approval of Securities and Exchange Board of India;
(ii) require prior permission from the respective stock exchanges if so stipulated by the stock
exchanges with prior approval of Securities and Exchange Board of India.]
68
Inserted by the Securities Laws (Amendment) Act, 2014, w.r.e.f. 18-07-2013.
69
Inserted by the Finance Act, 2018 w.e.f. 08-03-2019.
70
71
Substituted for “State or area” by the Securities Laws (Amendment) Act, 2004, Sec 7, w.r.e.f. 12-10-2004.
72
Substituted for “State or area” by the Securities Laws (Amendment) Act, 2004, Sec 7, w.r.e.f. 12-10- 2004.
73
74
Substituted by the Securities Laws (Amendment) Act, 2004, Sec 7, w.r.e.f. 12- 10-2004 for "between members of
a recognised stock exchange".
75
76
77
[Additional trading floor.
13A. A stock exchange may establish additional trading floor with the prior approval of the
Securities and Exchange Board of India in accordance with the terms and conditions stipulated
by the said Board.
Explanation: For the purposes of this section, “additional trading floor” means a trading ring or
trading facility offered by a recognised stock exchange outside its area of operation to enable the
investors to buy and sell securities through such trading floor under the regulatory framework of
that stock exchange.]
Contracts in notified areas to be void in certain circumstances.

14. (1) Any contract entered into in any State or area specified in the notification under section
13 which is in contravention of any of the bye-laws specified in that behalf under clause (a) of
sub-section (3) of section 9 shall be void:
(i) as respects the rights of any member of the recognised stock exchange who has entered
into such contract in contravention of any such bye-law, and also
(ii) as respects the rights of any other person who has knowingly participated in the transaction
entailing such contravention.
(2) Nothing in sub-section (1) shall be construed to affect the right of any person other than a
member of the recognised stock exchange to enforce any such contract or to recover any sum
under or in respect of such contract if such person had no knowledge that the transaction was in
contravention of any of the bye-laws specified in clause (a) of sub-section (3) of section 9.
Members may not act as principals in certain circumstances.

15. No member of a recognised stock exchange shall in respect of any securities enter into any
contract as a principal with any person other than a member of a recognised stock exchange,
unless he has secured the consent or authority of such person and discloses in the note,
memorandum or agreement of sale or purchase that he is acting as a principal:
Provided that where the member has secured the consent or authority of such person otherwise
than in writing he shall secure written confirmation by such person or such consent or authority
within three days from the date of the contract:
Provided further that no such written consent or authority of such person shall be necessary for
closing out any outstanding contract entered into by such person in accordance with the bye-
laws, if the member discloses in the note, memorandum or agreement of sale or purchase in
respect of such closing out that he is acting as a principal.
Power to prohibit contracts in certain cases. 78
16. (1) 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
77
Inserted by the Securities Laws (Amendment) Act, 1995, Sec 21, w.e.f. 25-01-1995.
78
Extra., Pt. II, Section 3 (ii), Dated 30-07-1992. Powers are exercisable by RBI also vide Government of India
Notification No. 183 (E), Dated 01-03-2000 in relation to any contracts in government securities, money market
securities etc.
security specified in the notification except to the extent and in the manner, if any, specified
therein.
(2) All contracts in contravention of the provisions of sub-section (1) entered into after the date
of notification issued thereunder shall be illegal.
Licensing of dealers in securities in certain areas.

17. (1) Subject to the provisions of sub-section (3) and to the other provisions contained in this
Act, no person shall carry on or purport to carry on, whether on his own behalf or on behalf of
any other person, the business of dealing in securities in any State or area to which section 13
has not been declared to apply and to which the Central Government may, by notification in the
Official Gazette, declare this section to apply, except under the authority of a 79[licence granted
by the Securities and Exchange Board of India] in this behalf.
(2) No notification under sub-section (1) shall be issued with respect to any State or area unless
the Central Government is satisfied, having regard to the manner in which securities are being
dealt with in such State or area, that it is desirable or expedient in the interest of the trade or in
the public interest that such dealings should be regulated by a system of licensing.
(3) The restrictions imposed by sub-section (1) in relation to dealings in securities shall not
apply to the doing of anything by or on behalf of a member of any recognised stock exchange.
80[Public issue and listing of securities referred to in sub-clause (ie) of clause (h) of section
2.
17A. (1) Without prejudice to the provisions contained in this Act or any other law for the time
being in force, no securities of the nature referred to in sub-clause (ie) of clause (h) of section 2
shall be offered to the public or listed on any recognised stock exchange unless the issuer fulfils
such eligibility criteria and complies with such other requirements as may be specified by
regulations made by the Securities and Exchange Board of India.
(2) Every issuer referred to in sub-clause (ie) of clause (h) of section 2 intending to offer the
certificates or instruments referred therein to the public shall make an application, before issuing
the offer document to the public, to one or more recognised stock exchanges for permission for
such certificates or instruments to be listed on the stock exchange or each such stock exchange.
(3) Where the permission applied for under sub-section (2) for listing has not been granted or
refused by the recognised stock exchanges or any of them, the issuer shall forthwith repay all
moneys, if any, received from applicants in pursuance of the offer document, and if any such
money is not repaid within eight days after the issuer becomes liable to repay it, the issuer and
every director or trustee thereof, as the case may be, who is in default shall, on and from the
expiry of the eighth day, be jointly and severally liable to repay that money with interest at the
rate of fifteen per cent per annum.
Explanation.—In reckoning the eighth day after another day, any intervening day which is a
public holiday under the Negotiable Instruments Act, 1881 (26 of 1881), shall be disregarded,
and if the eighth day (as so reckoned) is itself such a public holiday, there shall for the said
purposes be substituted the first day thereafter which is not a holiday.
(4) All the provisions of this Act relating to listing of securities of a public company on a
79
Substituted by the Securities and Exchange Board of India Act, 1992, Sec 33 and Schedule, Pt II, w.r.e.f. 30-01-
1992 for "licence granted by the Central Government".
80
Inserted by the Securities Contracts (Regulation) Amendment Act, 2007, Sec 3, w.e.f. 28-05-2007.
recognised stock exchange shall, mutatis mutandis, apply to the listing of the securities of the
nature referred to in sub-clause (ie) of clause (h) of section 2 by the issuer, being a special
purpose distinct entity.]
Exclusion of spot delivery contracts from sections 13, 14, 15 and 17.
18. (1) Nothing contained in sections 13, 14, 15 and 17 shall apply to spot delivery contracts.
(2) Notwithstanding anything contained in sub-section (1), if the Central Government 81 is of
opinion that in the interest of the trade or in the public interest it is expedient to regulate and
control the business of dealing in spot delivery contracts also in any State or area (whether
section 13 has been declared to apply to that State or area or not), it may, by notification in the
Official Gazette, declare that the provisions of section 17 shall also apply to such State or area in
respect of spot delivery contracts generally or in respect of spot delivery contracts for the sale or
purchase of such securities as may be specified in the notification, and may also specify the
manner in which, and the extent to which, the provisions of that section shall so apply.
82
[Contracts in derivative.
18A. Notwithstanding anything contained in any other law for the time being in force, contracts
in derivative shall be legal and valid if such contracts are—
(a) traded on a recognised stock exchange;
(b) settled on the clearing house of the recognised 83[stock exchange; or]
in accordance with the rules and bye-laws of such stock exchange.]
84
[(c) between such parties and on such terms as the Central Government may, by notification in
the Official Gazette, specify,]
Stock exchanges other than recognised stock exchanges prohibited.

