(b) "chairman" means the chairman of the board; (c) "existing securities and exchange board" means the securities and exchange board of india constituted under the resolution of the government of india in the department of economic affairs no, 1(44)se/86, dated the 12th day of april, 1988; (d) "fund" means the fund constituted under section 14; (e) "member" means a member of the board and includes the chairman; gf) "notification" means a notification published in the official 10 gazette; i (9) "prescribed" means prescribed by rules made wmder this act; ' ' (h) "regulations" means the tegulations made by the board under this act; ' 15 (i) "securities" has the meaning assigned to it in section 2 of the securities contracts (regulation) act, 1956, 42 of 1956, (2) words and expressions used and not defined in this act but defined in the capital issues (control) act, 1947, or the securities contracts (regulation) act, 1956, shall have the meanings respectively assigned to them in, those acts 20  chapter ii establishment of the securities and excuance boarp or inpia3 (1) with effect from such date as the central government may, by notification, appoint, there shall! bé° established, for 'tha purposes 6f' 'this : 25 act, a board by the name of the 'securities arid excharigé board' of india (2) the board shall be a body corporate by the name aforesaid, having perpetual succession and a common seal, with power subject to the provisions of this act, to acquire, hold , and dispose of property, both movable and immovable, and to contract, and shall, by the said name, sue or be sued 30 (3) the head office of the béaid' shall 'ba at bombay (4) the board may establish offices at other places in india 4 (1) the board shall consist of the followitig members, namely: —~ management of the board, (@} a chairman; (b) two members from amongst the officials of the ministries 35 of the central government dealing with finance and law; (c) one member frens: amongst the officials of the reserve bank of india constituted under section 3 of the reserve bank of india act, 1984; a an (d) two other members, to be appointed by the central government (2) the general superintendence, direction and management of the affairs of the board shall vest in a board of members, which may exercise 5 all powers and do all acts and things which may be exercised or done by the board, (3) save ag otherwise determined by regulations, the chairman shall also have powers of general superintendence and direction of the affairs of the board and may also exercise all powers and do all acts and things 10 which may be exercised or done by that board, ; (4) the chairman and members referred to in clauses (a) and (d) of sub-section (1) shall be appointed by the centra] government and the members referred to in clauses (b) and (ce) of that sub-section shall be nominated by the central government and the reserve bank of india 15 respectively : (5) the chairman and the other members referred to in clauses (a) and (d) of sub-section (1) shall be persons of ability, integrity and standing who have shown capacity in dealing with problems relating to securities market or have special knowledge or experience of law, finance, econo- 20 mies, accountancy, administration or in any other discipline which, in the opinion of the central government, shall be useful to the board, term: of office and conditions § (1) the term of office and other conditions of service of the chairman and the members referred to in clause (d) of sub-section (1) of section 4 shall be such as may be prescribed of service (2) notwithstanding anything contained in sub-section (1), the central government shall have the right to terminate the services of the chairman or a member appointed under clause (d) of sub-section of chairman and members of the board, (4) of section 4, at any time before the expiry of the period prescribed under sub-section (1), by giving him notice of not less than three months 30 in writing or three months' salary and allowances in lieu thereof, and the chairman or a member, as the case mnay be, shali also have the right to relinquish his office, at any time before the expiry of the period prescribed under sub-section (1), by giving to the central government notice of not less than three months in writing 35 6 (1) the central government shall remove a member from office if he— | removal    | of      ||------------|---------|| member     |         || ftom       | office, |(a) is, or at any time hag been, adjudicated as insolvent; (b) is of unsound mind and stands so declared by a competent court; : 40 ; (c) has been convicted of an offence which, in the opinion of the central government, involves a moral turpitude; (d) is appointed as a director of a company; (e) has, in the opinion of the central government position as to render his continuation in office detr » so abused his imental to the 45 publie interest : i te bora a provided that no member shail be removed under this clause unless meetings, he has been given a reasonable opportunity of being heard in the matter, 7, (1) the board shall meet at such times and places, and shall observe such un rules of procedure in regard to the transaction of business at its meetings (including quotum at such meetings) as may be provided by regulations, (2) the chairman; or, if for any reason, he is unable to attend a meeting of the board, any other member chosen by the members present from amongst themselves at the meeting shall preside at the meeting, (3) all questions which come up before any meeting of the board shalt be decided by a majority votes of the members present and voting, and, in the 10 event of an equality of votes, the chairman, or in his absence, the person presiding, shall have a second or casting vote, vacancies, ele, not 8 no act or