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Securities Exchange
Board of India Act, 1992

PART - A
 Objectives of SEBI Act, 1992 –

Objectives
of the Act

To protect the To promote the

To regulate the
interests of development of
seurities market
securities
investors in
market
securities

 SEBI is a body corporate– Section 3

1) SEBI is a body corporate having perpetual succession and a common seal with power to acquire,
hold and dispose off property, both movable and immovable and to contract, and shall sue and be
sued in its own name.
2) The SEBI has its Head Office at Mumbai and has powers to establish its offices at other places in
India.

 Composition of SEBI – Section 4

Composition of
the
SEBI

2 members from
amongst the Five other members
officials of the of whom at least
Ministry of the One member from three shall be the
Chairman amongst the whole time
Central
officials of the members, to be
Government
RBI appointed by the
dealing with
finance and Central Government
administration of

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About Composition of SEBI –

Term of office and - The Chairman and Whole time Members shall hold office for maximum 5 years but he
conditions of service shall be eligible for reappointment
- No person shall hold office as the Chairman or a Member after he attains the age of 65
of Chairman and years.
members of the - Right to termination –
Board – Section 5 The Central Government will have the right to terminate the services of the Chairman
or the Members appointed by CG at any time before the expiry of their tenure –
a) by giving not less than three months’ notice in writing; or
b) three months‘ salary and allowance in lieu thereof
- Relinquishment of office –
The Chairman and all the other members shall have the right to relinquish office at any
time before the expiry of their tenure

by giving a notice of 3 months in writing to the CG.

Removal of The Central Government shall remove a member from office if he –
Members of the a) at any time has been adjudicated as insolvent; or
b) has been declared by a competent court to be of unsound mind; or
Board – Section 6 c) has been convicted of an offence which in the opinion of the CG, involves a moral
turpitude.
d) has in the opinion of the CG so abused his position as to render his continuance in
office detrimental to the public interest.
Note –
Before removal, a reasonable opportunity of being heard in the matter shall be given
Meetings of the - The Board shall meet at such times and places and shall observe such rules as may be
Board – Section 7 provided by regulations.
- If Chairman is unable to attend a meeting, any member chosen by the members
present from amongst themselves shall preside over the meeting.
- Decision by majority vote. In case of equal votes, Chairman or the presiding member
will have casting vote.
Member not to Any Member
participate in
meetings in certain who is a director of a company
cases – Section 7A and
who as such director has any indirect pecuniary interest in any matter coming up for
consideration at a meeting of the Board,

shall, disclose the nature 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.
Vacancies, etc., not - Any vacancy in the Board shall not invalidate any of the acts or proceeding of the Board
to invalidate - Similarly, the following events shall not invalidate any act or proceeding of the Board –
a) any defect in the constitution of the Board
proceedings of the b) any defect in the appointment of any person or member of the Board
Board – Section 8 c) any irregularity in the procedure of the Board not affecting the merits of the case

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 Functions of SEBI – Section 11

A) Duty of SEBI – Section 11(1)
It is the duty of the SEBI –
- protect the interests of the investors in securities and
- to promote the development of securities market, and
- to regulate the securities markets by such measures as it thinks fit.
B) Additional functions – Section 11(2)
SEBI shall also perform the following functions in addition to function specified under section 11(1)
–
Regulating the business in stock exchanges and any other securities markets
Registering and regulating the working of intermediaries associated with the securities market
Registering and regulating the working of –
a) venture capital funds,
b) collective investment schemes,
c) mutual funds
Promoting and regulating self-regulatory organisations.
Prohibiting fraudulent and unfair trade practices relating to securities
markets
Promoting investors’ education and training of intermediaries of
securities markets;
Prohibiting insider trading in securities;
Regulating substantial acquisition of shares and takeover of companies;
Calling for information, undertaking inspection, conducting inquiries and audits of the stock
exchanges, mutual funds, other persons associated with the securities markets
Calling for information from any person which relevant to any investigation or inquiry by the
SEBI in respect of any transaction in securities.
Levying fees or other charges for carrying out the purposes of this section
Conducting research for the above purposes
Performing such other functions as may be prescribed.