19. (1) No person shall, except with the permission of the Central Government, organise or assist
in organising or be a member of any stock exchange (other than a recognised stock exchange)
for the purpose of assisting in, entering into or performing any contracts in securities.
(2) This section shall come into force in any State or area on such date as the Central
Government may, by notification in the Official Gazette, appoint.
Prohibition of options in securities.

20. 85[*****]
81
82
83
Substituted for "stock exchange," by the Part II of Chapter VIII of the Finance Act 2015, w.e.f. 28.09.2015 vide
Gazette Notification F. No. 1/9/SM/2015, Extraordinary, Pt. II, Sec. 3, Sub-section (ii) dtd 28.08.2015.
84
Inserted by the Part II of Chapter VIII of the Finance Act 2015, w.e.f. 28.09.2015 vide Gazette Notification F. No.
1/9/SM/2015, Extraordinary, Pt. II, Sec. 3, Sub-section (ii) dtd 28.08.2015. Section 134 of the Finance Act, 2015
states: “In section 18A of the Securities Contracts Act,—
(i) in clause (b), for the words "stock exchange,", the words ''stock exchange; or" shall be substituted;
(ii) after clause (b) as so amended, and after the long line, the following clause shall be inserted, namely:—
"(c) between such parties and on such terms as the Central Government may, by notification in the Official
Gazette, specify,".
85
Omitted by the Securities Laws (Amendment) Act, 1995, Sec 22, w.e.f. 25-01-1995. Prior to omission, section 20
read as under :
LISTING OF SECURITIES 86[***]
87
[Conditions for listing.
21. Where securities are listed on the application of any person in any recognised stock
exchange, such person shall comply with the conditions of the listing agreement with that stock
exchange.]
88[Delisting of securities.
21A. (1) A recognised stock exchange may delist the securities, after recording the reasons
therefor, from any recognised stock exchange on any of the ground or grounds as may be
prescribed under this Act :
Provided that the securities of a company shall not be delisted unless the company concerned has
been given a reasonable opportunity of being heard.
(2) A listed company or an aggrieved investor may file an appeal before the Securities Appellate
Tribunal against the decision of the recognised stock exchange delisting the securities within
fifteen days from the date of the decision of the recognised stock exchange delisting the
securities and the provisions of sections 22B to 22E of this Act, shall apply, as far as may be, to
such appeals:
Provided that the Securities Appellate Tribunal may, if it is satisfied that the company was
prevented by sufficient cause from filing the appeal within the said period, allow it to be filed
within a further period not exceeding one month.]
89[Right of appeal against refusal of stock exchanges to list securities of public companies.
9022. Where a recognised stock exchange acting in pursuance of any power given to it by its bye-
laws, refuses to list the securities of any public company 91[or collective investment scheme], the
company 92[or scheme] shall be entitled to be furnished with reasons for such refusal, and
may,—
(a) within fifteen days from the date on which the reasons for such refusal are furnished to it,
or
“20. Prohibition. of options in securities.—(1) Notwithstanding anything contained in this Act or in any other law
for the time being in force, all options in securities entered into after the commencement of this Act shall be
illegal.
(2) Any option in securities which has been entered into before such commencement and which remains to be
performed, whether wholly or in part, after such commencement shall, to that extent, become void.“
86
Words “By Public Companies” omitted by the Securities Laws (Amendment) Act, 1999, Sec 4, w.e.f.
22-02-2000.
87
Substituted by the Securities Laws (Amendment) Act, 1995, Sec 33, w.e.f. 25-01-1995. Prior to substitution,
section 21 read as under:
“21. Power to compel listing of securities by public companies.—Notwithstanding anything contained in any other
law for the time being in force, if the Securities and Exchange Board of India is of opinion, having regard to the
nature of the securities issued by any public company as defined in the Companies Act, 1956 (1 of 1956), or to the
dealings in them, that it is necessary or expedient in the interest of the trade or in the public interest so to do, it
may require the company, after giving it an opportunity of being heard in the matter, to comply with such
requirements as may be prescribed with respect to the listing of its securities on any recognised stock exchange.”
88
89
Substituted by The Companies (Amendment) Act, 1974 (Act No. 41 of 1974), Sec 42, w.e.f. 01-02-1975.
90
91
Inserted by the Securities Laws (Amendment) Act, 1999, Sec 5, w.e.f. 22-02-2000.; Substituted by The Repealing
and Amending Act, 1974 (Act No. 56 of 1974), Sec 3 and Sch II, for "recognized association" w.e.f. 20-12-1974.
92
(b) where the stock exchange has omitted or failed to dispose of, within the time specified in
sub-section (1) of section 73 of the Companies Act, 1956 (1 of 1956)
(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]:
93
[Provided that 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.]
94[Right of appeal to Securities Appellate Tribunal against refusal of stock exchange to list
securities of public companies.
22A. (1) Where a recognised 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, and may,—
(a) within fifteen 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
sub-section (1A) of section 73 of the Companies Act, 1956 (1 of 1956), (hereafter in this section
referred to as the “specified time”), the application for permission or 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 Securities Appellate Tribunal having jurisdiction in the matter against such refusal,
omission or failure, as the case may be, and thereupon 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 Securities Appellate Tribunal 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 Securities Appellate Tribunal.
93
94
Sections 22A, 22B, 22C, 22D, 22E and 22F inserted by the Securities Laws (Second Amendment) Act, 1999, Sec 5,
w.e.f. 16-12-1999. Earlier section 22A was inserted by the Securities Contracts (Regulation) Amendment Act, 1985
(Act No. 40 of 1985), Sec 2, w.e.f. 17-01-1986, and omitted by the Depositories Act, 1996, Sec 30 and Sch., Pt.III,
w.r.e.f. 20-09-1995.
(2) Every appeal under sub-section (1) shall be in such form and be accompanied by such fee as
may be prescribed.
(3) The Securities Appellate Tribunal shall send a copy of every order made by it to the Board
and parties to the appeal.
(4) The appeal filed before the Securities Appellate Tribunal under sub-section (1) 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.]
95[Procedure and powers of Securities Appellate Tribunal.
22B. (1) The Securities Appellate Tribunal shall not be bound by the procedure laid down by the
Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural
justice and, subject to the other provisions of this Act and of any rules, the Securities Appellate
Tribunal shall have powers to regulate their own procedure including the places at which they
shall have their sittings.
(2) The Securities Appellate Tribunal shall have, for the purpose of discharging their functions
under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure,
1908 (5 of 1908), while trying a suit, in respect of the following matters, namely :—
(a) summoning and enforcing the attendance of any person and examining him on oath ;
(b) requiring the discovery and production of documents; (c) receiving evidence on affidavits;
(d) issuing commissions for the examination of witnesses or documents; (e) reviewing its
decisions;
(f) dismissing an application for default or deciding it ex parte;
(g) setting aside any order of dismissal of any application for default or any order passed by it
ex parte; and
(h) any other matter which may be prescribed.
(3) Every proceeding before the Securities Appellate Tribunal shall be deemed to be a judicial
proceeding within the meaning of sections 193 and 228, and for the purposes of section 196 of
the Indian Penal Code (45 of 1860) and the Securities Appellate Tribunal shall be deemed to be
a civil court for all the purposes of section 195 and Chapter XXVI of the Code of Criminal
Procedure, 1973 (2 of 1974).]
96[Right to legal representation.
22C. The appellant may either appear in person or authorise one or more chartered accountants
or company secretaries or cost accountants or legal practitioners or any of its officers to present
his or its case before the Securities Appellate Tribunal.
Explanation.—For the purposes of this section,—
(a) “chartered accountant” means a chartered accountant as defined in clause b)of sub-section
(1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has
obtained a certificate of practice under sub-section (1) of section 6 of that Act;
(b) “company secretary” means a company secretary as defined in clause (c) of sub- section
(1) of section 2 of the Company Secretaries Act, 1980 (56 of 1980) and who has obtained
a certificate of practice under sub-section (1) of section 6 of that Act;
95
96
(c) “cost accountant” means a cost accountant as defined in clause (b)of sub section (1) of
section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959) and who has obtained a
certificate of practice under sub-section (1) of section 6 of that Act;
(d) “legal practitioner” means an advocate, vakil or an attorney of any High Court, and
includes a pleader in practice.]
97[Limitation.
22D. The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be, apply to an
appeal made to a Securities Appellate Tribunal.]
98[Civil court not to have jurisdiction.

