Securities Laws in India

8/11/2019 Securities Laws in India

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In 1988 the securities and exchangeboard of India was established bygovernment of India through anexecutive resolution and was

subsequently upgraded as a fullyautonomous body (a statutory body)in the year 1992 with the passing ofsecurities and exchange board ofIndia act (SEBI act) on 30th January1992.


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Shall be a body corporate with perpetual succession

an common seal with power to acquire hold and

dispose of property.

HQ will be in Mumbai and may establish offices atother places in India.

Chairman and members of board will be appointed

by the central government

Government can prescribe terms of offices and other

conditions of service of the board and chairman.

Primary duties of the board is to protect the interest

of the investors.


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POWERS:

Power to call periodical returns from recognized stock exchanges.

Power to compel listing of securities by public companies.

Power to levy fees or other changes for carrying out the purposes of regulation.

Power to call information or explanation from recognized stock exchanges or theirmembers.

Power to grant approval to bye-laws of recognized stock exchanges.Power to control and regulate stock exchanges.

FUNCTIONS:

Regulation of stock exchanges and self regulatory organizations.

Registration and regulation of stock brokers , sub-brokers , registrars of all issues,

merchant bankers, underwriters, portfolio managers..etcRegistration and regulation of the working of collective investment schemesincluding mutual funds.

Prohibition of fraudulent and unfair trade practices relating to securities market.

Prohibiting of insider trading.

Regulating substantial acquisition of shares and takeovers of the company.


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the board shall consists of following members:-

The chairman who is nominated by Union

Government of India.

Two members, i.e. Officers from Union

Finance Ministry.

One member from The Reserve Bank of India.

The remaining 5 members are nominated byUnion Government of India, out of them at

least 3 shall be whole-time members


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The expression 'stock market' refers to themarket that enables the trading of company

stocks (collective shares), other securities,

and derivatives. Bonds are still traditionallytraded in an informal, over-the-counter

market known as the bond market.

Commodities are traded in commoditiesmarkets, and derivatives are traded in a

variety of markets (but, like bonds, mostly

'over-the-counter').


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Securities marketEquity Market

Debt Market

Government securities Market (gilt

securities)Corporate Securities

Money Market

Derivative Market

Options MarketFutures Market

Foreign exchange market


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Financial

market

Capitalmarket

Securitiesmarket

Newissuesmarket

Secondary

marketotherforms oflending

andborrowing

Moneymarket


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Primary Market: it deals in the issuanceof new securities and bring the savers andusers of capital together.

Secondary Market: it is the financial

market where previously issued securitiesand financial instruments such as stock,bonds, options, and futures are boughtand sold.

It provide liquidity to the investors.

It helps the players to keep transactioncost very low.


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1. COMPLIANCE CERTIFICATE ON IPO / FPO

The Certification includes inter alia, confirmation of compliance ofconditions/stipulations prescribed by the Regulatory Authorities and stock exchanges forlisting of equity shares on Initial Public Offer (IPO), Further Public Offer (FPO), etc. Thescope of the Certification is wide enough to include compliance of all rules, applicableregulations, guidelines in relation to issue of securities, issue of certificates in relationto all transactions of company's securities, physical verification of relevant records anddocuments. The certification is intended to provide comfort and assurance to both theMerchant bankers and regulators to the effect that the proposed Initial Public Offering(IPO) and Further Public Offer (FPO), conforms to all regulatory prescriptions.

The Compliance certificate provide an assurance as to the:

Compliance with relevant laws

Formalities with SEBI / Stock Exchange / ROC, etc.

Compliances with regulations relating to Issue of Capital and Disclosure Requirements

Compliances with all the Listing ConditionsOther matters like utilization of promoter's contribution, etc.

The adoption of this Compliance Certificate also provide comfort to facilitate stockexchanges while considering listing of securities being offered under IPO/FPO.


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As stated earlier, SEBI has recognized the services of CompanySecretaries in employment and practice through introduction of variousclauses in the Model SME Equity Listing Agreement viz. appointment ofCompany Secretary as Compliance Officer, certification with regard tocompliance of conditions of corporate governance and completion of alltransfers within stipulated time.