ptoceeding of the board shall be invalid merely by reason of (4) any vacancy in, or any defect in the constitution of, the board; ;  5 or to inyali date proceedings of board, of the board; or (5) any defect in the appointment of a person acting as a member (c) any irregularity in the procedure of the board not affecting the merits of the case, officers and employees act 9 (1) the board may appoint such other officers and employees as it 20 considers necessary for the efficient discharge of its functions under this of the board the board appointed under sub-section (1) shall be as may be determined by regulations 25  chapter it transfer of assets, liabilitius, etc, of the existing securities and excuancr boarp to the boarptransfer of assets, 10, (1) on ang from the date of establishment of the board, siabilities, (a) any reference to the existing securities and exchange board in 30 any law other than this act or in any contract or other instrument shall be deemed as a reference to the board; ete, of existing securities and exchange board to the board, (b) all properties and assets, movable and immovable, of, or belonging to, the existing securities and exchange board, shall yest'in the board; : bey 35 (c) all rights and liabilities of the existing securities and exchange board shall be transferred to, and be the rights and liabilities of, the board; : (2) without prejudice to the provisions of clause (ce), all debts, obi gations and liabilities incurred, all contracts entered into and all matters 40 and things engaged to be done by, with or for the existing securities and exchange board immediately before that date, for or in connection with the purpose of the said existing board shall be deemed to have been incurred, entered into, or engaged to be done by, with or, for, the board; bi] (e) all sums of money due to the existing securities and exchange board immediately before that date shall be deemed to be due to the board; (f) all suits and other legal proceedings instituted or which could have been instituied by or against the existing securities and exchange board immediately before that date may be continued or may be instituted by or against the board; and (g) every employee holding any office under the existing securities and exchange board immediately before that date shall hold his office in the board by the same tenure and upon the same terms and conditions 10 of service as respects remuneration, leave, provident fund, retirement and other terminal benefits as he would have held such office if the board had not been established and shall continue to do so as an employee of the board or until the expiry of the period of six months from that date if such employee opts not to be the employee of the board within such period (2) notwithstanding anything contained in the industrial disputes act, 1947, or in any other law for the time being in force, absorption of any employee by the board in its regular service under this section shall not entitle such employee to any compensation under that act or other law and no such claim shali be entertained by any court, tribunal or other authority :  chapter iv 'powers and functions of the boarpfunctions of board, 11 (1) subject to the provisions of this act, it shall be the duty of the board to protect thd interests of investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit (2) without prejudice to the generality of the foregoing provisions, the measures referred to therein may provide for— : (a) regulating the business in stock exchanges aid aay other securities markets;  (d) registering and regulating the working of stock brokers, subbrokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant 'bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be assdciated with securities markets in any manner; (©) registering and regulating the working of collective investment schemes, including mutual funds; (d) promoting and regulating self-regulatory organisations: (e) probibiling fraudulent and unfair trade practices lating to securities markets: (f) promoting investors' education and training of intermediaries of securities markets; (g) prohibiting insider trading' in securities; (h) regulating substantial acquisition of shares and take-over of companies; @ calling for information from, undertaking inspection, conducting inquiries and audils of the stock exchanges and intermediaries and selfregulatory organisations in the securities market; (jf) performing such functions and exercising such powers under the provisions of the capital issues (control) act, 1947 and the securities 29 of 1947, 42 of 195contracts (regulation) act, 1956, as may be delegated to it by the central government; (k) levying fees or other charges for carrying out the purpose of 10 this section; (1) sonducting research for the above purposes; (m) performing such other functions as may be prescribed  chapter v registration certificateregistra- 12, (1) no stock-broker, sub-broker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant 'banker, underwriter, portfolio manager, investment adviser and such other intermediary who may be tion of stockbrokers, sub associated with securities market shall buy, sell or deal in securities except 20 under, and in accordance with, the conditions of a certificate of registration obtained from the board in accordance with the rules made under this act: brokers, share transfer agents, ete, provided that a person buying or selling securities or otherwise dealing with the securities market as a sock-broker, sub-broker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, 25 underwriter, portfolio manager, investment adviser and such other intermediary who may be associated with securities market immediately before the establishment of the board for which no registration certificate