SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

1. PREAMBLE TO THE ACT

An Act to provide for the establishment of a Board to protect the interests of investors in
securities and to promote the development of, and to regulate, the securities market and
for matters connected therewith or incidental thereto.

2. SHORT TITLE, EXTENT AND COMMENCEMENT [SECTION 1]

Particulars Details
Short title This Act may be called the Securities and Exchange Board of India Act,
[Section 1(1)] 1992.
Extent of applicability
It extends to whole of India
[Section 1(2)]
Commencement of the Act It shall be deemed to have come into force on the 30th day of January,
[Section 1(3)] 1992.

3. SELECTED DEFINITIONS [SECTION 2]

Particulars Details
Board Board means the Securities and Exchange Board of India established
[Section 2(1)(a)] under section 3.
Collective investment
Collective investment scheme means any scheme or arrangement which
scheme
satisfies the conditions specified in section 11AA.
[Section 2(1)(ba)]
Judicial member means a member of the securities appellate tribunal
Judicial Member
appointed under sub-section (1) of section 15MA and includes the
[Section 2(1)(db)]
presiding officer.
Member
Member means a member of the board and includes the chairman.
[Section 2(1)(e)]
Technical Member Technical member means a technical member appointed under sub-
[Section 2(1)(j)] section (1) of section 15 MB.

4. ESTABLISHMENT AND INCORPORATION OF BOARD [SECTION 3]

Particulars Details
With effect from such date as the Central Government may, by
Establishment details
notification, appoint, there shall be established, for the purposes of this
[Section 3(1)]
Act, a Board by the name of the Securities and Exchange Board of India.
 Body Corporate
 Perpetual succession
Incorporation features  Common seal
[Section 3(2)]  Acquire, hold and dispose of property.
 Contract in its own name
 Capacity to sue or to be sued.
Head office and Branches Head office Mumbai
[Section 3 and Section 4] Branch office Such other places as decided.

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5. MANAGEMENT OF THE BOARD [SECTION 4]

Particulars Details
 Chairman.
 2 members from amongst the officials of the Ministry of the Central
Composition of the Board Government dealing with Finance and administration of the
[Section 4(1)(a) to Companies Act, 2013.
Section 4(1)(d)]  1 member from amongst the officials of the Reserve Bank.
 5 other members of whom at least 3 shall be the whole-time
members.
Appointed by whom?
Appointed by Central Government.
[Section 4(1)]
The general superintendence, direction and management of the affairs of
Powers vest with Board of
the Board shall vest in a Board of members, which may exercise all
members
powers and do all acts and things which may be exercised or done by the
[Section 4(2)]
Board.
The requisite qualification for Chairman and 5 other members (not 2nd
and 3rd category as aforesaid) shall be as follows ------
 Ability, integrity and standing who have shown capacity in dealing
with problems relating to securities market or
Qualifications required  Special knowledge or experience of -----
[Section 4(5)]  Law
 Finance
 Economics
 Accountancy
 Administration

6. TERM OF OFFICE AND CONDITIONS OF SERVICE OF CHAIRMAN AND MEMBERS

OF THE BOARD [SECTION 5 READ WITH RULE 3 OF SEBI RULES, 1992]
Particulars Details
Section deals with term of office and conditions of service including
termination of office of -----
What section deals  Chairman and
with?  5 other members
Note: Section doesn’t deal with appointment and term of office of
Ministry members and RBI member.
The term of office and other conditions of service of the Chairman and
the 5 other members shall be such as may be prescribed by the CG by the
rules.
As per Rule 3(2) ------
Power of CG
The Chairman and every whole-time Member shall hold office for such
[Section 5(1)]
period, not exceeding 5 years, as many be specified in the order of his
appointment; but he shall be eligible for reappointment.
However, no person shall hold office as the Chairman or a Member
after he attains the age of 65 years.

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 SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

The Central Government shall have the right to terminate the services of
the Chairman or any of the 5 other members, at any time before the
expiry of the period prescribed under sub-section (1), by giving him
CG power to terminate
notice of not less than 3 months in writing or 3 months’ salary and
and power of members to
allowances in lieu thereof, and the Chairman or a member, as the case
terminate
may be, shall also have the right to relinquish his office, at any time
[Section 5(2)]
before the expiry of the period prescribed under sub-section (1), by
giving to the Central Government notice of not less than 3 months in
writing.

7. REMOVAL OF MEMBERS OF THE BOARD [SECTION 6]

Particulars Details
Who has power to
remove? Central Government
[Section 6]
 Is, or at any time has been, adjudicated as insolvent.
 Is of unsound mind and stands so declared by a competent court.
 Has been convicted of an offence which, in the opinion of the central
Grounds of removal government, involves a moral turpitude.
[Section 6(a) to (e)] *******Clause d deleted*********
 Has, in the opinion of the central government, so abused his position
as to render his continuation in office detrimental to the public
interest.
Principles of natural
No member shall be removed under this clause unless he has been given
justice to be followed
a reasonable opportunity of being heard in the matter.
[Proviso to section 6]

8. MEETINGS OF THE BOARD [SECTION 7]

Particulars Details
Meetings as per The Board shall meet at such times and places, and shall observe such
Regulations rules of procedure in regard to the transaction of business at its meetings
[Section 7(1)] (including quorum at such meetings) as may be provided by regulation.
Presiding officer in case of The Chairman or, if for any reason, he is unable to attend a meeting of
absence of chairman the Board, any other member chosen by the members present from
[Section 7(2)] amongst themselves at the meeting shall preside at the meeting.
All questions which come up before any meeting of the Board shall be
Voting at the meetings decided by a majority votes of the members present and voting, and, in
[Section 7(3)] the event of an equality of votes, the Chairman, or in his absence, the
person presiding, shall have a second or casting vote.