A small enterprise in order to get its securities listed on SME Exchanges

is required to ensure compliance of various provisions of the CompaniesAct, 1956, other laws, regulations, listing agreement etc., as applicable.

In order to ensure that the formalities and procedures connected withthe issue process by SME are adhered to and the issuer is fully compliantwith the Regulations connected therewith, it is suggested that the

Practicing Company Secretaries act as Advisor to an Issue guidingadherence to various compliances by the SME proposing listing on theStock Exchange.

The certification of compliance by practicing company secretariesprovide comfort and assurance to SEBI and stock exchanges to the effectthat the proposed listing of SMEs conforms to all regulatory prescriptions


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A Company Secretary can effectively discharge responsibility ofinspection and investigations under SEBI Act, 1992, as he isthoroughly conversant with the technicalities and substantiveprovisions of the securities laws and capital market related matters,and has adequate exposure of financial matters, securities trading,banking and finance.

Recognizing the core competency of Practicing Company Secretary inlegal and procedural aspects of corporate, economic and securitieslaws, they have been recognized to act as authorized representativebefore the Tribunals, Appellate Tribunals, Quasi Judicial bodies suchas Company Law Board, MRTP Commission, Securities AppellateTribunal, National Company Law Tribunal, Competition Commission of

India, etc. In addition, Practicing Company Secretary is alsoauthorized to issue various certifications under the Regulations andGuidelines made under SEBI Act. The services of Practicing CompanySecretaries can therefore be utilized for market surveillance andinvestigation.

4 ACT AS MEMBER OF STOCK EXCHANGES


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4. ACT AS MEMBER OF STOCK EXCHANGES

Practicing Company Secretaries can take memberships of theexchange(s) on fulfilling the eligibility requirements laid downby SEBI.

5. COMPLIANCE CERTIFICATE ON 'QUALIFIED INSTITUTIONSPLACEMENT'

Regulation 84(3) reads as under-

"84 (3) The issuer shall, while seeking in-principle approval from

the recognized stock exchange, furnish a copy of the placementdocument, a certificate confirming compliance with theprovisions of this Chapter along with any other documentsrequired by the stock exchange."

Practicing Company Secretaries may issue this compliance

Certificate confirming the compliances under ICDR.The certification include legal/secretarial compliances. Since noSEBI approval is required for QIP, it will give additional comfortto SEBI if a comprehensive compliance certificate by PCS ismade mandatory for QIP Issue.


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Regulation 73 (2) of the SEBI ICDR regulations requires a

compliance certificate to be given by the statutory auditors. The

regulations read as under:

"73 (2) The issuer shall place a copy of the certificate of its

statutory auditor before the general meeting of the shareholders,

considering the proposed preferential issue, certifying that the

issue is being made in accordance with the requirements of these

regulations."

As most of the compliances relates to governance matters,Practicing Company Secretary may be authorized to issue this

Compliance Certificate at with other people.


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There are various regular compliancerequirements by a listed entity and its promoters

under SEBI (Substantial Acquisition of Shares &

Takeover) Regulations, 2011, SEBI (Prohibition of

Insider Trading) Regulations, 1992. There have

been incidences of non-compliance by listed

entities.

Practicing Company Secretary may certifycompliance of Takeover Code and Insider Trading

Regulations on yearly/half-yearly/quarterly basis

to help improve compliances.


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The Issuer may submit a comprehensive Certificate of

Compliance, covering various conditions / requirements

applicable for listing / continued listing, compliance

with SEBI Rules, Regulations obtained from the company

secretary' in practice, for each financial year. The issuermay also be required to place this certificate before the

meeting of its Board Directors for noting and forwarding

to the Stock Exchange within prescribed time.


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It is understood that the Forward Market Commission(FMC), as part of its initiatives to bring more

transparency to the functioning of Commodity Exchanges

and help ensuring a greater degree of compliances, is

making the audit of brokers mandatory once in threeyears.

Company Secretary in practice may conduct Brokers Audit

for members of the Commodity Stock.


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SUCCESS MANTRA

S- Strategic Thinking

U- Understanding

C- Curiosity & CommitmentC- Can do Attitude

E- Excellence in Knowledge

S- SincerityS- Strives for Excellence always

and Strong Work Ethics

Securities Laws in India

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