was necessary prior to such establishment, may continue to do so for a period of three months from 30 such establishment or if he has made an application for such registration within fhe said period of three months, till the disposal of such application (2) every application for registration shall be in such manner and on payment of such fees as may be determined by regulations 35 (3) the board may, by order, suspead or cancel a certificate of registration in such manner as may be determined by regulations: provided that no order under this sub-section shall be made unless the person concerned has been given a reasonable opportunity of being heard  ~ chapter vi : finance, accounts and auditgrants 40 18 the central government may, after the appropriation made by parliament by law in this behalf, make te the board grants of such sums of money as that government may think fit for being utilised for the purposes of this act by the central govertment 14 (j) there shall be constituted a fund to be called the securities and = fund exchange board of india general fund and there shail be credited thereto—- (a) all grants, fees and charges received by the board under this act; and 5 (b) all sums received by the board from such other sources as may be decided upon by the central government, (2) the fund shall be applied for meeting— (@) the salaries, allowances and other remuneration of the members, officers and other employees of the board; 10 (4) the expenses of the board in the discharge of its functions under section 11; y (c) the expenses on objects and for purposes authorised by this act : 15 (1) the board shall maintain proper accounts and other relevant records accounts 15 and prepare an annual statement of accounts im such form as may be prescribed: and audit by the central government in consultation with the comptroller and auditor 'general of india (2) the accounts of the board shall be audited by the comptroller and auditor-general of india at such intervals as may be specified by him and any 20 expenditure incurred in connection with such audit shall be payable by the board to the comptroller and auditor-general of india (3) the comptroller and auditor-general of india and any other person appointed by him in connection with the audit of the accounts of the board shall have the same tights and privileges ang authority in connection with such 25 audit as the comptroller and auditor-general generally has in connection with the audit of the government accounts and, in particular, shall have the right to demand the production of books, accounts, connected 'vouchers and other documents and papers and to-inspect any of the- offices of the board (4) the accounts of the board as certified by the comptroller and auditor- 30 general of india or any other person appointed by him in this behalf together with the audit report thereon shall be forwarded annually to the central 'government and that government shall cause the same to be laid before each house of parliament  chapter vil35 miscetanzous  capatas dé : +s  power of 16, (1) without prejudice to the foregoing provisions of this act, central the board -shall, in exercise of its powers or the performance of its ' govern functions under this act, be bound by such directions on quesment to tions of policy as the centra] government may give in writing to it from issue 40 time to time: directions, provided that the board shall, as far as practicable, be given an opportunity to express its views before any direction is given under this sub-section, (2) the decision of the central government whether a question is 45 ene of policy or not shall be anal ' i7, (1) if at any time the central government is of opinion— power of central government to supersede (a) that on account of grave emergency, the board is unable to discharge the functions and duties imposed on it by or under the provisions of this act; or the board (6) that the board hag persistently made default in complying with any direction issued by the central government under this act or in the discharge of the functions and duties imposed on it by or under the provisions of this act and asa result of such default the financial position of the board or the administra~ tion of the board has deteriorated; or 10 (c) that circumstances exist which render it necessary in the 4 public interest so to do, 4 the central government may, by notification, supersede the board for such period, not exceeding six months, as may be specified in the, notification ; 15 (2) upon the publication of a notification under sub-section (1) superseding the board,— (2) all the members shall, as from the date of supersession, vacate their offices as such; 20 (4) all the powers, functions and duties which may, by or under the provisions of this act, be exercised or discharged by or on behalf of the board, shall until the board is reconstituted under sub-section (3), be exercised and discharged by such person or persons as the central government may direct; and (c) all property owned or controlled by the board shall, until 25 the board is reconstituted under sub-section (3), vest in the central government ' ' 30 (3) on the expiration of the period of supersession specified in the notification issued under sub-section (1), the central government 'may reconstitute the board by a fresh appointment and in such case any person or persons who vacated their offices under clause (a) of sub-section (2), shall not be deemed disqualified 'for appointment: provided that the central government may, at any time, before the expiration of the period of supersession, take action under this subsection ! 