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9. MEMBER NOT TO PARTICIPATE IN MEETINGS IN CERTAIN CASES [SECTION 7A]

Particulars Details
Any member, who is a director of a company and who as such director
has any direct or indirect pecuniary interest in any matter coming up for
consideration at a meeting of the Board, shall, as soon as possible after
Interest of the member
relevant circumstances have come to his knowledge, disclose the nature
and consequences
of his interest at such meeting and such disclosure shall be recorded in
the proceedings of the Board, and the member shall not take any part in
any deliberation or decision of the Board with respect to that matter.

10. VACANCIES ETC., NOT TO INVALIDATE PROCEEDINGS OF THE BOARD [SECTION

8]
Particulars Details
No act or proceeding of the Board shall be invalid merely by reason of---
 Any vacancy in, or any defect in the constitution of, the Board; or
No effect on proceedings  Any defect in the appointment of a person acting as a member of the
before the board Board; or
 Any irregularity in the procedure of the Board not affecting the
merits of the case.

11. FUNCTIONS OF THE BOARD [SECTION 11]

Particulars Details
It shall be the duty of the Board to protect the interests of investors in
Basic function securities and to promote the development of, and to regulate the
securities market, by such measures as it thinks fit.
 Regulating the business in stock exchanges and any other securities
markets.
 Registering and regulating the working of -----
 Stock brokers
 Sub-brokers
 Share transfer agents
 Bankers to an issue
 Trustees of trust deeds
 Registrars to an issue
Other functions  Merchant bankers
 Underwriters
 Portfolio managers
 Investment advisers
 Registering and regulating the working of -----
 Depositories
 Depository participants
 Foreign institutional investors
 Credit rating agencies
 Registering and regulating the working of -----

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SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

 Venture Capital funds

 Collective investment schemes
 Mutual Funds
 Promoting and regulating self-regulatory organisations.
 Promoting investors' education and training of intermediaries of
securities markets.
 Prohibiting insider trading in securities.
 Regulating substantial acquisition of shares and take-over of
companies.
 Calling for information from, undertaking inspection, conducting
inquiries and audits of the stock exchanges, mutual funds, other
persons associated with the securities market intermediaries and
self-regulatory organisations in the securities market.
 Board has following civil court powers
 Summoning and enforcing the attendance of persons
 Examining them on oath
 Discovery and production of books of account and other
documents.
 Inspection of any books, registers and other documents of any
person referred to in section 12.
 Issuing commissions for the examination of witnesses or
documents.
 SEBI shall have following special powers w.r.t. investigation
(either pending or complete) -----
 Suspend the trading of any security in a recognised stock
exchange;
 Restrain persons from accessing the securities market and
prohibit any person associated with securities market to buy, sell
or deal in securities;
 Suspend any office-bearer of any stock exchange or self-
regulatory organisation from holding such position;
 Impound and retain the proceeds or securities in respect of any
transaction which is under investigation;
 Attach, for a period not exceeding ninety days, bank accounts or
other property of any intermediary or any person associated with
the securities market in any manner involved in violation of any
of the provisions of this act, or the rules or the regulations made
thereunder. [Amended 2019]
However, the Board shall, within 90 days of the said attachment,
obtain confirmation of the said attachment from the Special
Court, established under section 26A, having jurisdiction and on
such confirmation, such attachment shall continue during the
pendency of the aforesaid proceedings and on conclusion of the
said proceedings, the provisions of section 28A shall apply.
However, that only property, bank account or accounts or any
transaction entered therein, so far as if related to the proceeds
actually involved in violation of any of the provisions of this Act,

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 SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

or the rules or the regulations made thereunder shall be allowed

to be attached.]
 Direct any intermediary or any person associated with the
securities market in any manner not to dispose of or alienate an
asset forming part of any transaction which is under
investigation.
However, the Board may, without prejudice to the provisions
contained in sub-section (2) or sub-section (2A), take any of the
measures specified in clause (d) or clause (e) or clause (f), in
respect of any listed public company or a public company (not
being intermediaries referred to in section 12) which intends to
get its securities listed on any recognised stock exchange where
the Board has reasonable grounds to believe that such company
has been indulging in insider trading or fraudulent and unfair
trade practices relating to securities market:
However, that the Board shall, either before or after passing such
orders, give an opportunity of hearing to such intermediaries or
persons concerned.
 Without prejudice to the provisions contained in sub-sections (1),
(2), (2A), (3) and (4), section 11B and Section 15-I, the Board may,
by an order, for reasons to be recorded in writing, levy penalty
under sections 15A, 15B, 15C, 15D, 15E, 15EA, 15EB, 15F, 15G,
15H, 15HA and 15HB after holding an inquiry in the prescribed
manner. [Amended 2019]
 The amount disgorged, pursuant to a direction issued, under
section 11B of this Act or section 12A of the Securities Contracts
(Regulation) Act, 1956 (42 of 1956) or section 19 of the
Depositories Act, 1996 (22 of 1996), 12[or under a settlement
made under section 15JB or section 23JA of the Securities
Contracts (Regulation) Act, 1956 (42 of 1956) or section 19-IA of
the Depositories Act, 1996 (22 of 1996)] as the case may be, shall
be credited to the Investor Protection and Education Fund
established by the Board and such amount shall be utilised by the
Board in accordance with the regulations made under this Act.