C) Inspection of companies – Section 11(2A)

SEBI may take measures to undertake inspection of any book, or register, or
other document or record of any listed public company or a public company
which intends to get its securities listed on any recognised stock exchange
where SEBI has reasonable grounds to believe that such company has been
indulging (involving) in insider trading or fraudulent and unfair trade practices
relating to securities market.

D) Powers of SEBI is same as vested with Civil Court – Section 11(3)

SEBI has been vested with the same powers as are available to a
Civil Court under the Code of Civil Procedure, 1908 for trying a
suit in respect of the following matters –

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the discovery and production inspection of any books,

summoning and
of books of account and registers and other
enforcing the attendance
other documents at such documents of any person
of persons and
place and such time listed referred in section 12
examining them on oath.
indicated by SEBI of the Act at any place.

inspection of any book or register or

other document or record of any issuing commissions
listed company or a public company for the examination
which intends to get its securities of witnesses or
listed on any recognized stock documents
exchange

E) Measures to be taken – Section 11(4)

After the completion of inquiry or during the inquiry is pending, SEBI may take any of the following
measures –
a) suspend the trading of any security in a recognised stock exchange.
b) restrain persons from accessing the securities market and prohibit any person associated with
securities market to buy, sell or deal in securities
c) suspend any office-bearer of any stock exchange or self-regulatory organisation from holding
such position.
d) seize and take legal custody of the proceeds or securities in respect of any transaction which is
under investigation
e) 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
f) direct any intermediary or any person associated with the securities market in any manner not
to dispose of or alienate (transfer) an asset forming part of any transaction which is under
investigation
Note –
SEBI before taking any actions or passing any order, will provide opportunity of being heard.

 To Regulate or Prohibit Issue of Prospectus, Offer Document or

Advertisement Soliciting (collecting / asking for) Money for Issue of Securities
– Section 11A
For the protection of investors SEBI may –

specify, by regulations – by general or special orders –

a) the matters relating to issue of capital, transfer of a) prohibit any company from issuing prospectus,
securities and other matters connected to it; and any offer document, or advertisement soliciting
b) the manner in which such matters shall be money from the public for the issue of securities;
disclosed by the companies b) specify the conditions subject to which the
prospectus, such offer document or
advertisement, if not prohibited, may be issued.

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 Power to Issue Directions and Levy Penalty – Section 11B

1) If SEBI is specified after making enquiries that it is necessary –
In the interest of the investors or orderly development of securities market; or
To prevent intermediary from conducting their business in the manner which is detrimental to
investor’s interest or securities market; or
to secure the proper management of any such intermediary or person
the SEBI may issue such directions as it deems fit to any person or intermediary or company.
2) The power to issue directions shall also include the power to direct any person to transfer all the
profit made through transactions entered in contravention of the Act or regulations.
3) SEBI also has the power to levy penalty under section 15 after holding inquiry.

 Investigations – Section 11C

1) Grounds for investigation –
Where the SEBI has reasonable ground to believe that –
The transactions entered in securities market are detrimental to the interest of the investors
or the securities market; or
any intermediary or any person associated with the securities market has
violated any of the provisions of this Act or the rules or the regulations
made or directions issued by SEBI
it may order in writing, investigation the affairs of any intermediary or any
person associated with the securities market.

2) Duty of officers to produce Accounts and Records –

It is the duty of every manager, managing director, officer and other employee
of the company and every intermediary or every person associated with the securities market to
produce accounts and records to investigating authorities / investigating officers

3) Powers of Investigating Authority –

a) Investigating authority may require any intermediary or any person associated with
securities market to furnish such information / records / books or registers as it may think
necessary for the purpose of investigation.
b) The Investigating Authority may keep in its custody any books / registers or any document
for six months and thereafter shall return the same
c) However, if required, investigating authority may call for information again.