35 (4) the central government shall cause a notification issued under sub-section (1) and a full report of any action taken under this section and the circumstances leading to such action to be laid before each house of parliament at the earliest ' 40 ¥8 (1) the board shali furnish to the central government at such time and in such form and manner ag may be prescribed or as the central government may direct, such returns and statements and such particulars in régard to any proposed or existing programme for the promotion and development of the securities market, as the central government may, from time to time, require  45 (2) without prejudice to the provisions of sub-section (1), the board shall, within sixty days after the end of each financial year, submit to the central government a report in such form, as may be preseribed, giving a true and full account of its activities, policy and programmes during the previous financial year (3) a copy of the report received under sub-section (2) shall be laid, as soon as may be after it is received, before each house of parliament delegation 19 the board may, by general or special order in writing delegate to any member, officer of the board or any other person subject to such condi- 5 tions, if any, as may be specified in the order, such of its powers and functions under this act (except the powers under section 29) as it may deem necessary 20 (2) any person aggrieved by an order of the board made under appeals, this act, or the rules or regulations made thereunder may prefer an appeal 10 to the central government within such time as may be prescribed (2) no appeal shali be admitted if it is preferred after the expiry of theperiod prescribed therefor: provided that an appeal may be admitted after the expiry of the period prescribed therefor if the appellant satisfies the central government that he 15 had sufficient cause for not preferring the appeal within the prescribed period ° (3) every appeal made under this section shall be made in such form and shall be accompanied by a copy of the order appealed against and by such fees as may be prescribed, 20 (4) the -procedure for disposing of an appeal shall be such as may be prescribed: : provided that before disposing of an appeal, the appellant shall be given a reasonable opportunity of being heard 21 nothing in this act shall exempt any person 'from any suit or savings a5 other proceedings which might, apart from this act, be brought against | him, 22 all members, officers and other employees of the board shall be deemed, when acting or purporting to act in putsuance of any of the provisions of this act, to be public servants within the meaning of section 21 of 860, 30 the indian penal code, members, officers and employees of the board to be public servants, 23 no suit, prosecution or other legal proceedings shall lie against the central government or any officer of the central government on any member, officer or other employee of the board for anything which is in good faith done or intended to be done under this act or the rules or regula- 35 tions made thereunder ' protec- hon of action taken i good faith 24 whoever 'contravenes or attempts to contravene or abets the con- penalty travention of the provisions of 'this act or of any tules or regulations made thereunder, shall be punishable with imprisonment for a term which may extend to one year, or with fine, or with both exemp- 25 notwithstanding anything contained in the wealth-tax act, 1957, the income-tax act, 1961 or any other enactment for the time being in force tion from telating to tax on wealth, income, profits or gains— (a) the board; | tax     ||---------|| wealth  || and     || income, |(b) the existing securities and exchange board from the date of its constitution to the date of establishment of the board, shall not be liable to pay wealth-tax, income-tax or any other tax in respect of their wealth, income, profits or gains derived, cognizance of 26 (1) no court shall take cognizance of any offence punishable under 5 offences by courts this act-or any mules or regulations made thereunder, save on a complaint made by the board with the previous sanction of the central government, (2) no court inferior to that of a metropolitan magistrate or a judicial magistrate of the first class shall try any offence punishable under this act, tee 10 offences iby companies 27 (1) where an offence under this act has been committed by a i company, every person who at the time the offence 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 offence and shall be liable to be proceeded against and 15 | 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 offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence, 20 (2) notwithstanding anything contained in sub-section (1), where an offence under this act has been committed by a company and it is proved that the offence has been coimmitted with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary, or other officer of the company, such director, manager, secretary or 25 other officer shall also be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly,  explanation—for the purposes of this section,—(a) "company" means any body corporate and includes a fim or other association of individuals; and 30 (5) "director", in relation to a firm, means a partner in the firm, power to exempt 28 if the centrat government is of the opinion that itis necessary or expedient so to do in public interest, it may, by order published in the official gazette, exempt any person or class of persons buying or selling securities or otherwise dealing with the securities market from the operation of the provisions : 35 of sub-section (1) of section 12 rower te make 29, (1) the central government may, be notification, make rules for carrying out the purposes of this act rules, (2) in particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, 49 namely :— : (a) the terms of office and other conditions of service of the 