22E. No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any
matter which a Securities Appellate Tribunal is empowered by or under this Act to determine
and no injunction shall be granted by any court or other authority in respect of any action taken
or to be taken in pursuance of any power conferred by or under this Act.]
99[Appeal to Supreme Court.

22F. Any person aggrieved by any decision or order of the Securities Appellate Tribunal may
file an appeal to the Supreme Court within sixty days from the date of communication of the
decision or order of the Securities Appellate Tribunal to him on any question of law arising out
of such order:
Provided that the Supreme Court may, if it is satisfied that the appellant was prevented by
sufficient cause from filing the appeal within the said period, allow it to be filed within a further
period not exceeding sixty days.]
PENALTIES AND PROCEDURE

Penalties.
23. (1) Any person who-
(a) without reasonable excuse (the burden of proving which shall be on him) fails to comply
with any requisition made under sub-section (4) of section 6; or
(b) enters into any contract in contravention of any of the provisions contained in section 13 or
section 16; or
(c) contravenes the provisions contained in 100[section 17 or section 17A], or section 19; or
101
[(d) enters into any contract in derivative in contravention of section 18A or the rules made
97
98
99
Substituted by the Securities Laws (Amendment) Act, 2004, Sec 9, w.r.e.f. 12-10-2004. Earlier section 22F as
inserted by the Securities Laws (Second Amendment) Act, 1999, Sec 5, read as under:-
“22F. Appeal to High Court.-Any person aggrieved by any decision or order of the Securities Appellate Tribunal
may file an appeal to the High Court within sixty days from the date of communication of the decision or order of
the Securities Appellate Tribunal to him on any question of fact or law arising out of such order :
Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing
the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.”
100
Inserted by the Securities Contracts (Regulation) Amendment Act, 2007, Sec 4, w.e.f. 28-05-2007 for "section
17".
under section 30;]
(e) owns or keeps a place other than that of a recognised stock exchange which is used for the
purpose of entering into or performing any contracts in contravention of any of the
provisions of this Act and knowingly permits such place to be used for such purposes; or
(f) manages, controls, or assists in keeping any place other than that of a recognised stock
exchange which is used for the purpose of entering into or performing any contracts in
contravention of any of the provisions of this Act or at which contracts are recorded or
adjusted or rights or liabilities arising out of contracts are adjusted, regulated or enforced
in any manner whatsoever; or
(g) not being a member of a recognised stock exchange or his agent authorised as such under
the rules or bye-laws of such stock exchange or not being a dealer in securities licensed
under section 17 wilfully represents to or induces any person to believe that contracts can
be entered into or performed under this Act through him; or
(h) not being a member of a recognised stock exchange or his agent authorised as such under
the rules or bye-laws of such stock exchange or not being a dealer in securities licensed
under section 17, canvasses, advertises or touts in any manner either for himself or on
behalf of any other persons for any business connected with contracts in contravention of
any of the provisions of this Act; or
(i) joins, gathers or assists in gathering at any place other than the place of business specified
in the bye-laws of a recognised stock exchange any person or persons for making bids or
offers or for entering into or performing any contracts in contravention of any of the
provisions of this Act;
102
[shall, without prejudice to any award of penalty by the Adjudicating Officer 103[or the
Securities and Exchange Board of India] under this Act, 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.]
(2) Any person who enters into any contract in contravention of the provisions contained in
section 15 104[or who fails to comply with the provisions of 105[section 21 or section 21A] or
with the orders of] or section 22 106[or with the orders of the Securities Appellate Tribunal]
107
[shall, without prejudice to any award of penalty by the Adjudicating Officer under this Act,
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.]
101
Inserted by the Securities Laws (Amendment) Act, 1999, Sec 6, w.e.f. 22-02-2000. Earlier clause (d) was omitted
by the Securities Laws (Amendment) Act, 1995, Sec 24, w.e.f. 25-01-1995.
102
Substituted for “shall, on conviction, be punishable with imprisonment for a term which may extend to one
year, or with fine, or with both” by the Securities Laws (Amendment) Act, 2004, Sec 10, w.r.e.f. 12-10- 2004.
103
104
Substituted for “or who fails to comply with the orders of the Securities and Exchange Board of India under
Section 21” by the Securities Laws (Amendment) Act 1995, Sec 24 w.e.f.25-01-1995.Prior to 1995, "Securities and
Exchange Board of India under section 21 or Central Government under section 22" were substitutes for “Central
Government under Section 21 or section 22” vide The Schedule, Part II of Securities and Exchange Board of India
Act, 1992, w.e.f. 30-01-1992.
105
106
107
Substituted for “shall, on conviction, be punishable with fine which may extend to one thousand rupees” by the
Securities Laws (Amendment) Act, 2004, Sec 10, w.r.e.f. 12-10-2004.
108[Penalty
for failure to furnish information, return, etc.
23A. Any person, who is required under this Act or any rules made thereunder,—
(a) to furnish any information, document, books, returns or 109[report to the recongnised stock
exchange or to the Board, fails to furnish the same within the time specified therefor in the
listing agreement or conditions or bye-laws of the recongnised stock exchange or the Act
or rules made thereunder, or who furnishes] 110[*** false, incorrect or incomplete
information, document, books, return or report], shall be liable to a penalty 111[which shall
not be less than one lakh rupees but which may extend to one lakh rupees for each day
during which such failure continues subject to a maximum of one crore rupees] 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
112
[which shall not be less than one lakh rupees but which may extend to one lakh rupees
for each day during which such failure continues subject to a maximum of one crore
rupees.]
113[Penaltyfor failure by any person to enter into an agreement with clients.

23B. If any person, who is required under this Act or any bye-laws of a recognised stock
exchange made thereunder, to enter into an agreement with his client, fails to enter into such an
agreement, he shall be liable to a penalty 114[which shall not be less than one lakh rupees but
which may extend to one lakh rupees for each day during which such failure continues subject to
a maximum of one crore rupees] for every such failure.]
115[Penalty for failure to redress investors’ grievances.