4) To examine on oath –
1) Any person, directed to make an investigation may, examine on oath, any manager, managing
director, officer and other employee of any intermediary or any person associated with
securities market in any manner and for that purpose may require any of those persons to
appear before it personally.
2) Penalty
If any person fails without reasonable cause or refuses –
a) To produce to the Investigating Authority any books / records / documents etc.; or
b) to furnish any information which it is his duty to furnish; or
c) to appear before the Investigating Authority personally when required to do so or to
answer any question which is put to him by the Investigating Authority; or
d) to sign the notes of any examination,
then he shall be punishable with

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imprisonment – Maximum one year, or fine – Maximum one crore rupees

or with both; and

Also with a further fine which may extend to five lakh rupees for every day after the first
during which the failure or refusal continues

5) To take notes on examination –

Notes of any examination shall be taken down in writing and shall be read over to, or by, and
signed by the person whose examination is conducted, and may thereafter be used in evidence
against him.

6) Seizure of Records –
a) Grounds of seizure of records –
Where in the course of an investigation, the Investigating Authority has reasonable ground to
believe that the books, registers, other documents and record of, or relating to any, any
intermediary or any person associated with securities market may be destroyed, mutilated,
altered, falsified or secreted, then the Investigating Authority may make an application to the
Magistrate or Judge of such designated Court in Mumbai for the seizure of such books,
registers, other documents and records.
b) Application for assistance (help) –
The authorised officer may request the services of any police officer or any office of the Central
Government, or of both, to assist (help) him for all or any of the purposes specified above and
it shall be the duty of every such officer to comply with such request.
c) Order of the Magistrate or Judge of the Designated Court –
After considering the application and hearing the Investigating Authority, if necessary, the
Magistrate or Judge of the Designed Court may, by order, authorize the investigating authority
–
 to enter, with such assistance, as may be required, the place or places where such books,
registers, other documents and record are kept.
 to search that place or those places in the manner specified in the order and.
 to seize books, registers and other documents and records, it considers necessary for the
purpose of the investigation.
Note –
The Magistrate or Judge of the Designated Court shall not authorize seizure of books,
registers, other documents and record of any listed public company or a public company
which intends to get its securities listed on any recognized stock exchange unless such
company indulges in insider trading or market manipulation.
d) Period for which documents to be seized –
The Investigating Authority shall keep in its custody the books, registers, other documents and
record seized under this section for such period not later than the conclusion of the
investigation as it considers necessary and thereafter shall return the same and inform the
Magistrate or Judge of the Designated Court of such return

 Cease and Desist Proceedings – Section 11D

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a) If the SEBI 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.
b) However, the SEBI shall not pass such order in respect of any listed public company or a public company
which intends to get its securities listed on any recognized stock exchange unless SEBI has reasonable
grounds to believe that such company has indulged in insider trading or market manipulation.
Note –
Cease – come or bring to an end.
Desist – stop doing something;

 Additional functions of SEBI under the Securities Contracts (Regulation) Act, 1956
–

Power to call for  Power to inspect –

periodical returns or SEBI can inspect books of accounts and other documents maintained by
direct enquiries to be SE for periods not exceeding 5 years in public interest and in the interest
made – Section 6 of of trade by the CG
SCRA  Power of SEBI to call for information/explanation relating to affairs of
the stock exchange
 SEBI to appoint persons to make an inquiry –
a) SEBI can appoint persons to make inquiry in relation to the affairs of
the governing body of stock exchange or the affairs of any of the
members of the stock exchange.
b) Such person will make report submit to SEBI.
c) SEBI can also direct SE to make inquiry in relation to affairs of
member of SE and submit its report.
 SEBI will bound the concerned persons to produce documents before
himself /other enquiry officer
 Power to approve the bye-laws of stock exchanges
 Power of SEBI to make or amend bye-laws of recognised stock
exchanges