'chairman and the members under sub-section (1) of section 3; (6) the additional functions that may be performed by 'the board under section 11; 45 (c) the conditions subject to which registration certificate is to be issued under sub-section (1) of section 12; (2) the manner in which the accounts of the board shall be maintained under séction 15; (e) the form and the manner in which 'returns and report to be made to the central government under section 18; 3 (f) any other matter which is to be, or may be, prescribed, or in respect of which provision is to be, or may be, made by rules 30 (1) the board may, with the previous approval of the central government, by notification, make regulations consistent with this act and the power to make regularules made thereunder to carry out th9 purposes of this act tions 10 (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 times and places of meetings of the board and the procedure to be followed at such meetings under sub-section (1) of section 7 includ- 15 ing quorum necessary for the transaction of business; (5) the term and other conditions of service of officers and employees of the board under sub-section (2) of section 9; (c) the amount of fee to be paid for registration certificate and manner of suspension or cancellation of registration certificate under sub-sec- 20 tions (2) and (3) of section 12, 31 every rule and every regulation made under this act shall be rules and vegulalaid, 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 25 of the session immediately following the session or the successive sessions aforesaid, both houses agree in making any modification in the rule or regulation | tions    | to    ||----------|-------|| be       | laid  || before   |       || parlia-  |       || ment,    |       |or both houses agree that the rule or regulation should not be made, the rule or 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 39 annulment shall be without prejudice to the validity of anything previously done under that rule or regulation applica- $2, the provisions of this act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force | tion    | of    ||---------|-------|| other   |       || laws    | not   || barred, |       |33 the enactments specified in parts i and i of the schedule to this 45 act shall be amended in the manner specified therein and such amendments shall take effect on the date of establishment of the board aamendment of certain enactments 34, (1) if any difficulty arises in giving effect to the provisions of this | power    ||----------|| remove   |act, the central government may, by order, published in the official diffi- 'gazette, make such provisions not inconsistent with the provisions of this culties, 40 act as may appear to be necessary for removing the difficulty: provided that no order shall be made under this section after the expiry of five years from the commencement of this act, (2) every order made under this section shall be laid, as soon as may be after it is made, before each house of parliament ord, 5 of 1992 repeal 35 (1) the securities and exchange board of india ordinance, 1992, and at is hereby repealed i saving, (2) notwithstanding such repeal, anything done or any action taken 5 under the said ordinance, shall be deemed to have been done or taken under the corresponding provisions of this act  amendment of certain enactments part i amendments to the capitar issues (control) act, 1947(29 or 1947) in section 10, for "to that government" substitute "to that government or the securities and exchange board of india"  part i10 amendments to the securities contracts (regulation) act, 1956 (42 of 1956) 1 section 2, in clause (), for sub-clause (d), substitute the following: - "(h) government securities; (iia) such other instruments as may be declared by the central go- 15 vernment to be securities; and" 2 section 6,— (i) in sub-section (1) for "central government", substitute "securities and exchange board of india"; (ii) in sub-section (2), for "by the central government", substitute 20 "by the securities and exohange board of india"; (ii) in sub-section (3) for "central government" wherever it occurs, substitute "securities and exchange board of india"; 3 section 9, for "central government" | wherever it occurs, substitute "securities and exchange board of india"; 25 4 section 10, for "central government" wherever it occurs, substitute "securities and exchange board of india"; 5, section 17, in sub-section (1) for "licence granted by the central go- yernment", substitute "licence granted by the securities and exchange board of india"; 6 section 21, for "central government", substitute "securities and ex- 30 change board of india"; 7 section 22a, in sub-section (3), for clause (b), substitute the follow- ing:— "(b) that the transfer of the securities is in contravention of any law or rules made thereunder or any administrative instructions or condi- 35 tions of listing agreement laid down in pursuance of stich laws or rules;"; 8 in sub-section (2) of section 23, for "central government under section 21 or section 22", substitute "securities and exchange board of india under section 21 or the central government under section 22"; ao 9, after section 29, insert the following: - power to delegate, "994 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 45 also by the securities and exchange board of india"  statement of objects and reasonssecurities and exchange board of india (sebi) was established in 1988 through a government resolution to promote orderly and healthy growth of jthe securities market and for investors' protection sebi has been monitoring the activities of stock exchanges, mutual funds and merchant bankers, etc, jbo achieve these goals the capital market has witnessed tremendous growth in recent