12. BOARD TO REGULATE OR PROHIBIT ISSUE OF PROSPECTUS, OFFER DOCUMENT

OR ADVERTISEMENT SOLICITING MONEY FOR ISSUE OF SECURITIES [SECTION
11A]
Particulars Details
Regulated through -----
How regulated?  Regulations (ICDR and LODR)
 Orders
By regulations  The matters relating to issue of capital, transfer
What are the controls? of securities.
 Disclosures required.

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 SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

By Orders  Prohibit any company from issuing prospectus,

any offer document, or advertisement soliciting
money from the public for the issue of securities.
 Specify the conditions subject to which the
prospectus, such offer document or
advertisement, if not prohibited, may be issued.

13. COLLECTIVE INVETMENT SCHEME [SECTION 11AA]

Particulars Details
Any scheme or arrangement which satisfies the conditions referred
below shall be a collective investment scheme:
Condition Content [Section 11AA(2)]
The contributions, or payments made by the
Condition – 1 investors, are pooled and utilized for the purposes of
the scheme or arrangement.
The contributions or payments are made to such
scheme or arrangement by the investors with a view
Condition – 2 to receive profits, income, produce or property,
What shall be construed whether movable or immovable, from such scheme
as a CIS? or arrangement.
[Section 11AA(1) read The property, contribution or investment forming
with Section 11AA(2) Condition – 3 part of scheme or arrangement, whether identifiable
and Section 11AA(2A)] or not, is managed on behalf of the investors.
The investors do not have day-to-day control over
Condition – 4 the management and operation of the scheme or
arrangement.
OR
Condition Content [Section 11AA(2A)]
Any scheme or arrangement made or offered by any
Only 1 person satisfying the conditions as may be specified
Condition in accordance with the regulations made under this
Act.
The following shall not be treated as CIS:
Particulars Details
Any pooling of funds under any scheme or
Proviso to arrangement, which is not registered with the Board
What shall not be treated
Section or is not covered under sub-section (3), involving a
as a CIS?
11AA(1) corpus amount of ₹ 100 crore or more shall be
[Proviso to 11AA(1)
deemed to be a collective investment scheme.
read with Section
Any scheme or arrangement offered by -----
11AA(3)(i) to Section
 Cooperative society registered under the Co-
11AA(3)(ix)]
operative Societies Act, 1912 or
Clause i
 Society being a society registered or deemed to be
registered under any law relating to co-operative
societies for the time being in force in any State.

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 SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

Any scheme or arrangement offered by -----

Clause ii  Under which deposits are accepted by non-
banking financial companies.
Any scheme or arrangement -------
Clause iii  Being a contract of insurance to which the
Insurance Act, 1938.
Any scheme or arrangement -------
 Providing for Any Scheme, Pension Scheme Or
Clause iv The Insurance Scheme Framed Under The
Employees Provident Funds And Miscellaneous
Provisions Act, 1952.
Any scheme or arrangement -------
Clause v  Under which deposits are accepted under section
58A of the Companies Act, 2013.
Any scheme or arrangement -------
Clause vi  Under which deposits are accepted by a company
declared as a Nidhi or a Mutual Benefit Society.
Any scheme or arrangement -------
Clause vii
 Falling within the meaning of chit business.
Any scheme or arrangement -------
Clause viii  Under which contributions made are in the
nature of subscription to a mutual fund.
Such other scheme or arrangement as central
Clause ix
government deem fit.

14. POWER TO ISSUE DIRECTIONS AND LEVY PENALTY [SECTION 11B]

Particulars Details
Who has power to issue
SEBI has power to issue directions.
directions?
Upon an enquiry being conducted, SEBI has formed an opinion that -----
 It is necessary in interest of investors or
When SEBI issues
 Orderly development of securities market or
directions?
 To prevent the affairs of any intermediary or other persons referred
[Section 11B(i) to
to in section 12 being conducted in a manner detrimental to the
Section 11B(iii)]
interests of investors or securities market or
 To secure proper management of any intermediary or person
Directions are issued to
 To any person or class of persons referred to in section 12 or
whom?
 To any person associated with securities market.
[Section 11B(a) and
Section 11B(b)]  To any company in respect of matters specified in section 11A.

For the removal of doubts, it is hereby declared that the power to issue
Power to order
directions under this section shall include and always be deemed to have
disgorgement
been included the power to direct any person, who made profit or
[Explanation to section
averted loss by indulging in any transaction or activity in contravention
11B]
of the provisions of this Act or regulations made thereunder, to disgorge

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 SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

an amount equivalent to the wrongful gain made or loss averted by such

contravention.