23C. If any stock broker or sub-broker or a company whose securities are listed or proposed to
be listed in a recognised stock exchange, after having been called upon by the Securities and
Exchange Board of India or a recognised stock exchange in writing, to redress the grievances of
the investors, fails to redress such grievances within the time stipulated by the Securities and
Exchange Board of India or a recognised stock exchange, he or it shall be liable to a penalty
116
[which shall not be less than one lakh rupees but which may extend to one lakh rupees for
each day during which such failure continues subject to a maximum of one crore rupees.]
108
109
Substituted for the words “report to a recognised stock exchange, 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 who
furnishes”, by the Finance (No. 2) Act, 2019 w.e.f. 20-01-2020.
110
111
Substituted for the words "‘of one lakh rupees for each day during which such failure continues or one crore
rupees, whichever is less" by the Securities Laws (Amendment) Act, 2014, w.e.f 08-09-2014.
112
Substituted for the words "‘of one lakh rupees for each day during which such failure continues or one crore
113
114
Substituted for the words "of one lakh rupees for each day during which such failure continues or one crore
115
116
Substituted for the words "of one lakh rupees for each day during which such failure continues or one crore
117[Penalty for failure to segregate securities or moneys of client or clients.
23D. If any person, who is registered under section 12 of the Securities and Exchange Board of
India Act, 1992 (15 of 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 118[liable to a penalty which shall not be less than one lakh rupees
but which may extend to one crore rupees.]
119[Penaltyfor failure to comply with provision of listing conditions or delisting conditions

or grounds.
23E. If a company or any person managing collective investment scheme or mutual fund 120[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 121[liable to a penalty which shall not be less than five lakh rupees but
which may extend to twenty-five crore rupees.]
122[Penalty for excess dematerialisation or delivery of unlisted securities.

23F. If any issuer dematerialises securities more than the issued securities of a company or
delivers in the stock exchanges the securities which are not listed in the recognised stock
exchange or delivers securities where no trading permission has been given by the recognised
stock exchange, he shall be 123[liable to a penalty which shall not be less than five lakh rupees
but which may extend to twenty-five crore rupees.]
124[Penalty for failure to furnish periodical returns, etc.

23G. If a recognised stock exchange fails or neglects to furnish periodical returns 125[or
furnishes false, incorrect or incomplete periodical returns] to the Securities and Exchange Board
of India or fails or neglects to make or amend its rules or bye-laws as directed by the Securities
and Exchange Board of India or fails to comply with directions issued by the Securities and
Exchange Board of India, such recognised stock exchange shall be 126[liable to a penalty which
shall not be less than five lakh rupees but which may extend to twenty-five crore rupees.]
127
[Penalty for failure to conduct business in accordance with rules, etc.
23GA. Where a stock exchange or a clearing corporation fails to conduct its business with its
members or any issuer or its agent or any person associated with the securities markets in
accordance with the rules or regulations made by the Securities and Exchange Board of India
and the directions issued by it under this Act, the stock exchange or the clearing corporations, as
117
118
Substituted for the words "liable to a penalty not exceeding one crore rupees" by the Securities Laws
(Amendment) Act, 2014, w.e.f 08-09-2014.
119
120
121
Substituted for the words "liable to a penalty not exceeding twenty-five crore rupees" by the Securities Laws
122
123
124
125
126
127
the case may be, shall be liable to penalty which shall not be less than five crore rupees but
which may extend to twenty-five crore rupees or three times the amount of gains made out of
such failure, whichever is higher.]
128
[Penalty for contravention where no separate penalty has been provided.
23H. Whoever fails to comply with any provision of this Act, the rules or articles or bye- laws or
the regulations of the recognised stock exchange or directions issued by the Securities and
Exchange Board of India for which no separate penalty has been provided, shall be 129[liable to a
penalty which shall not be less than one lakh rupees but which may extend to one crore rupees.]
130[Power to adjudicate.
23-I. (1) For the purpose of adjudging under sections 23A, 23B, 23C, 23D, 23E, 23F, 23G and
23H, the Securities and Exchange Board of India 131[may] appoint any officer not below the rank
of a Division Chief of the Securities and Exchange Board of India to be an adjudicating officer
for holding an inquiry in the prescribed manner after giving any person concerned a reasonable
opportunity of being heard for the purpose of imposing any penalty.
(2) While holding an inquiry, the adjudicating officer shall have power to summon and enforce
the attendance of any person acquainted with the facts and circumstances of the case to give
evidence or to produce any document, which in the opinion of the adjudicating officer, may be
useful for or relevant to the subject-matter of the inquiry and if, on such inquiry, he is satisfied
that the person has failed to comply with the provisions of any of the sections specified in sub-
section (1), he may impose such penalty as he thinks fit in accordance with the provisions of any
of those sections.
132
[(3) The Board may call for and examine the record of any proceedings under this section and
if it considers that the order passed by the adjudicating officer is erroneous to the extent it is not
in the interests of the securities market, it may, after making or causing to be made such inquiry
as it deems necessary, pass an order enhancing the quantum of penalty, if the circumstances of
the case so justify:
Provided that no such order shall be passed unless the person concerned has been given an
opportunity of being heard in the matter:
Provided further that nothing contained in this sub-section shall be applicable after an expiry of a
period of three months from the date of the order passed by the adjudicating officer or disposal
of the appeal under section 23L, whichever is earlier.]
133[ 134[
Factors to be taken into account while adjudging quantum of penalty.]
23J. While adjudging the quantum of penalty under 135[section 12A or section 23-I], the 136[ the
Securities and Exchange Board of India or the adjudicating officer] shall have due regard to the
following factors, namely:—
128
129
Substituted for the words "liable to a penalty which may extend to one crore rupees" by the Securities Laws
130
131
Substituted for the word " shall" by the Finance Act, 2018 w.e.f. 08-03-2019.
132
133
134
Substituted for the words " Factors to be taken into account by adjudicating officer." by the Finance Act, 2018
w.e.f. 08-03-2019.
135
Substituted for the word, figures and letter "section 23-I" by the Finance Act, 2018 w.e.f. 08-03-2019.
136
Substituted for the words "adjudicating officer" by the Finance Act, 2018 w.e.f. 08-03-2019.
(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.]
137
[Explanation.—For the removal of doubts, it is clarified that the power of an adjudicating
officer to adjudge the quantum of penalty under sections 23A to 23C shall be and shall always
be deemed to have exercised under the provisions of this section.]
138[Settlement of administrative and civil proceedings.