times, characterised particularly by the increasing participation of the public investors' confidence in the capital market can be sustained largely by ensuring investors' protection, with this end in view, government decided to vest sebi immediately with satutory powers required to deal effectively with all matters relating to capital market as parliament was not in session, and there was an urgent need to instil a sense of confidence in the public in the growth and stability of the capital market, the president promulgated the securities and exchange board of india ordinance, 1992 (no 5 of 1992) on the 30th january, 1992 3 the bill seeks to replace the aforesaid ordinance new delay manmohan singh the 24th february, 1992  president's recommendation under articles 117 and 274 of the constitution of india[copy of letter no 1(44) |sh86, dated the 25th february, 1992 from dr manmohan singh, minister of finance to the secretary-general, lok sabha ] | , the president having been informed of the subject matter of the proposed bill to provide for the espablishment of a board to protect the interests of investors in, securities and to promote the development of, and to regulate jthe securities market and for matters connected therewith or incidental thereto, recommends under clause (1) of article 117 and article 274 of the constitution for introduction and under clause (3) of i article-117 thereof for consideration, of the above bill in lok sabha :  notes on clausesclause 2 seeks to define certain words and expressions used in the bill clouse 3 provides for the establishment of a body corporate by the name of securities and exchange board of india with head quarters at bombay clause 4 provides for the constitution of the board of members consisting of a chairman, two whole-time members to be appointed by the central government and two members to be nominated by the central government and one mernber by the reserve bank of india clause 5 makes provisions relating to the term of office and other conditions of service of the chairrman and members appointed by the central government clause 6 provides for the contingencies in which the central government may remove a member from office clause 7 makes provisions regarding meetings of the board clause 8 lays down that any vacancy or defect or irregularity in the constitution of the board shall not invalidate proceedings of the board clause 9 provides for the appointment of officers and employees of the board and the terms and conditions of their service clause 10 provides for transfer of assets and liabilities of the existing securities and exchange board to the board, it further provides for the transfer of employees of the existing securities and exchange board to the board clause 11 provides for the powers and functions of the board with a view to protect the interest of investors in securities and to promote the development of and to regulate the securities market clause 12 provides for the board to register stock brokers, sub-brokers, share transfer agents and other intermediaries associated with securities market with the exceptions that the existing stock brokers, sub-brokers, ete may buy, sell or otherwise deal with the securities market without registration for a period of three months from the date of establishment of the board clause 13 provides for making of grants by the central government to the board to be utilised for the purposes of the bill clause 14 provides for the constitution of the securities and exchange board of india general fund it further provides that the grants, fees, charges and other sums received by the board should be credited thereto and all its payments should be made there from clause 15 provides for usual provisions regarding maintenance of proper accounts and other relevant records by the board as may be prescribed by the central government the accounts of the board should be audited and certified by the comptroller and auditor-general of india which would be laid 'before the parliament by the central government clause 16 confers on the central government the power to issue directions to the board clause 17 confers on the ceniral government the power to supersede the board the central government through a notification can supersede the board for a period not exceeding 6 months if it is satisfied that on account of grave emergency, the board is unable 10 discharge its duties or that the board has persistently mace defaults in complying with the directions of the central government clause 18 provides for the central government to call for returns and statements from the board in regard to matters provided for in the bill clause 19 provides for the delegations of certain powers of the board clause 20 provides for a person aggrieved by an order made by the board to appeal to the central government, clause 21 saves the suit or proceedings which might be prought against any person under any other law clause 22 specifies that the members, officers and other employees of the board shall be deemed to be public servants, clause 23 provides or usual provision relating ito the protection of action taken in good faith clause 24 provides for penalty for contravention of the provisions of the bill or any rules or regulations made thereunder clouse 25 provides the board with cxemptions from tax on wealth and income clause 26 lays down that a court should take cognizance of offences punishab'e under the provisions of the bill or any rules or regulations made thereunder on a complaint made by the board with the previous sanction of the central government : clause 27 provides that any offace committed by a company and punishable under the bill would cover the persons in charge of company clause 28 conters on the central government in public interest, the aling with