Securities Contracts (Regulation) Act, 1956 and Securities Contracts

Securities Contracts (Regulation) Act, 1956

Definition: The Securities Contracts (Regulation) Act, 1956 is a law that provides for direct and indirect control of virtually all aspects of securities trading and the running of stock exchanges.
Objective: The objective of SC(R)A is to prevent undesirable speculation and to regulate contracts and transactions in securities.

Regulatory Jurisdiction: The Central Government has regulatory jurisdiction over stock exchanges, contracts in securities, and listing of securities on stock exchanges.
Call for Periodical Returns: Every member of a recognized stock exchange must maintain and preserve books of accounts and other documents for a specified period.
Inspection by SEBI: SEBI can inspect the books of accounts and other documents of a recognized stock exchange or its members.
Contract as Principal: No member of a recognized stock exchange can enter into a contract as a principal with any person other than a member of a recognized stock exchange, unless they have secured the consent or authority of such person.

Penalty for Non-Compliance: Any person who fails to comply with the provisions of SCRA can be punishable with imprisonment or a fine.
SEBI's Power: SEBI has the power to impose penalties, inspect books of accounts, and make inquiries into the affairs of a recognized stock exchange or its members.
Settlement of Proceedings: SEBI can settle proceedings initiated or to be initiated for alleged defaults, on payment of a sum or on such other terms as may be determined by SEBI.

Section 6: Requires every member of a recognized stock exchange to maintain and preserve books of accounts and other documents.
Section 15: Prohibits a member of a recognized stock exchange from entering into a contract as a principal with any person other than a member of a recognized stock exchange.
Section 23: Provides for penalties for non-compliance with the provisions of SCRA.
Section 23A: Provides for penalties for failure to furnish information or documents to SEBI.
Section 23B: Provides for penalties for failure to enter into an agreement with a client.
Section 23C: Provides for penalties for failure to redress the grievances of an investor.
Section 23D: Provides for penalties for failure to segregate securities or monies of clients.
Section 23E: Provides for penalties for failure to comply with listing conditions or delisting conditions.

Definition: The Securities Contracts (Regulation) Act, 1956 is a law that regulates securities contracts in India.
Details: The Act provides for the regulation of securities contracts, including the establishment of stock exchanges, the listing of securities, and the trading of securities.

SEBI Act: The SEBI Act, 1992 is a law that established the Securities and Exchange Board of India (SEBI) as the primary regulator of the securities market in India.
SCRA: The Securities Contracts (Regulation) Act, 1956 is a law that regulates securities contracts in India.
SEBI Stock Broker Regulations: The SEBI Stock Broker Regulations, 1992 are regulations that govern the conduct of stockbrokers in India.

Case 5.2: SEBI vs. Ashok Shivlal Rupani, Naresh Shivlal Rupani and Utam Ravji Gada: This case involved a violation of regulation 30(4) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company failed to make a corporate announcement to the stock exchange regarding a change in management.
Case 5.3: SEBI Settlement order in respect of Polson Limited: This case involved a company that failed to comply with the minimum public shareholding (MPS) requirements under Rule 19(2)(b) and 19A of SCRR, 1957.

Rule 8: This rule specifies the eligibility criteria for membership of a recognized stock exchange.
Rule 9: This rule requires all contracts entered into between members of a recognized stock exchange to be confirmed in writing and to be enforced in accordance with the rules and bye-laws of the stock exchange.
Rule 12: This rule requires every member to get their accounts audited by a chartered accountant whenever such audit is required by SEBI.
Rule 15: This rule requires every member of a recognized stock exchange to maintain and preserve certain books of account and documents for a specified period.

The trading members of the stock exchanges are required to maintain the counterfoils or duplicates of contract notes issued to clients for 2 years.
Members of the stock exchanges are required to preserve books and accounts and other documents for a specific period of time.
The statement that a stockbroker of a recognised stock exchange can enter into a contract in securities with another stockbroker after obtaining his consent is False.
The manner in which the derivatives contracts and other contracts should be dealt in the securities market are prescribed in the SCRA, 1956.