15. INVESTIGATION [SECTION 11C]

Particulars Details
 The transactions in securities are being dealt with in a manner
detrimental to the investors or the securities market or
Grounds for investigation
 Any intermediary or any person associated with the securities
[Section 11C(1)]
market has violated any of the provisions of this Act or the rules or
the regulations made or directions issued by the Board thereunder.
Power to investigate with
SEBI
whom?
What is the power of
 Order Investigating authority to investigate the affairs.
SEBI?
 Order to report to Board after investigation.
[Section 11C(1)]
Obligation on whom?  Intermediary
 Person associated with securities market
(or)
 Manager or
 Managing director or
 Officer and
Duty of various persons
[Section 11C(2) and  Employees
Section 11C(3)] of the Company and every intermediary
referred to in section 12 (or)
 Every person associated with securities
market.
What is the obligation? Produce all books, registers and other
required documents in their custody or
power.
 Investigating authority may keep in custody for a period of 6 months.
Period of custody  Investigating authority may call for books or register or any record if
[Section 11C(4) + 1st needed again.
Proviso + 2nd Proviso]  Investigating authority shall give certified copies of such documents
if required.
Examination on oath Investigating authority has a power to examine on oath any manager or
[Section 11C(5)] managing director or officer or any other employee.
 Fails to produce to the Investigating
Authority any book, register, other
Consequences of document and record which is his duty
contravention Nature of contravention to produce. (or)
[Section 11C(6)]  Fails to provide any information. (or)
 Fails to appear before investigating
authority personally. (or)

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 SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

 Fails to give answer for questions put

before him. (or)
 Fails to sign notes on examination.
He shall be punishable with
imprisonment for a term which may
extend to 1 year, or with fine, which may
What is the extend to 1 crore rupees, or with both, and
punishment? also with a further fine which may extend
to 5 lakh rupees for every day after the
first during which the failure or refusal
continues.
Notes on examination and Notes of any examination shall be taken down in writing and shall be
evidence read over to, or by, and signed by, the person examined, and may
[Section 11C(7)] thereafter be used in evidence against him.
Power with whom? Investigating authority
Power to seize books, registers and
What is the power?
records.
If investigating authority has a reason to
believe that the books, registers, other
records are likely to be ------
When can he exercise  Destroyed
such power?  Mutilated
 Altered
 Falsified or
 Secreted
Power to seize The Magistrate or Judge of such
Seize with whose permit?
[Section 11C(8) and designated court in Mumbai.
Section 11C(9) read Authorise the Investigating authority to –
with Proviso to Section What are powers of  Enter such place where books are kept
11C(9)] Magistrate or Judge?  Search such place
 Seize the books and documents.
The Magistrate or Judge of the Designated
Court] shall not authorise seizure of
books, registers, other documents and
record, of any listed public company or a
Restriction on seizure in public company (not being the
certain cases intermediaries specified under section
12) which intends to get its securities
listed on any recognised stock exchange
unless such company indulges in insider
trading or market manipulation.
Power to request for The authorised officer may requisition the services of any police officer
police assistance or any officer of the Central Government, or of both, to assist him for all
[Section 11C(8A)] or any of the purposes specified in sub-section (8).

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 SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

Period of retention of
 The Investigating Authority shall keep in its custody the books,
documents obtained on
registers, other documents and record seized under this section for
search and power to place
such period not later than the conclusion of the investigation.
id marks
 The Investigating Authority may, before returning such books,
[Section 11C(10) +
registers, other documents and record as aforesaid, place
Proviso to Section
identification marks on them or any part thereof.
11C(10)]
Search and Seizure shall
Every search or seizure made under this section shall be carried out in
be as per CrPC, 1973
accordance with the provisions of the Code of Criminal Procedure, 1973.
[Section 11C(11)]

16. CEASE AND DESIST PROCEEDINGS [SECTION 11D]

Particulars Details
 If the Board finds, after causing an inquiry to be made, that any
person has violated, or is likely to violate, any provisions of this Act,
or any rules or regulations made thereunder, it may pass an order
requiring such person to cease and desist from committing or
causing such violation.
Power to order for
 However, the Board shall not pass such order in respect of any listed
cease and desist
public company or a public company (other than the intermediaries
specified under section 12) which intends to get its securities listed
on any recognised stock exchange unless the Board has reasonable
grounds to believe that such company has indulged in insider trading
or market manipulation.

17. REGISTRATION OF STOCK BROKERS, SUB-BROKERS, SHARE TRANSFER

AGENTS, ETC [SECTION 12]
Particulars Details
 Stock broker
 Sub – broker
 Share transfer agent
 Banker to an issue
 Trustee to a trust deed
 Registrar
 Merchant banker
Applicable to whom?
 Underwriter
 Portfolio Manager
 Investment adviser
 Depository participant
 Foreign Institutional Investor
 Credit rating agency
 Sponsor to any scheme