 Registration of Intermediaries – Section 12

Section 12(1) of the Act provides that the following intermediaries are required to obtain a registration
certificate from the SEBI to buy, sell or deal in securities:
a. Stock-Broker
b. Sub-Broker
c. Share Transfer Agent
d. Banker to an issue
e. Trustee of Trust Deed
f. Registrar to an Issue
g. Merchant Banker
h. Underwriter
i. Portfolio Manager
j. Investment Adviser
k. Depository Participant
l. Custodian of Securities
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m. Foreign Institutional Investor

n. Credit Rating Agency
o. Such other intermediary

 Prohibition of manipulative and deceptive devices, insider trading etc –

Section 12A
A person shall not directly or indirectly –
1) use or employ any manipulative or deceptive device in
contravention of the provisions of this Act or the rules or the
regulations in connection with the issue, purchase or sale of any
securities listed or proposed to be listed on a recognized stock
exchange
2) employ any device, scheme to defraud in connection with issue
or dealing in securities which are listed or proposed to be listed
on a recognized stock exchange;
3) engage in any act, practice, course of business which operates or would operate as fraud upon any
person, in connection with the issue, dealing in securities which are listed or proposed to be listed
on a recognized stock exchange, in contravention of the provisions of this Act or the rules or the
regulations
4) engage in insider trading
5) deal in securities while in possession of unpublished price sensitive information or communicate
such unpublished price sensitive information to any other person in contravention of the provisions
of this Act or the rules or the regulations

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6) 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 recognized stock exchange in
contravention of the regulations

 Penalties

Section Particulars of non-compliance Penalty

15A a) Failure to furnish required information with SEBI or Minimum 1 lakh rupees which may extend
furnishes false, incomplete or incorrect information to 1 lakh rupees for each day during which
b) Failure to file return within the time specified or files such failure continues subject to a
false, incomplete or incorrect return maximum of 1 crore rupees.
c) failure to maintain books of accounts or records
15B Failure of intermediary to enter into agreement with the Same as section 15A
clients
15C Failure by listed companies or any intermediary to redress Same as section 15A
investor’s grievances within the time specified by SEBI
15D Penalties for default in case of mutual funds –
a) If any person who is required to obtain certificate of
registration from SEBI for sponsoring any scheme or
carrying out activities of CIS or MF, fails to obtain Same as section 15A
certificate of registration
b) If any CIS or MF fails to comply with the terms and
conditions of certificate of registration;
c) If any CIS or MF fails to make an application for listing
of its schemes as provided for in the regulations
governing such listing
d) If any CIS or MF fails to dispatch unit certificates of
any scheme in the manner provided in the regulation
e) If any CIS or MF fails to refund the application monies
paid by the investors within the period specified in
the regulations
f) If any CIS or MF fails to invest money collected by
such collective investment schemes in the manner or
within the period specified in the regulations
15E Failure of an asset management company to comply with Same as section 15A
rules and regulations specified by SEBI
15EA failure to comply with the regulations made by the SEBI in Minimum 1 lakh rupees but which may
respect of alternative investment funds, infrastructure extend to 1 lakh rupees for each day during
investment trusts and real estate investment trusts or which such failure continues subject to a
failure to comply with the directions issued by the SEBI maximum of 1 crore rupees or 3 times the
amount of gains made out of such failure,
whichever is higher.
15EB Failure of investment adviser or a research analyst to Same as section 15A
comply with the regulations made by the SEBI or
directions issued by the SEBI

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15F Penalties for default in case of stock brokers –

a) failure to issue contract notes Minimum = 1 lakh
Maximum = 1 crore
b) failure to deliver any security or fails to make Minimum 1 lakh rupees which may extend
payment of the amount due to the investor’ to 1 lakh rupees for each day during which
such failure continues subject to a
maximum of 1 crore rupees
c) charges an amount of brokerage which is in excess of 1 lakh rupees or five times the amount of
the brokerage specified in the regulations brokerage charged in excess of the
specified brokerage, whichever is higher
15G Penalty for Insider Trading Minimum = 10 lakhs
Maximum = 25 crores or 3 times the profit
made out of insider trading, whichever is
higher
15H Penalty for Non-Disclosure of Acquisition of Shares and Minimum = 10 lakhs
Takeovers Maximum = 25 crores or 3 times the profit
made out of such failure, whichever is
higher
15HA Penalty for fraudulent and unfair trade practices Minimum = 5 lakhs
Maximum = 25 crores or 3 times the profit
made out of such practices, whichever is
higher
15HAA Penalty for alteration, destruction, etc., of records and Minimum = 1 lakh
failure to protect the electronic database of SEBI Maximum = 10 crores or 3 times the profit
made out of such act, whichever is higher
15HB Penalty for contravention where no separate penalty has Minimum = 1 lakh
been provided Maximum = 1 crore