securities market from the ermpt any person die power to &x (1) of clause 12 of the bil of sub-clause operation of the provisions ers on the central government clause 28 cont the power to make ions of the bill rules for carrying out the provis e board to make regul ations with the previous with the bill clause 30 empowers tin overnment consistent approval of the central g that the rules and regulations made under the clause 31 lays down e the parliament, bill would be jaid efor the bill are notin derogahe provisions of clause 32 provides that bt he time being in force tion of the provisions of any other law for t clause 33 provides tor amendments of enactments specified in the schedule central government to remove any clause 34 seeks to empower the s of the bill difficulty which may arise in giving effect to the provision urities and exchange ken thereunder as if seeks to repeal the sec nd save actions ta ovisions of the bill clause 35 of the bill board of india ordinance, 1992 a taken under the corresponding pr  financial memorandumclause 13 of the bill contains a provision unavr whieh the centra: government may make grants to the board as may be deemed necessary grants will be made after due approptiation made by parliament by law in this behalf it is not possible at this stage to visualise the nature and quantum of expenditure which may be involved in the creation and operation of the fund,  memorandum regarding delegated legislationclause 29 of the bill empowers the central government to make rules regarding: - (i) the term of office and other conditions of service of the chairman and the members under sub-clause (1) of clause 5; (i) the additional functions that may be performed by the board under clause 11;  (iii) the conditions subject to which registration certificate is to be issued under sub-clause (1) of clause 12; (iv) the manner im which the accounts of the board shall be maintained under clause 15; (v) the form and the manner in which returns and report are to be made to the central government under clause 18; (vi) any other matter which is to be, or may be, prescribed or in respect of which provision is to be made by rules 2, clause 30 empowers the board, with 'the prior approval of the central government, to make regulations regarding:— (i) the times and places of meetings of the board and the procedure to be followed at such meetings under sub-clause (1) of clause 7 including quorum necessary for the transaction of business (ii) the terms and other conditions of service of officers and employees of the board under sub-clause (2) of clause 3; (iii) the amount of fee to be paid for registration certificate and mamner of suspension or cancellation of registration certificate under sub-clauses (2) and (3) of clause 12 3 the matter with respect to which rules or regulations may be made under the aforesaid provisions are matters of procedure and detail the delegation of legislative power contained in such provisions is, therefore, ef a normal character ,  memorandum explaining the modifications contained in the bill to replace the securities and exchange, board of india ordinance, 1992the securities and exchange board of india bill 1992 which seeks to repeal and replace the securities and exchange board of india ordinance, 1992 proposes to make certain modifications of drafting nature in sub-clause (2) of clause 2, sub-clause (2) and (3) of clause 7 and subclause (2) of clause 27 the modifications are clarificatory in nature  annexureextract from «the carrran issus (cowrron) acr, 1947 (29 of 1947) %  eg ba 10, the central government may by order direct that any power or power duty which by or under any of the preceding provisions of this act is to deleconferred or imposed upon the central government shall, in such cirgate cumstances and under such conditions, if any, as may be specified in the funetion direction, be exercised or discharged by any officer subordinate to that government ' extracts rrom tam securrtims contracts (regulation) act, 1956 (42 or 1956)   es  m 2 in this act, uniess the context otherwise requires,— definitions      (h) "securities" include—    ae  (ti) government securities; and ®     6 (1) every recognised stock exchange shall furnish to the central power of government such periodical returns relating to its affairs as may be eae  © - prescribed - ment to call for (2) every recognised stock exchange and every member thereof shall periodi_ maintain and preserve for such periods not exceeding five years such cal books of account, and other documents as the central government, after merarns consultation with the stock exchange concerned, may prescribe in the inquiries, interest of the trade or in the public interest, and such books of account, t5 po and other documents shall be subject to inspection at all reasonable times made by the central government (3) without prejudice to the provisions contained in sub-sections mm and (2), the central government, if it is satisfied that it is in the interest of the trade or in the public interest so to do, may, by order in writing - (4) call upon a recognised stock exchange or any member thereof to furnish in writing such information or explanation relating to the affairs xchange or of the member in relation to the stock exchange as the central government may require; or (6) 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-central government within' such, time as may be specified im 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 centra] government      power of 9 (1) any recognised stock exchange may, subject to the previous te ee approval of the central government, make bye-laws for the regulation ed stock and control of contracts exchane ges to (2) in particular, and without prejudice to the generality of the forete going power, such bye-laws