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The persons so specified shall not buy or sell or deal in the securities
What is the obligation? except in accordance with the conditions specified by the board in the
certificate of registration.
18. PROHIBITION OF MANIPULATIVE AND DECEPTIVE DEVICES, INSIDER TRADING
AND SUBSTANTIAL ACQUISITION OF SECURITIES OR CONTROL [SECTION 12A]
Particulars Details
 Use or employ, in connection with the issue, purchase or sale of any
securities listed or proposed to be listed on a recognised stock
exchange, any manipulative or deceptive device or contrivance in
contravention of the provisions of this Act or the rules or the
regulations made thereunder;
 Employ any device, scheme or artifice to defraud in connection with
issue or dealing in securities which are listed or proposed to be listed
on a recognised stock exchange;
 Engage in any act, practice, course of business which operates or
would operate as fraud or deceit upon any person, in connection with
the issue, dealing in securities which are listed or proposed to be
Which acts are
listed on a recognised stock exchange, in contravention of the
prohibited?
provisions of this Act or the rules or the regulations made
[Section 12A(a), (b), (c)]
thereunder;
 Engage in insider trading;
 Deal in securities while in possession of material or non-public
information or communicate such material or non-public
information to any other person, in a manner which is in
contravention of the provisions of this Act or the rules or the
regulations made thereunder;
 Acquire control of any company or securities more than the
percentage of equity share capital of a company whose securities are
listed or proposed to be listed on a recognised stock exchange in
contravention of the regulations made under this Act.

19. GRANTS BY THE CENTRAL GOVERNMENT [SECTION 13]

Particulars Details
The Central Government may make to the Board grants of such sums of
Grants by CG money as that Government may think fit for being utilised for the
purposes of this Act.

20. FUND [SECTION 14]

Particulars Details
Name of the fund
The Securities and Exchange Board of India General Fund.
[Section 14(1)]
Debits Credits
Credits and Debits to the
the salaries, allowances and other All grants, fees and charges
fund
remuneration of the members,

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 SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

[Section 14(1)(a) and officers and other employees of

(b) read with Section the Board.
14(2)] the expenses of the Board in the All other sums received
discharge of its functions under
section 11.
Other expenses to achieve objects.

21. ACCOUNTS AND AUDIT [SECTION 15]

Particulars Details
Maintenance of books as
The Board shall maintain proper Books as prescribed by CG in
per CG stipulations
consultation with C&AGI.
[Section 15(1)]
Audit The accounts of the Board shall be audited by the Comptroller and
[Section 15(2)] Auditor-General of India.
Powers of C&AGI during
the course of audit Same as powers during the course of audit of government company.
[Section 15(3)]
Place before parliament The accounts certified by C&AGI shall be placed before both houses of
[Section 15(4)] parliament.

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22. PENALTIES AND ADJUDICATION [SECTION 15 A TO SECTION 15 JB]

Who is
Particulars When Liable? What is the Liability?
Liable?
Fails to furnish any document, return or Imprisonment No
report to the Board.
Liable to a penalty
Furnishes or files false, incorrect or
Any Person
Penalty for failure to furnish incomplete information, return, report, books Minimum ₹ 1,00,000
who is
information, return, etc. or other documents
required to
[Section 15A] Fails to file any return or furnish any
comply.
information, books or other documents within ₹ 1,00,000 every day till
Maximum
the time specified. a maximum of ₹ 1 crore.
Fails to maintain books of account or records.
Imprisonment No
Any person,
Penalty for failure by any Liable to a penalty
who is
person to enter into
Fails to enter into an agreement with his client. registered as Minimum ₹ 1,00,000
agreement with clients
an
[Section 15B] ₹ 1,00,000 every day till
intermediary. Maximum
a maximum of ₹ 1 crore.
Listed Imprisonment No
company or
Liable to a penalty
Penalty for failure to redress any person
investors’ grievances Fails to redress the grievances of investors. who is Minimum ₹ 1,00,000
[Section 15C] registered as
an ₹ 1,00,000 every day till
Maximum
intermediary a maximum of ₹ 1 crore.

Such Imprisonment No
Company Liable to a penalty

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 SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

Penalty for failure to observe Failure to comply with any of the regulations Asset Minimum ₹ 1,00,000
rules and regulations by an providing for restrictions on the activities of the management
asset management company asset management companies. ₹ 1,00,000 every day till
Maximum
[Section 15E] a maximum of ₹ 1 crore.
Fails to comply with the regulations made by the Imprisonment No
Board in respect of alternative investment funds, Shall be liable to a penalty
Penalty for default in case of infrastructure investment trusts and real estate
alternative investment funds, investment trusts or fails to comply with the Minimum ₹ 1,00,000
infrastructure investment directions issued by the Board.
Any person ₹ 1,00,000 every day till
trusts and real estate a maximum of ₹ 1 crore
investment trusts. or three times the
[Section 15 EA] Maximum
amount of gains made
out of such failure,
whichever is higher.

Penalty for default in case of Fails to comply with the regulations made by the Investment Liable to a penalty
investment adviser and Board or directions issued by the Board, such adviser or Minimum ₹ 1,00,000
research analyst. investment adviser or research analyst. research ₹ 1,00,000 every day till
[Section 15 EB] analyst Maximum
a maximum of ₹ 1 crore.
Liable to a penalty
Fails to issue contract notes in the form and Minimum – More than ₹ 1 Lakh
Case 1
manner specified by the stock exchange of which and
such broker is a member. [Case 1] Person, Maximum – extend up to
Penalty for default in case of
registered as amount on contract note
stock brokers
a Stock
[Section 15 F] Fails to deliver any security or fails to make Liable to a penalty
Broker
payment of the amount due to the investor in the Minimum – ₹ 1 lakh
Case 2
manner within the period specified in the Maximum – ₹ 1,00,000 every
regulations. [Case 2] day till a maximum of ₹ 1 crore.