 Settlement of Administrative and Civil Proceedings – Section 15JB

1) Any person against whom any proceedings have been initiated or may be initiated under –
- section 11,
- Section 11B,
- section 11D,
- section 12(3) (cancellation of certificate of registration pf
intermediary) or
- section 15-I,
may file an application in writing to the SEBI proposing for settlement of
proceeding initiated or to be initiated.
2) The SEBI, may, after taking into consideration the following factors
agree to the proposal for settlement, –
- the nature of defaults,
- gravity of defaults and
- impact of defaults,
3) If SEBI agrees for the settlement, then it will direct the concerned person to pay such settlement
amount as may be specified by SEBI.
4) No appeal shall lie under section 15T (appeal to SAT) against any order passed by the SEBI or
adjudicating officer with respect to settlement.
5) Amount received through settlement shall be credited to Consolidated fund of India
account.
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 Adjudications – Section 15-I

1)The SEBI may appoint any of its officers not below the rank of Division Chief to be an adjudicating officer
for holding an inquiry after giving any person concerned a reasonable opportunity of being heard for the
purpose of imposing any penalty.

1)The adjudicating officer has powers to summon and enforce the attendance of any person to give
evidence or any document which will be useful for the inquiry.

SEBI has the power to call for any information relating to proceedings under this section and if it considers
that the order passed by the adjudicating officer is erroneous to the extent it is not in the interests of the
securities market, it may, after making or causing to be made such inquiry as it deems necessary, pass an
order enhancing (increasing) the quantum (amount) of penalty, if the circumstances of the case so justify

SEBI, before passing any order mentioned above, should give oppurtunity of being heard to the concerned
person
Further, this section shall not be applicable after an expiry of a period of 3 months from the date of the
order passed by the adjudicating officer or disposal of the appeal under section 15-T(Appeal to SAT),
whichever is earlier

 What are the factors to be taken into account by the adjudicating officer –
Section 15J / JA
1) While adjudging the amount of penalty, the adjudicating officer shall consider the following factors –
a) the amount of gain because of default
b) the amount of loss caused to an investor or group of investors because of default
c) the repetitive nature of the default.

2) Section 15JA –
All sums realised by way of penalties under this Act shall be credited to the Consolidated Fund
of India.

 FINANCE, ACCOUNTS AND AUDIT

Grants by the The CG may make to the Board grants of such sums of money as
Central that Government may think fit after due appropriation made by
Government – Parliament for being utilized for the purposes of this Act.
Section 13
Fund – Section 14 1. A fund will be constituted which will be called as SEBI
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General Fund
2. Credits to the fund –
a) all grants, fees and charges received by the Board
under this Act;
b) all sums received by the Board from such other
sources as may be decided upon by the Central
Government.
3. Debits from the fund –
a) the salaries, allowances and other remuneration of the
members, officers and other employees of the Board;
b) the expenses of the Board in the discharge of its
functions under section 11;
c) the expenses on objects and for purposes authorised by
this Act.

Accounts and audit 1. Preparation of annual financial statement of Board in

– Section 15 consultation with CAG of India
2. The accounts of the Board shall be audited by the
Comptroller and Auditor-General of India and expenses of
audit will be payable by Board
3. Certified Accounts and Audit reports to be forwarded to
the Central Government and that Government shall cause
the same to be laid before each House of Parliament.