23JA. (1) Notwithstanding anything contained in any other law for the time being in force, any
person, against whom any proceedings have been initiated or may be initiated under section 12A
or section 23-I, may file an application in writing to the Board proposing for settlement of the
proceedings initiated or to be initiated for the alleged defaults.
(2) The Board may, after taking into consideration the nature, gravity and impact of defaults,
agree to the proposal for settlement, on payment of such sum by the defaulter or on such other
terms as may be determined by the Board in accordance with the regulations made under the
Securities and Exchange Board of India Act, 1992.
(3) For the purposes of settlement under this section, the procedure as specified by the Board
under the Securities and Exchange Board of India Act, 1992 shall apply.
(4) No appeal shall lie under section 23L against any order passed by the Board or the
adjudicating officer, as the case may be, under this section.]
139
[(5) All settlement amounts, excluding the disgorgement amount and legal costs, realised
under this Act shall be credited to the Consolidated Fund of India.]
140[Recovery of amounts.
23JB. (1) If a person fails to pay the penalty imposed 141[ 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
Board, the Recovery Officer may draw up under his signature a statement in the specified form
specifying the amount due from the person (such statement being hereafter in this Chapter
referred to as certificate) 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,
and for this purpose, the provisions of sections 220 to 227, 228A, 229, 232, the Second and
Third Schedules to the Income-tax Act, 1961 and the Income-tax (Certificate Proceedings)
137 Inserted by Part V of Chanpter VI of the Finance Act, 2017, w.e.f. 01.04.2017 vide Gazette Notification No. 7 , Extraordinary, Pt II Section I dated March 31, 2017
138
139
Inserted by the Finance Act, 2018 w.e.f. 08-03-2019
140
141
Substituted for the words "by the adjudicating officer" by the Finance Act, 2018 w.e.f. 08-03-2019.
Rules, 1962, as in force from time to time, in so far as may be, apply with necessary
modifications as if the said provisions and the rules thereunder were the provisions of this Act
and referred to the amount due under this Act instead of to income-tax under the Income-tax
Act, 1961.
Explanation 1.— For the purposes of this sub-section, the person's movable or immovable
property or monies held in bank accounts shall include any property or monies held in bank
accounts which has been transferred, directly or indirectly on or after the date when the amount
specified in certificate had become due, by the person to his spouse or minor child or son's wife
or son's minor child, otherwise than for adequate consideration, and which is held by, or stands
in the name of, any of the persons aforesaid; and so far as the movable or immovable property or
monies held in bank accounts so transferred to his minor child or his son's minor child is
concerned, it shall, even after the date of attainment of majority by such minor child or son's
minor child, as the case may be, continue to be included in the person's movable or immovable
property or monies held in bank accounts for recovering any amount due from the person under
this Act.
Explanation 2. — Any reference under the provisions of the Second and Third Schedules to
the Income-tax Act, 1961 and the Income-tax (Certificate Proceedings) Rules, 1962 to the
assessee shall be construed as a reference to the person specified in the certificate.
Explanation 3.— Any reference to appeal in Chapter XVIID and the Second Schedule to the
Income-tax Act, 1961, shall be construed as a reference to appeal before the Securities Appellate
Tribunal under section 23L of this Act.
(2) The Recovery Officer shall be empowered to seek the assistance of the local district
administration while exercising the powers under sub-section (1).
(3) Notwithstanding anything contained in any other law for the time being in force, the
recovery of amounts by a Recovery Officer under sub-section (1), pursuant to non-compliance
with any direction issued by the Board under section 12A, shall have precedence over any other
claim against such person.
(4) For the purposes of sub-sections (1), (2) and (3), the expression “Recovery Officer” means
any officer of the Board who may be authorised, by general or special order in writing to
exercise the powers of a Recovery Officer.]
142
[Continuance of proceedings.
23JC. (1) Where a person dies, his legal representative shall be liable to pay any sum which the
deceased would have been liable to pay, if he had not died, in the like manner and to the same
extent as the deceased:
Provided that, in case of any penalty payable under this Act, a legal representative shall
be liable only in case the penalty has been imposed before the death of the deceased person.
(2) For the purposes of sub-section (1),—

(a) any proceeding for disgorgement, refund or an action for recovery before the
Recovery Officer under this Act, except a proceeding for levy of penalty, initiated against the
deceased before his death shall be deemed to have been initiated against the legal representative,
and may be continued against the legal representative from the stage at which it stood on the
date of the death of the deceased and all the provisions of this Act shall apply accordingly;
(b) any proceeding for disgorgement, refund or an action for recovery before the
142
Recovery Officer under this Act, except a proceeding for levy of penalty, which could have been
initiated against the deceased if he had survived, may be initiated against the legal representative
and all the provisions of this Act shall apply accordingly.
(3) Every legal representative shall be personally liable for any sum payable by him in
his capacity as legal representative if, while his liability for such sum remains undischarged, he
creates a charge on or disposes of or parts with any assets of the estate of the deceased, which
are in, or may come into, his possession, but such liability shall be limited to the value of the
asset so charged, disposed of or parted with.
(4) The liability of a legal representative under this section shall, be limited to the extent
to which the estate of the deceased is capable of meeting the liability.
Explanation.—For the purposes of this section ‘‘Legal representative” means a person