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Liable to a penalty
Charges an amount of brokerage which is in
Minimum – More than ₹ 1 lakh
excess of the brokerage specified in the Case 3
Maximum – 5 times of the
regulations. [Case 3]
Brokerage charged in excess.
Ground 1 – Fails to disclose the aggregate of his
shareholding in the body corporate before he
acquires any shares of that body corporate.
Ground 2 – Fails to make a public announcement Liable to a penalty
Penalty for non-disclosure of Any person
to acquire shares at a minimum price. Minimum – ₹ 10 Lakhs
acquisition of shares and who is
Ground 3 – Fails to make public offer by sending Maximum – ₹ 25 crores or 3 times profit so
takeovers required to
letter of offer to the shareholders of the made whichever is higher.
[Section 15 H] comply
concerned company.
Ground 4 – Fails to make payment of
consideration to the shareholders who sold their
shares pursuant to letter of offer.
Liable to a penalty
Penalty for fraudulent and
Indulges in fraudulent and unfair trade practices Minimum – ₹ 5 Lakhs
unfair trade practices Any Person
relating to securities Maximum – ₹ 25 crores or 3 times profit so
[Section 15HA]
made whichever is higher.
Penalty for contravention Fails to comply with any provision of this Act, the
Liable to a penalty
where no separate penalty rules or the regulations made or directions issued
Whoever Minimum – ₹ 1 Lakh
has been provided by the Board thereunder for which no separate
Maximum – ₹ 1 Crore
[Section 15HB] penalty has been provided.
Ground 1 – Deals in securities of a body corporate
Liable to a penalty
listed on any stock exchange on the basis of any
Penalty for Insider Trading Minimum – ₹ 10 Lakhs
unpublished price-sensitive information. Any Insider
[Section 15G] Maximum – ₹ 25 crores or 3 times profit so
Ground 2 – Communicates any unpublished
made whichever is higher.
price-sensitive information to any person, with or

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without his request for such information except

as required under law.
Ground 3 – Counsels, or procures for any other
person to deal in any securities of any body
corporate on the basis of unpublished price-
sensitive information
Ground 1 – Without obtaining certificate of Imprisonment No
registration from the Board sponsoring or Liable to a penalty
carrying on any collective investment scheme,
including mutual funds.
Ground 2 – Fails to comply with the terms and Minimum ₹ 1,00,000
Penalty for certain defaults
conditions of certificate of registration.
in case of mutual funds Any Person
Ground 3 – Fails to list its schemes of Mutual
[Section 15D]
funds or C.I.S.
Ground 4 – Fails to dispatch unit certificates. ₹ 1,00,000 every
Ground 5 – Fails to refund the application money Maximum day till a maximum
paid. of ₹ 1 crore.
Ground 6 – Fails to invest for requisite purpose.

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23. POWER TO ADJUDICATE [SECTION 15 – I]

Particulars Details
Purpose of Section For the purpose of adjudging under sections 15A, 15B, 15C, 15D, 15E,
[Section 15-I(1)] 15EA, 15EB, 15F, 15G, 15H, 15HA and 15HB.
Power to appoint with
whom? SEBI
[Section 15-I(1)]
Qualification of
Adjudication authority Any officer not below the rank of a Division Chief of SEBI.
[Section 15-I(1)]
 Holding an inquiry and
Purpose of adjudication
 Imposing a penalty
[Section 15-I(1)]
After giving a reasonable opportunity of being heard.
Power of adjudicating
 Summon and enforce the attendance of any person.
officer during inquiry
 Produce any document.
[Section 15-I(2)]
 If, SEBI considers that the order passed by the adjudicating officer is
Special powers of SEBI erroneous, -----
[Section 15-I(3)]  It shall give an OBH and
 Pass an order enhancing the quantum of penalty.

24. FACTORS TO BE TAKEN INTO ACCOUNT WHILE ADJUDGING QUANTUM OF

PENALTY [SECTION 15J]
Particulars Details
When section gets Section gets attracted while adjudging the quantum of penalty under 15-
attracted? I or section 11 or section 11B.
 Amount of disproportionate gain or unfair advantage.
Factors to be considered  Amount of loss caused to investor or investor group.
 Repetitive nature of default.

25. CREDITING SUMS REALISED BY WAY OF PENALTIES TO CONSOLIDATED FUND

OF INDIA [SECTION 15JA]
Particulars Details
All sums realised by way of penalties under this Act shall be credited to
Crediting the sums
the Consolidated Fund of India.

26. SETTLEMENT OF ADMINISTRATIVE AND CIVIL PROCEEDINGS [SECTION 15 JB]

Particulars Details
 Proceedings that actually or likely to initiate under -----
Settlement of proceedings
 Section 11 or
under which sections?
 Section 11B or
[Section 15JB(1)]
 Section 11D or

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 Section 12(3) or
 Section 15 – I.
Application to whom, for The person concerned may file an application in writing to the Board
settlement? proposing for settlement of the proceedings initiated or to be initiated
[Section 15JB(1)] for the alleged defaults.
The Board may, after taking into consideration the nature, gravity and
Power of Board to settle
impact of defaults, agree to the proposal for settlement, on payment of
the default
such sum by the defaulter or on such other terms as may be determined
[Section 15JB(2)]
by the Board in accordance with the regulations made under this Act.
Settlement as per The settlement proceedings under this section shall be conducted in
procedure specified accordance with the procedure specified in the regulations made under
[Section 15JB(3)] this Act.
No appeal No appeal shall lie under section 15T against any order passed by the
[Section 15JB(4)] Board or adjudicating officer, as the case may be, under this section.
All settlement amounts, excluding the disgorgement amount and legal
Sums to be credited
costs, realised under this Act shall be credited to the Consolidated Fund
[Section 15JB(5)]
of India.

