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(a) SEBI Act, 1992: The provisions of the SEBI Act define its role in more specific terms. These broadly relate to (i) Regulating the business in stock exchanges and any other Securities Markets (ii) Registration and regulation of a range of financial intermediaries and trade participants (iii) Prohibiting practices that are considered to be unhealthy for development of the Securities Market such as insider trading and fraudulent and unfair trade practices for promoting and regulating self regulatory organizations (iv) Promoting investors education and training of intermediaries of Securities Markets (v) Inspection and calling for information from various regulated entities referred to in (ii) above (vi) Conducting research (viii) Collecting fees or other charges for carrying out the purposes of this section and (ix) Performing such other functions as may be prescribed. (b) Securities Contracts (Regulation) Act, 1956: It provides for direct and indirect control of virtually all aspects of securities trading and the running of stock exchanges and aims to prevent undesirable transactions in securities. It gives central government/SEBI regulatory jurisdiction over (a) stock exchanges through a process of recognition and continued supervision, (b) contracts in securities, and (c) listing of securities on stock exchanges. As a condition of recognition, a stock exchange complies with prescribed conditions of Central Government. Organised trading activity in securities takes place on a specified recognised stock exchange. The stock exchanges determine their own listing regulations which have to conform to the minimum listing criteria set out in the Rules.
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The four main legislations governing the Securities Market are: (a) the SEBI Act, 1992 which establishes SEBI
to protect investors and develop and regulate Securities Market; (b) the Companies Act, 1956, which sets out
the code of conduct for the corporate sector in relation to issue, allotment and transfer of securities, and disclosures
to be made in public issues; (c) the Securities Contracts (Regulation) Act, 1956, which provides for regulation of
transactions in securities through control over stock exchanges; and (d) the Depositories Act, 1996 which provides
for electronic maintenance and transfer of ownership of demat securities.
(a) SEBI Act, 1992: The provisions of the SEBI Act define its role in more specific terms. These broadly relate to
(i) Regulating the business in stock exchanges and any other Securities Markets (ii) Registration and regulation
of a range of financial intermediaries and trade participants (iii) Prohibiting practices that are considered to be
unhealthy for development of the Securities Market such as insider trading and fraudulent and unfair trade
practices for promoting and regulating self regulatory organizations (iv) Promoting investors education and
training of intermediaries of Securities Markets (v) Inspection and calling for information from various regulated
entities referred to in (ii) above (vi) Conducting research (viii) Collecting fees or other charges for carrying out
the purposes of this section and (ix) Performing such other functions as may be prescribed.
(b) Securities Contracts (Regulation) Act, 1956: It provides for direct and indirect control of virtually all aspects
of securities trading and the running of stock exchanges and aims to prevent undesirable transactions in securities.
It gives central government/SEBI regulatory jurisdiction over (a) stock exchanges through a process of recognition
and continued supervision, (b) contracts in securities, and (c) listing of securities on stock exchanges. As a
condition of recognition, a stock exchange complies with prescribed conditions of Central Government. Organised
trading activity in securities takes place on a specified recognised stock exchange. The stock exchanges determine
their own listing regulations which have to conform to the minimum listing criteria set out in the Rules.
(c) Depositories Act, 1996: The Depositories Act, 1996 provides for the establishment of depositories in securities
with the objective of ensuring free transferability of securities with speed, accuracy and security by (a) making
securities of public limited companies freely transferable subject to certain exceptions; (b) dematerialising the
securities in the depository mode; and (c) providing for maintenance of ownership records in a book entry form.
In order to streamline the settlement process, the Act envisages transfer of ownership of securities electronically
by book entry without making the securities move from person to person. The Act has made the securities of all
public limited companies freely transferable, restricting the companyโs right to use discretion in effecting the
transfer of securities, and the transfer deed and other procedural requirements under the Companies Act have
been dispensed with.
(d) Companies Act, 1956: It deals with issue, allotment and transfer of securities and various aspects relating
to company management. It provides for standard of disclosure in public issues of capital, particularly in the
fields of company management and projects, information about other listed companies under the same
management, and management perception of risk factors. It also regulates underwriting, the use of premium
and discounts on issues, rights and bonus issues, payment of interest and dividends, supply of annual report
and other information.
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