who in law represents the estate of a deceased person, and includes any person who intermeddles
with the estate of the deceased and where a party sues or is sued in a representative character, the
person on whom the estate devolves on the death of the party so suing or sued.]
143[Crediting sums realised by way of penalties to Consolidated Fund of India.
23K. All sums realised by way of penalties under this Act shall be credited to the Consolidated
Fund of India.]
144[Appeal to Securities Appellate Tribunal.
23L. (1) 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 under
145
[or sub-section (3) of section 23-I], may prefer an appeal before the Securities Appellate
Tribunal and the provisions of sections 22B, 22C, 22D and 22E of this Act, shall apply, as far as
may be, to such appeals.
(2) Every appeal under sub-section (1) 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:
Provided that 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.
(3) On receipt of an appeal under sub-section (1), 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.
(4) The Securities Appellate Tribunal shall send a copy of every order made by it to the parties
to the appeal and to the concerned adjudicating officer.
(5) The appeal filed before the Securities Appellate Tribunal under sub-section (1) 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.]
143
144
145
146[Offences.
23M. (1) Without prejudice to any award of penalty by the adjudicating officer 147[or the
Securities and Exchange Board of India] under this Act, if any person contravenes or attempts to
contravene or abets the contravention of the provisions of this Act or of any rules or regulations
or bye-laws made thereunder, for which no punishment is provided elsewhere in this Act, he
shall 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.
(2) If any person fails to pay the penalty imposed by the adjudicating officer 148[or the Securities
and Exchange Board of India] or fails to comply with 149[the direction or order], he shall be
punishable with imprisonment for a term which shall not be less than one month but which may
extend to ten years, or with fine, which may extend to twenty-five crore rupees, or with both.]
150[Composition of certain offences.
23N. Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),
any offence punishable under this Act, not being an offence punishable with imprisonment only,
or with imprisonment and also with fine, may either before or after the institution of any
proceeding, be compounded by a Securities Appellate Tribunal or a court before which such
proceedings are pending.]
151[Power to grant immunity.
23-O. (1) The Central Government may, on recommendation by the Securities and Exchange
Board of India, if the Central Government is satisfied, that any person, who is alleged to have
violated any of the provisions of this Act or the rules or the regulations made thereunder, has
made a full and true disclosure in respect of alleged violation, grant to such person, subject to
such conditions as it may think fit to impose, immunity from prosecution for any offence under
this Act, 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:
Provided that no such immunity shall be granted by the Central Government in cases where the
proceedings for the prosecution for any such offence have been instituted before the date of
receipt of application for grant of such immunity:
Provided further that the recommendation of the Securities and Exchange Board of India under
this sub-section shall not be binding upon the Central Government.
(2) An immunity granted to a person under sub-section (1) may, at any time, be withdrawn by
the Central Government, if it is satisfied that such person had, in the course of the proceedings,
not complied with the condition on which the immunity was granted or had given false evidence,
and thereupon such person may be tried for the offence with respect to which the immunity was
granted or for any other offence of which he appears to have been guilty in connection with the
contravention and shall also become liable to the imposition of any penalty under this Act to
which such person would have been liable, had not such immunity been granted.]
152[Contravention by companies;]
146
147
148
149
Substituted for the words "any of his directions or orders" by the Finance Act, 2018 w.e.f. 08-03-2019
150
151
152
Substituted for the words "Offences by companies." by the Finance Act, 2018 w.e.f. 08-03-2019.
24. (1) Where 153[a contravention of any of the provisions of this Act or any rule, regulation,
direction or order made thereunder] has been committed by a company, every person who, at the
time when the 154[contravention] was committed, was in charge of, and was responsible to, the
company for the conduct of the business of the company, as well as the company, shall be
deemed to be guilty of the 155[contravention], and shall be liable to be proceeded against and
punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to any
punishment provided in this Act, if he proves that the 156[contravention] was committed without
his knowledge or that he exercised all due diligence to prevent the commission of such
157
[contravention].
(2) Notwithstanding anything contained in sub-section (1), where 158[ a contravention of any of
the provisions of this Act or any rule, regulation, direction or order made thereunder] has been
committed by a company and it is proved that the 159[contravention] has been committed with
the consent or connivance of, or is attributable to any gross negligence on the part of any
director, manager, secretary or other officer of the company, such director, manager, secretary or
other officer of the company, shall also be deemed to be guilty of that 160[contravention] and
shall be liable to be proceeded against and punished accordingly.
Explanation.—For the purpose of this section,—
(a) “company” means any body corporate and includes a firm or other association of
individuals, and
161
[(b) “director”, in relation to -
(i) a firm, means a partner in the firm;
(ii) any association of persons or a body of individuals, means any member controlling
the affairs thereof.]
162
[(3) The provisions of this section shall be in addition to, and not in derogation of, the
provisions of section 22A.]
Certain offences to be cognizable.
25. Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (5 of 1898)163,
any offence punishable under 164[***] section 23 shall be deemed to be a cognizable offence
within the meaning of that Code.
153
Substituted for the words "an offence" by the Finance Act, 2018 w.e.f. 08-03-2019.
154
Substituted for the words "offence" by the Finance Act, 2018 w.e.f. 08-03-2019.
155
Substituted for the words " offence" by the Finance Act, 2018 w.e.f. 08-03-2019.
156
157
158
Substituted for the words " an offence under this Act" by the Finance Act, 2018 w.e.f. 08-03-2019.
159
160
161
Substituted by the Securities Laws (Amendment) Act, 1999, Sec 7, w.e.f. 22-2-2000. Prior to its substitution,
sub-clause (b) read as under:
‘(b) “director”, in relation to a firm, means a partner in the firm'
162
Inserted by The Securities Contracts (Regulation) Amendment Act, 1985 (Act No. 40 of 1985), Sec 3, w.e.f. 17-
01-1986.
163
See now the Code of Criminal Procedure, 1973 (2 of 1974)
164
Words “sub- section (1) of” omitted by the Securities Laws (Amendment) Act, 2004, w.e.f. 12-10-2004.
165
[Cognizance of offences by courts.
26. (1) No court shall take cognizance of any offence punishable under this Act or any rules or
regulations or bye-laws made thereunder, save on a complaint made by the Central Government
or State Government or the Securities and Exchange Board of India or a recognised stock
exchange or by any person.
166[(2)********]
167[Establishmentof Special Courts.

26A. (1) The Central Government may, for the purpose of providing speedy trial of offences
under this Act, by notification, establish or designate as many Special Courts as may be
necessary.
(2) A Special Court shall consist of a single judge who shall be appointed by the Central
Government with the concurrence of the Chief Justice of the High Court within whose
jurisdiction the judge to be appointed is working.
(3) A person shall not be qualified for appointment as a judge of a Special Court unless he is,
immediately before such appointment, holding the office of a Sessions Judge or an Additional
Sessions Judge, as the case may be.
Offences triable by Special Courts.

26B. Notwithstanding anything contained in the Code of Criminal Procedure, 1973, all offences
under this Act committed prior to the date of commencement of the Securities Laws
(Amendment) Act, 2014 or on or after the date of such commencement, shall be taken
cognizance of and tried by the Special Court established for the area in which the offence is
committed or where there are more Special Courts than one for such area, by such one of them
as may be specified in this behalf by the High Court concerned.
Appeal and Revision.

26C. The High Court may exercise, so far as may be applicable, all the powers conferred by
Chapters XXIX and XXX of the Code of Criminal Procedure, 1973 on a High Court, as if a
Special Court within the local limits of the jurisdiction of the High Court were a Court of
Session trying cases within the local limits of the jurisdiction of the High Court.
Application of Code to proceedings before Special Court.