27. ESTABLISHMENT, JURISDICTION, AUTHORITY AND PROCEDURE OF

SECURITIES APPELLATE TRIBUNAL (SAT) [SECTION 15K TO SECTION 15Z]
Sl.no. Particulars Content
Establishment of a. Central Government shall establish.
Securities b. By notification in official gazette.
1 Appellate c. Tribunal to be known as ‘Securities Appellate Tribunal’
Tribunals d. For the purpose of ‘exercising the jurisdiction, powers and authority
[Section 15K] conferred on it’.
Presiding Officer
Judicial Members
Who shall fill the SAT?
Technical
Members
The jurisdiction of the SAT
Purpose may be exercised by
Benches
2
Composition of Presiding officer of SAT
SAT 2 or more Judicial or
[Section 15L] Technical members.
Benches of SAT Composition Every Bench constituted
shall include at least one
Judicial Member and one
Technical Member.
Main bench at Mumbai.
Place Other Benches at such
other places.

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A Judge of the Supreme

Court or
Presiding A Chief Justice of a High
officer Court or
A Judge of High Court for at
least seven years.
Judicial A Judge of High Court for at
Member least five years.
Qualification for A Secretary or an
appointment as Additional Secretary in the
Presiding Officer Ministry or Department of
or Member of Qualifications of the Central Government or
3 any equivalent post in the
Securities members
Appellate Central Government or a
Tribunal State Government.
[Section 15M] A person of proven ability,
Technical
integrity and standing
Member
having special knowledge
and professional
experience, of not less than
fifteen years, in financial
sector including securities
market or pension funds or
commodity derivatives or
insurance.
Appointment of The Presiding Officer and Judicial Members of the Securities Appellate
Judicial Tribunal shall be appointed by the Central Government in consultation
4
Members with the Chief Justice of India or his nominee.
[Section 15MA]
Appointed by Central Government on the recommendation of
whom? a Search-cum-Selection Committee

Chairperson Presiding Officer of SAT

Appointment of
technical Secretary, Department of
5 Member
member Economic Affairs
Composition of SCS
[Section 15MB] committee Secretary, Department of
Member
Financial Services
Secretary, Legislative
Member Department or Secretary,
Department of Legal Affairs
Appointment of Presiding
Validity of
Officer, a Judicial Member or
6 appointment of Defect or vacancy in SCS Committee
a Technical Member of the
Presiding officer
Securities Appellate

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and members of Tribunal shall be not be

SAT invalid.
[Section 15MC] Member of the Board.
Member of IRDA.
On whom? Member of Pension fund
regulatory development
authority.
From being appointed as-----
From what? Presiding officer or
Disqualifications Member of SAT.
As such during the
tenure.
Within two years from
Period? the date on which he
ceases to hold office as
such in the Board or in
such Authorities.
For a period of five years
Tenure of office Term of office from the date on which he
of Presiding enters upon his office
Officer and other
Shall be eligible for
Members of
7 Reappointment reappointment for another
Securities
term of maximum 5 years.
Appellate
Tribunal They shall not hold office
[Section 15N] Age Limits after he has attained the age
of seventy years.

Salary and Presiding officers and other

allowances and Who are covered?
members.
other terms and
conditions of
8
service of
Presiding Salary, allowances, other terms and
Officers Shall be as such as may be
conditions, pension, gratuity, and
[Section 15O] prescribed.
other retirement benefits.

Filling up of Central Government shall

vacancies in appoint another person in
Type of
9 office of Temporary absence accordance with the
absence.
Presiding officer provisions of this Act to fill
or Members the vacancy.

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[Section 15P] Senior-most Judicial

Member of the SAT shall act
Absence by death, as the Presiding Officer until
resignation or the date on which a new
otherwise Presiding Officer is
[Section 15PA] appointed in accordance
with the provisions of this
Act.
Presiding officer or any
Of Whom?
other member
Notice to whom? Central government
Nature? In Writing
Earlier of the Following
Resignation 3 months from the date
Resignation and of receipt of such notice
10 Removal Date of Resignation or
[Section 15Q] taking effect? Until a person duly
appointed as his
successor enters upon
his office or
Until expiry of his term
By Whom? Central government.
Conditions before
Inquiry by Judge of SC.
removal?
Adjudged as an insolvent.
Become physically or mentally
incapable.
Grounds Convicted of any offence which, involves
for moral turpitude
Removal
removal Abused his position.
Acquired such financial interest or other
interest as is likely to affect prejudicially
his functions.
Before
OBH shall be given for last two grounds.
removal
Who are
Presiding officer or any other member.
covered?
No act or proceeding before a Securities
Orders constituting Appellate Tribunal to be Appellate Tribunal shall be called in
11 final and not to invalidate its proceedings question in any manner on the ground
[Section 15R] merely of any defect in the constitution of a
Securities Appellate Tribunal.
Staff of the Securities Appellate Tribunal CG shall appoint such officers and
12
[Section 15S] employees.