may provide for— laws (@) the opening and closing of markets and the regulation of the hours of trade; (b) a clearing house for the periodical settlement of contracts and differences thereunder, the delivery of and payment for securities, the passing on of delivery orders and the regulation and maintenance of such clearing house; (c) the submission to the central government by the clearing house as soon as may be after each periodical settlement of all or any of the following particulars as the central government may, from time to time, require, namely:— (@! the total number of each category of security carried over from one settlement period to another; () the total number of each category of security, contracts in respect of which have been squared up during the course of each settlement period; i | (2) the total number of each category of security actually delivered at each clearing; | (@) the publication by the clearing house of all or any of the : particulars submitted to the central government under clause (c) subject to the directions, if any, issued by the central government in this behalf; ch  (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 ov 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 thé responsibility of members who are not, parties to such contracts; () the regulation of tarevani business including the placing of limitations thereon; (m) the lishing of securities on the stock exchange, the inclusion of any security for the purpose of dealings and the suspension or withdrawal of any such sectrities, and the suspension or prohibition of trading in any specified securities, (n) the method and procedure for the 'settlement of claims or disputes, including sdttlement by arbitration; (0) 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 seale of brokerage and other charges; (r) the making, comparing, settling and closing of bargains; (s) the emergencies in trade which may arise, whether as a result of puol 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, (w) 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 of 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 byelaws void under sub-section (1) of section 14; (b) provide that the contravention of any of the bye-laws shall render the member concerned hable to one or more of the following punishments, namely:— (@® fine; ! ' (2) expulsion from membership; (i) 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 central government, 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 ¢xchange is situate, and shall have effect as from the date of its publication in the gazette of india: provided that if the central government is satisfied in any case that im the interest of the trade or in the public interest any bye-laws should be made immediately, it may, by order in writing specifying the reasons therefor, dispense with the condition of previous publication, power of cen- 10 (1) the central government may, either on a tequest 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, tral government to make or amend pyelaws (2) where in pursuance of this section any bye-laws have been made | of       ||----------|| cognised || stock    || en:      || changes, |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 exchangd 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 axchange objects to any bye-laws made or amended under this section by the central government on its own motion, it may, within six months or the publication thereof in the gazette of india under sub-section (2), apply to the central government for revision thereof, and the central government may, after giving an opportunity to the governing body of the stock exchange to be heard in the matter, revise the bye-laws so made or amended, and where any bye-laws so made or amended 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 central government 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 ¥ ed   licen: sing of dealersin securities i7 (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 | in     ||--------|| tain   || areas, |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 licence granted by the central government, in this behalf e &  co eo  lastinc or securities by public companiespower to com- 21, notwithstanding anything contained in any other law for the time being in force, if the 'central government is of opinion, having regard to the nature of this securities issued by any public company as defined pel listing| of securi- in the companies act, 1996, or to the dealings in them, that it is necessary 19 of 1958 or expedient in the interest of the trade or in the public interest so to | ties    ||---------|| public  || compa   || nies   |do, it may require the company, after giving it an opportunity of being heard in the matter, to comply with such requirements as may ba preseribed with respect to the listing of its securities on any recognised stock exchange 7 la  me  oe  2a (1)   « 4(3) notwithstanding anything contained in its articles or in section free transferability and regis- 1 of 1956 82 or section 111 of tha companies act, 1956, but subject to the other provisions of this section, a company may refuse to register the transfer tration of trans- of any of its securities in the name of the transferee on any one or more of the following grounds and on no other ground, namely: - fers of listed securities    a  of companies (b) that the transfer of the security is in contravention of any law; %  es    penalties and procedure anpenalties 23 (1)    + (2) any person who enters into any contract in contravention of the provisions contained in section 15 or who fails to comply with the orders of the central government under section 21 or section 22 shall, on conviction, be punishable with fine which may extend to one thousand rupees     %  