26D. (1) Save as otherwise provided in this Act, the provisions of the Code of Criminal
Procedure, 1973 shall apply to the proceedings before a Special Court and for the purposes of
the said provisions, the Special Court shall be deemed to be a Court of Session and the person
conducting prosecution before a Special Court shall be deemed to be a Public Prosecutor within
165
Substituted by the Securities Laws (Amendment) Act, 2004, Sec 13, w.r.e.f. 12-10-2004. Prior to its substitution
section 26 read as under :—
“26 Jurisdiction. to try offences under this Act.—No court inferior to that of a presidency magistrate or a
magistrate of the first class shall take cognizance of or try any offence punishable under this Act. “
166
Omitted by the Securities Laws (Amendment) Act, 2014, w.r.e.f. 18-07-2013. Prior to omission, Sub-section (2)
read as under:
“No court inferior to that of a Court of Session shall try any offence punishable under this Act.”
167
the meaning of clause (u) of section 2 of the Code of Criminal Procedure, 1973.
(2) The person conducting prosecution referred to in sub-section (1) should have been in practice
as an Advocate for not less than seven years or should have held a post, for a period of not less
than seven years, under the Union or a State, requiring special knowledge of law.
Transitional provisions.
26E. Any offence committed under this Act, which is triable by a Special Court shall, until a
Special Court is established, be taken cognizance of and tried by a Court of Session exercising
jurisdiction over the area, notwithstanding anything contained in the Code of Criminal
Procedure, 1973:
Provided that nothing contained in this section shall affect the powers of the High Court under
section 407 of the Code to transfer any case or class of cases taken cognizance by a Court of
Session under this section.]
MISCELLANEOUS
Title to dividends.
27. (1) It shall be lawful for the holder of any security whose name appears on the books of the
company issuing the said security to receive and retain any dividend declared by the company in
respect thereof for any year, notwithstanding that the said security has already been transferred
by him for consideration, unless the transferee who claims the dividend from the transferor has
lodged the security and all other documents relating to the transfer which may be required by the
company with the company for being registered in his name within fifteen days of the date on
which the dividend became due.
Explanation.—The period specified in this section shall be extended—
(i) in case of death of the transferee, by the actual period taken by his legal representative to
establish his claim to the dividend;
(ii) in case of loss of the transfer deed by theft or any other cause beyond the control of the
transferee, by the actual period taken for the replacement thereof; and
(iii) in case of delay in the lodging of any security and other documents relating to the transfer
due to causes connected with the post, by the actual period of the delay.
(2) Nothing contained in sub-section (1) shall affect—
(a) the right of a company to pay any dividend which has become due to any person whose
name is for the time being registered in the books of the company as the holder of the
security in respect of which the dividend has become due; or
(b) the right of the transferee of any security to enforce against the transferor or any other
person his rights, if any, in relation to the transfer in any case where the company has
refused to register the transfer of the security in the name of the transferee.
168
[Right to receive income from collective investment scheme.
27A. (1) 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
168
Inserted by the Securities Laws (Amendment) Act, 1999, Sec 8, w.e.f. 22-2-2000. Earlier clause (d) was omitted
by the Securities Laws (Amendment) Act, 1995, w.e.f. 25-01-1995.
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, notwithstanding that 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.
establish his claim to the income in respect of units or other instrument issued by the
collective investment scheme;
(ii) in case of loss of the transfer deed by theft or any other cause beyond the control of the
(iii) in case of delay in the lodging of any security, being units or other instruments issued by
the collective investment scheme, and other documents relating to the transfer due to
causes connected with the post, by the actual period of the delay.
(a) the right of a collective investment scheme to pay any income from units or other
instruments issued by the collective investment scheme which has become due to any
person whose name is for the time being registered in the books of the collective
investment scheme as the holder of the security being units or other instruments issued by
the collective investment scheme in respect of which the income in respect of units or
other instruments issued by the collective scheme has become due; or
(b) the right of transferee of any security, being units or other instruments issued by the
collective investment scheme, to enforce against the transferor or any other person his
rights, if any, in relation to the transfer in any case where the company has refused to
register the transfer of the security being units or other instruments issued by the collective
investment scheme in the name of the transferee.]
169
[Right to receive income from mutual fund.
27B. (1) It shall be lawful for the holder of any securities, being units or other instruments issued
by any mutual fund, whose name appears on the books of the mutual fund issuing the said
security to receive and retain any income in respect of units or other instruments issued by the
mutual fund declared by the mutual fund in respect thereof for any year, notwithstanding that the
said security, being units or other instruments issued by the mutual fund, 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 mutual fund from the transferor has lodged the security
and all other documents relating to the transfer which may be required by the mutual fund with
the mutual fund 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 mutual fund became due.
169
establish his claim to the income in respect of units or other instrument issued by the
mutual fund;
(ii) in case of loss of the transfer deed by theft or any other cause beyond the control of
(iii) in case of delay in the lodging of any security, being units or other instruments issued by
the mutual fund, and other documents relating to the transfer due to causes connected with
the post, by the actual period of the delay.
(a) the right of a mutual fund to pay any income from units or other instruments issued by the
mutual fund which has become due to any person, whose name is for the time being
registered in the books of the mutual fund as the holder of the security being units or other
instruments issued by the mutual fund in respect of which the income in respect of units or
other instruments issued by the mutual fund has become due; or
(b) the right of transferee of any security, being units or other instruments issued by the mutual
fund, to enforce against the transferor or any other person, his rights, if any, in relation to
the transfer in any case where the mutual fund has refused to register the transfer of the
security being units or other instruments issued by the mutual fund in the name of the
transferee.]
170[Act not to apply in certain cases.
28. (1) The provisions of this Act shall not apply to—
(a) the Government, the Reserve Bank of India, any local authority or any corporation set up
by a special law or any person who has effected any transaction with or through the
agency of any such authority as is referred to in this clause;
(b) any convertible bond or share warrant or any option or right in relation thereto, in so far as
it entitles the person in whose favour any of the foregoing has been issued to obtain at his
option from the company or other body corporate, issuing the same or from any of its
shareholders or duly appointed agents’ shares of the company or other body corporate,
whether by conversion of the bond or warrant or otherwise, on the basis of the price
agreed upon when the same was issued.
(2) Without prejudice to the provisions contained in sub-section (1), if the Central
Government171 is satisfied that in the interests of trade and commerce or the economic
development of the country it is necessary or expedient so to do, it may, by notification in the
Official Gazette, specify any class of contracts as contracts to which this Act or any provision
contained therein shall not apply, and also the conditions, limitations or restrictions, if any,
subject to which it shall not so apply.]
Protection of action taken in good faith.

29. No suit, prosecution or other legal proceeding whatsoever shall lie in any court against the
governing body or any member, office bearer or servant of any recognised stock exchange or
170
Substituted by Securities Contracts (Regulation) Amendment Act, 1959 (Act No. 49 of 1959), Sec 3, w.e.f. 08-12-
1959.
171
against any person or persons appointed under sub-section (1) of section 11 for anything which
is in good faith done or intended to be done in pursuance of this Act or of any rules or bye-laws
made thereunder.
172
[Power to delegate.
29A. 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 this Act
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 Securities and Exchange Board of India or the Reserve Bank of
India constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934).]
Power to make rules.

30. (1) The Central Government may, by notification in the Official Gazette, make rules for the
purpose of carrying into effect the objects of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may
provide for,—
(a) the manner in which applications may be made, the particulars which they should contain
and the levy of a fee in respect of such applications;
(b) the manner in which any inquiry for the purpose of recognising any stock exchange may
be made, the conditions which may be imposed for the grant of such recognition, including
conditions as to the admission of members if the stock exchange concerned is to be the
only recognised stock exchange in the area; and the form in which such recognition shall
be granted;
(c) the particulars which should be contained in the periodical returns and annual reports to be
furnished to the Central Government;
(d) the documents which should be maintained and preserved under section 6 and the periods
for which they should be preserved;
(e) the manner in which any inquiry by the governing body of a stock exchange shall be made
under section 6;
(f) the manner in which the bye-laws to be made or amended under this Act shall before being
so made or amended be published for criticism;
(g) the manner in which applications may be made by dealers in securities for licences under
section 17, the fee payable in respect thereof and the period of such licences, the
conditions subject to which licences may be granted, including conditions relating to the
forms which may be used in making contracts, the documents to be maintained by
licensed dealers and the furnishing of periodical information to such authority as may be
specified and the revocation of licences for breach of conditions;
173
[(h) the requirements which shall be complied with—
172
Inserted by Securities and Exchange Board of India Act, 1992, Sec 33 and Schedule, Pt II, w.r.e.f. 30-01-1992 and
section 29A read as under:
“29APower to delegate.—The Central Government may, by order published in the Official Gazette, direct that the
powers exercisable by it under any provision of this Act 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 Securities and Exchange Board of
India.”
173
(A) by public companies for the purpose of getting their securities listed on any stock
exchange;
(B) by collective investment scheme for the purpose of getting their units listed on any
stock exchange;] 174[***]
175
[(ha) the grounds on which the securities of a company may be delisted from any recognised
stock exchange under sub-section (1) of section 21A;
(hb) the form in which an appeal may be filed before the Securities Appellate Tribunal under
sub-section (2) of section 21A and the fees payable in respect of such appeal;
(hc) the form in which an appeal may be filed before the Securities Appellate Tribunal under
section 22A and the fees payable in respect of such appeal;
(hd) the manner of inquiry under sub-section (1) of section 23-I;
(he) the form in which an appeal may be filed before the Securities Appellate Tribunal under
section 23L and the fees payable in respect of such appeal;]
(i) any other matter which is to be or may be prescribed.
176
[(3) Every rule made under this Act shall be laid, as soon as may be after it is made, before
each House of Parliament, while it is in session, for a total period of thirty days which may
be comprised in one session or in two or more successive sessions, and if, before the expiry
of the session immediately following the session or the successive sessions aforesaid, both
Houses agree in making any modification in the rule or both Houses agree that the rule
should not be made, the rule shall thereafter have effect only in such modified form or be of
no effect, as the case may be; so, however, that any such modification or annulment shall be
without prejudice to the validity of anything previously done under that rule.]
177[Special Provisions related to commodity derivatives.