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The officers and employees of the

Securities Appellate Tribunal shall
discharge their functions under general
superintendence of the Presiding Officer.
Who may prefer an
Any person aggrieved
appeal?
Board
Aggrieved by whose Adjudicating officer
order? IRDAI
Appeal to SAT PFRDAI
13
[Section 15T] Time Limit for filing an Within 45 days from the date of receipt of
appeal order.
Principles of Natural SAT pass orders only after giving the parties
justice to appeal a reasonable OBH.
Time limit for disposal Within 6 months from the date of receipt of
of appeal appeal
Shall not be bound by CPC.
Shall be guided by the
Principles of Natural
Procedure followed by SAT
justice.
SAT shall have its own
procedures.
Procedure and
powers of the Summoning and enforcing
Securities the attendance of a person.
14 Examination on oath.
Appellate
Tribunal Discovery and production
[Section 15U] of documents.
Powers of SAT – Like powers of a
Receiving evidence on
civil court
affidavits.
Issuing commissions for
examination of witnesses.

The appellant may either appear in person or authorise one or more

Right to legal
chartered accountants or company secretaries or cost accountants or
15 representation
legal practitioners or any of its officers to present his or its case before the
[Section 15V]
Securities Appellate Tribunal.

Limitation The provisions of the Limitation Act, 1963 shall, apply to an appeal made
16 to a Securities Appellate Tribunal.
[Section 15W]

Presiding Officer, Members and staff of The Presiding Officer, Members and other
17 Securities Appellate Tribunals to be public officers and employees of a SAT shall be
servants [Section15X] deemed to be public servants.

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No civil court shall have jurisdiction to

entertain any suit or proceeding in respect
of any matter which an adjudicating officer
Civil Court not to have jurisdiction [Section
18 appointed under this Act or a Securities
15Y]
Appellate Tribunal constituted under this
Act is empowered by or under this Act to
determine.
Who may prefer an Any person aggrieved by any decision or
19 appeal? order of the SAT.
Appeal to Appeal to whom? Supreme Court
Supreme court Within 60 days from the date of
[Section 15Z] Time Limit for
communication of the decision or order of
preferring an appeal?
the Securities Appellate Tribunal
Appeal on what? Appeal only on question of law

28. OFFENCES AND SPECIAL COURTS [SECTION 24 – SECTION 28]

Particulars Details
If any person contravenes or attempts to contravene or
When Section gets
abets (encourages) the contravention of the provisions of
attracted?
this Act or of any rules or regulations made thereunder.
Offences Imprisonment (or) Up to 10 years
What is the
[Section Fine (or)
punishment? Up to ₹ 25 crores
24(1)] Both
What about Without prejudice to any award of penalty by the
penalties levied adjudicating officer under this Act, this section shall apply.
u/s 15?
If any person fails to pay the penalty imposed by the
When Section gets
adjudicating officer or fails to comply with any of his
attracted?
Offences directions or orders.
[Section Min – 1 month
Imprisonment (or)
24(2)] What is the Max – 10 Years
punishment? Fine (or) Max – ₹ 25 crores
Both
Any offence punishable under this Act, not being an offence
Composition of
punishable with imprisonment only, or with imprisonment
Composition which offences?
and also with fine.
of certain
Who is the
offences
Compounding Securities Appellate Tribunal
[Section
authority?
24A]
Time for Compounding may be may either before or after the
compounding institution of any proceeding.

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Section shall apply notwithstanding anything contained in

Overriding effect
the Code of Criminal Procedure.
Cognizance
of offences No court shall take cognizance of any offence punishable
Cognizance upon
by courts under this Act or any rules or regulations made
whose complaint?
[Section thereunder, except on a complaint made by the Board.
26]
Established by
Central government
Special whom?
courts For the purpose of providing speedy trial of offences under
Purpose?
[Section this Act.
26A] Who shall be presiding
and Single Judge.
Composition of officer?
Offences
Special court? Central Government with
triable by Appointed by whom?
Special concurrence of CJ of HC.
Courts Trial of offences by All offences under this Act shall be taken cognizance of and
[Section 26 whom? tried by the Special Court.
B] Which Special The Special Court established for the area in which the
court? offence is committed.

Offence by whom? Offence committed by a Company.

Offences by
companies Every person who at the time the offence was committed
[Section Who shall be was in charge of, and was responsible to, the company for
27] liable? the conduct of the business of the company and shall be
punished accordingly.
Any Person -----
When Section gets  Fails to pay the penalty imposed.
attracted?  Fails to refund money.
 Fails to pay fees to Board.
What is the effect
Recovery proceedings shall initiate.
of the section?
Recovery of
Recovery by
amounts Recovery by a recovery officer.
whom?
[Section
28A] Who shall be a
Recovery Officer” means any officer of the Board.
recovery officer?
 Attachment and sale of the person's movable property.
 Attachment of the person's bank accounts.
Modes of recovery  Attachment and sale of the person's immovable
property.
 Arrest of the person and his detention in prison.

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 Appointing a receiver for the management of the

person's movable and immovable properties.

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