legal framework of corporate governance

8/12/2019 Legal Framework of Corporate Governance

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S E B I G U I D E L I N E S

LEGAL FRAMEWORK OF

CORPORATE GOVERNANCE


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SEBI LAWS

SECURITIES CONTRACTS

(REGULATION) ACT, 1956

This Act was enacted to prevent undesirable

transactions and to check speculation in thesecurities by regulating the business of dealingtherein.

Any stock exchange, which is desirous of beingrecognized, may make an application in theprescribed manner to the Central Government.
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CONT...

Every application shall contain such particulars as may beprescribed, and shall be accompanied by a copy of the bye-laws of the stock exchange for the regulation and control ofcontracts as well as a copy of the rules relating in general tothe constitution of the stock exchange, and in particular to:-

1. The governing body of such stock exchange, its constitutionand powers of management and the manner in which itsbusiness is to be transacted;

2. The powers and duties of the office bearers of the stockexchange;

3. The admission into the stock exchange of various classes of

members, the qualifications for membership, and theexclusion, suspension, expulsion and re-admission ofmembers there from or there into;

4. The procedure for the registration of partnerships asmembers of the stock exchange, in cases where the rulesprovide for such membership; and the nomination and

appointment of authorized representatives and clerks.


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CONT...

Every recognized stock exchange shall furnish theCentral Government with a copy of the annual report,and such annual report shall contain such particulars asmay be prescribed.

The restriction of voting rights to members only in respectof any matter placed before the stock exchange at anymeeting;

The regulation of voting rights in respect of any matterplaced before the stock exchange at any meeting sothat each member may be entitled to have one vote

only, irrespective of his share of the paid-up equitycapital of the stock exchange;

The restriction on the right of a member to appointanother person as his proxy to attend and vote at ameeting of the stock exchange; etc.


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CONT...

If, in the opinion of the Central Government, an emergencyhas arisen and for the purpose of meeting the emergency, theCentral Government considers it expedient so to do, it may,by notification in the Official Gazette, for reasons to be set outtherein, direct a recognized stock exchange to suspend such

of its business for such period not exceeding seven days andsubject to such conditions as may be specified in thenotification, and, if, in the opinion of the Central Government,the interest of the trade or the public interest requires that theperiod should be extended.

Securities Contracts (Regulation) Amendment Act, 2007 hasbeen enacted in order to further amend the SecuritiesContracts (Regulation) Act, 1956, with a view to includesecuritization instruments under the definition of 'securities' andprovide for disclosure based regulation for issue of thesecuritized instruments and the procedure thereof.


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SECURITIES AND EXCHANGE BOARDOF INDIA ACT, 1992

This Act was enacted to protect the interests ofinvestors in securities and to promote thedevelopment of, and to regulate, the securities

market and for matters connected therewith orincidental thereto. For this purpose, the SEBI (theBoard), by regulation, specify:-

a. The matters relating to issue of capital, transfer ofsecurities and other matters incidental thereto;and

b. The manner in which such matters shall bedisclosed by the companies.
http://business.gov.in/outerwin.php?id=http://indiacode.nic.in/rspaging.asp?tfnm=199215http://business.gov.in/outerwin.php?id=http://indiacode.nic.in/rspaging.asp?tfnm=199215http://business.gov.in/outerwin.php?id=http://indiacode.nic.in/rspaging.asp?tfnm=199215http://business.gov.in/outerwin.php?id=http://indiacode.nic.in/rspaging.asp?tfnm=199215


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CONT..

No stock-broker, sub-broker, share transfer agent, banker to an issue, underwriter,portfolio manager, investment adviser and such other intermediary who may beassociated with securities market shall buy, sell or deal in securities except under,and in accordance with, the conditions of a certificate of registration obtainedfrom the Board in accordance with the regulations made under this Act.

No depository, participant, custodian of securities, foreign institutional investor,credit rating agency, or any other intermediary associated with the securitiesmarket as the Board may by notification in this behalf specify, shall buy or sell ordeal in securities except under and in accordance with the conditions of acertificate of registration obtained from the Board in accordance with theregulations made under this Act.

Further, no person shall sponsor or cause to be sponsored or carry on or caused tobe carried on any venture capital funds or collective investment scheme includingmutual funds, unless he obtains a certificate of registration from the Board in

accordance with the regulations.

Every application for registration shall be in such manner and on payment of suchfees as may be determined by regulations. The Board may, by order, suspend orcancel a certificate of registration in a prescribed manner, as may be determinedby regulations under this Act.


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DEPOSITORIES ACT, 1996

This Act was enacted to provide for regulation ofdepositories in securities and for matters connectedtherewith or incidental thereto.

It provides for the introduction of fair trading systemand settlement, which is considered necessary forthe effective functioning of the securities markets.

As per the Act, the term 'depository' means "acompany formed and registered under the

Companies Act, 1956 and which has been granteda certificate of registration under sub-section (1A) ofsection 12 of the Securities and Exchange Board ofIndia Act, 1992".
http://business.gov.in/outerwin.php?id=http://indiacode.nic.in/rspaging.asp?tfnm=199622http://business.gov.in/outerwin.php?id=http://indiacode.nic.in/rspaging.asp?tfnm=199622


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CONT...

No depository shall act as a depository unless itobtains a certificate of commencement of businessfrom the Board (the SEBI).

The Board shall grant a certificate only if it issatisfied that the depository has adequate systemsand safeguards to prevent manipulation of recordsand transactions.


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CONT.

The Board, on being satisfied that it is necessary in the

public interest or in the interest of investors so to do, may,

by order in writing,:-

i. call upon any issuer, depository, participant or

beneficial owner to furnish in writing such information

relating to the securities held in a depository as it may

require; or

ii. Authorize any person to make an enquiry or inspection

in relation to the affairs of the issuer, beneficial owner,depository or participant, who shall submit a report of

such enquiry or inspection to it within such period as

may be specified in the order.

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