30A. (1) Nothing contained in this Act shall apply to non-transferable specific delivery
contracts:
Provided that no person shall organise or assist in organising or be a member of any
association in any area to which the provisions of section 13 have been made applicable
clause (h) read as under:

“(h) the requirements which shall be complied with by public companies for the purpose of getting their securities
listed on any stock exchange;”
174
The word "and" omitted by the Securities Contracts (Regulation) Amendment Act, 1985, Sec 4, w.e.f. 17-01-
1986.
175
Substituted for clause (ha) by the Securities Laws (Amendment) Act, 2004, Sec 15, w.r.e.f. 12-10-2004. Earlier
clause (ha), as amended by the Securities Laws (Amendment) Act, 1999, read as under :—
“(ha) the form in which an appeal may be filed before the Securities Appellate Tribunal under section 22A
and the fees payable in respect of such appeal; and”
176
Substituted by the Securities Laws (Amendment) Act, 2004, Sec 15, w.r.e.f. 12-10-2004. Prior to its substitution,
sub-section (3), as amended by the Securities Laws (Amendment) Act, 1995, w.e.f. 25-01-1995, read as under:
“(3) Every rule made under this section shall, as soon as may be, after its publication in the Official Gazette, be laid
before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in
one session or in two or more successive sessions, and if, before the expiry of the session immediately following
the session or the successive session aforesaid, both Houses agree in making any modification in the rule or both
Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or
be of no effect, as the case may be; so, however, that any such modification or annulment shall be without
prejudice to the validity of anything previously done under that rule.”
177
1/9/SM/2015, Extraordinary, Pt. II, Sec. 3, Sub-section (ii) dtd 28.08.2015.
(other than a stock exchange) which provides facilities for the performance of any non-
transferable specific delivery contract by any party thereto without having to make or receive
actual delivery to or from the other party to the contract or to or from any other party named
in the contract.
(2) Where in respect of any area, the provisions of section 13 have been made applicable in
relation to commodity derivatives for the sale or purchase of any goods or class of goods, the
Central Government may, by notification, declare that in the said area or any part thereof as
may be specified in the notification all or any of the provisions of this Act shall not apply to
transferable specific delivery contracts for the sale or purchase of the said goods or class of
goods either generally, or to any class of such contracts in particular.
(3) Notwithstanding anything contained in sub-section (1), if the Central Government is of

the opinion that in the interest of the trade or in the public interest it is expedient to regulate
and control non-transferable specific delivery contracts in any area, it may, by notification in
the Official Gazette, declare that all or any of the provisions of this Act shall apply to such
class or classes of non-transferable specific delivery contracts in such area in respect of such
goods or class of goods as may be specified in the notification, and may also specify the
manner in which and the extent to which all or any of the said provisions shall so apply. ]
178[Power of Securities and Exchange Board of India to make regulations.
31. (1) Without prejudice to the provisions contained in section 30 of the Securities and
Exchange Board of India Act, 1992 (15 of 1992), the Securities and Exchange Board of India
may, by notification in the Official Gazette, make regulations consistent with the provisions of
this Act and the rules made thereunder to carry out the purposes of this Act.
179[(2) In particular, and without prejudice to the generality of the foregoing power, such
regulations may provide for all or any of the following matters, namely:—
(a) the manner, in which at least fifty-one per cent of equity share capital of a recognised
stock exchange is held within twelve months from the date of publication of the order
under sub-section (7) of section 4B by the public other than the shareholders having
trading rights under sub-section (8) of that section;
(b) the eligibility criteria and other requirements under section 17A.]
180
[(c) the terms determined by the Board for settlement of proceedings under subsection (2) of
section 23JA;
(d) any other matter which is required to be, or may be, specified by regulations or in respect of
which provision is to be made by regulations.]
(3) Every regulation made under this Act shall be laid, as soon as may be after it is made, before
each House of Parliament, while it is in session for a total period of thirty days which may be
comprised in one session or in two or more successive sessions, and if, before the expiry of the
session immediately following the session or the successive sessions aforesaid, both Houses
178
Inserted by the Securities Laws (Amendment) Act, 2004, Sec 16, w.r.e.f. 12-10-2004. Earlier it was repealed by
the Repealing and Amending Act, 1960, Sec 2 and First Sch. w.e.f. 28-12-1960.
179
Substituted by the Securities Contracts (Regulation) Amendment Act, 2007, Sec 5, w.e.f. 28-05-2007. Prior to
substitution it read as under:
“(2) In particular and without prejudice to the generality of the foregoing power, such regulations may provide for
the manner in which at least fifty-one per cent of equity share capital of a recognised stock exchange is held within
twelve months from the date of publication of the order under sub-section (7) of section 4B by the public other
than the shareholders having trading rights under sub-section (8) of that section.”
180
Inserted by the Securities Laws (Amendment) Act, 2014, w.r.e.f 18-07-2013.
agree in making any modification in the regulation or both Houses agree that the regulation
should not be made, the regulation shall thereafter have effect only in such modified form or be
of no effect, as the case may be; so, however, that any such modification or annulment shall be
without prejudice to the validity of anything previously done under that regulation.]
181[Validation of certain acts.
32. Any act or thing done or purporting to have been done under the principal Act, in respect of
settlement of administrative and civil proceedings, shall, for all purposes, be deemed to be valid
and effective as if the amendments made to the principal Act had been in force at all material
times.]
******
181
Inserted by the Securities Laws (Amendment) Act, 2014, w.r.e.f 18-07-2013.

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SECURITIES CONTRACTS (REGULATION) ACT, 1956

[As amended by the Finance Act, 2017]

RECOGNISED STOCK EXCHANGES

3. Application for recognition of stock exchanges

PENALTIES AND PROCEDURE

RECOGNISED STOCK EXCHANGES

Grant of recognition to stock exchanges.

31[Corporatisation and demutualisation of stock exchanges.

Power of Central Government46 to direct rules to be made or to make rules.

Power of 56[Securities and Exchange Board of India] to make or amend bye-laws of

Power to suspend business of recognised stock exchanges. 64

CONTRACTS AND OPTIONS IN SECURITIES

Contracts in notified areas to be void in certain circumstances.

Members may not act as principals in certain circumstances.

Licensing of dealers in securities in certain areas.

Stock exchanges other than recognised stock exchanges prohibited.

Prohibition of options in securities.

98[Civil court not to have jurisdiction.

99[Appeal to Supreme Court.

PENALTIES AND PROCEDURE

113[Penaltyfor failure by any person to enter into an agreement with clients.

115[Penalty for failure to redress investors’ grievances.

119[Penaltyfor failure to comply with provision of listing conditions or delisting conditions

122[Penalty for excess dematerialisation or delivery of unlisted securities.

124[Penalty for failure to furnish periodical returns, etc.

138[Settlement of administrative and civil proceedings.

(2) For the purposes of sub-section (1),—

Explanation.—For the purposes of this section ‘‘Legal representative” means a person

Certain offences to be cognizable.

167[Establishmentof Special Courts.

Offences triable by Special Courts.

Appeal and Revision.

Application of Code to proceedings before Special Court.

Protection of action taken in good faith.

Power to make rules.

177[Special Provisions related to commodity derivatives.

clause (h) read as under:

(3) Notwithstanding anything contained in sub-section (1), if the Central Government is of

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