PART - B

Securities Appellate Tribunal

Introduction
Securities Appellate Tribunal is a statutory body established under the Section 15K of the Securities and
Exchange Board of India Act, 1992 to hear and to dispose appeals against orders passed by the SEBI or by
an adjudicating officer under the Act

Composition of SAT –

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SAT shall consist of Presiding officer and such number of Judicial Members and Technical Members as
the Central Government may determine to exercise the powers and discharge the functions granted on the
SAT under this Act or any other law for the time being in force.
Note –

a)a Bench may be constituted However, every Bench

by the Presiding Officer of the
the jurisdiction of the SAT may constituted shall include at
SAT with two or more Judicial
be exercised by Benches least one Judicial Member and
or Technical Members as he
one Technical Member
may deem fit

The Benches of the SAT shall

ordinarily sit at Mumbai and a)The Presiding Officer may
may also sit at such other transfer a Judicial Member or
places as the Central a Technical Member of the
Government may, in SAT from one Bench to
consultation with the another Bench.
Presiding Officer, notify

Qualification for appointment as Presiding Officer or Member of Securities Appellate Tribunal –

Officer / Member Qualifications

Presiding officer a) Is or has been –
- a Judge of the Supreme Court; or
- a Chief Justice of a High Court; or
- a Judge of High Court for at least 7 years,
b) The Presiding Officer of the SAT shall be appointed by the Central Government in
consultation with the Chief Justice of India or his nominee.
Judicial member a) Is, or has been, a Judge of High Court for at least 5 years
b) The judicial member of the SAT shall be appointed by the Central Government in
consultation with the Chief Justice of India or his nominee

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Technical member a) is, or has been, a Secretary or an Additional Secretary in the Ministry or
Department of the Central Government or any equivalent post in the Central
Government or a State Government; or
b) is a person of proven ability, integrity and standing having special knowledge and
professional experience, of not less than 15 years, in financial sector including
securities market or pension funds or commodity derivatives or insurance.
c) The Technical Members of the Securities Appellate Tribunal shall be appointed
by the Central Government on the recommendation of a Search-cum-Selection
Committee

Composition of Search-cum-Selection Committee –

a) Presiding Officer, Securities Appellate Tribunal – Chairperson;
b) Secretary, Department of Economic Affairs – Member;
c) Secretary, Department of Financial Services – Member; and
d) Secretary, Legislative Department or Secretary, Department of Legal Affairs –
Member.

Validity of appointment – Section 15MC

Validity of appointment

A member or part time member of -

Appointment of Presiding Officer, a
- the SEBI or
Judicial Member or a Technical Memberof
SAT shall not be invalid only because of - the Insurance Regulatory and Development Authority, or
any vacancy or any defect in the - the Pension Fund Regulatory and Development Authority, or
constitution of the Search cum- Selection
Committee. - any person at senior management level equivalent to the
Executive Director in the SEBI / IRDA or PFRDA
shall not be appointed as Presiding Officer or Member of the
Securities Appellate Tribunal, during his service or tenure or
within two years from the date on which he ceases to hold
office as such in the SEBI / IRDA / PFRDA.

Tenure of office of Presiding Officer and other Members of Securities Appellate Tribunal – Section 15N
1. Presiding Officer or every Judicial or Technical Member of the SAT shall hold office for a term of 5
years from the date on which he enters upon his office, and shall be eligible for reappointment for
another term of maximum 5 years;
2. However, no Presiding Officer or the Judicial or Technical Member shall hold office after he has
attained the age of 70 years.

Orders Constituting Appellate Tribunal to be Final and not to invalidate its Proceedings – 15R

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Section 15R makes it clear that no order of the Central Government appointing any person as the Presiding
Officer or a member of a Securities Appellate Tribunal shall be called in question in any manner, and no Act
or proceeding before a Securities Appellate Tribunals shall be called in question in any manner on the ground
merely of any defect in the constitution of a Securities Appellate Tribunal

Appeal to the SAT – Section 15T and 15U

Any person aggrieved by an order of the SEBI / adjudicating officer under this Act
or by an order of the IRDA or the PFRDA may prefer an appeal to a SAT

Appeal shall be made within 45 days from the reciept of order

On receipt of appeal and after giving the parties to opportunity of being heard
SAT will pass such orders as it think fit

SAT shall dispose of the appeal within 6 months from the date of receipt of the
appeal months
any person aggrieved by any decision or order of the SAT may file an appeal to
the Supreme Court within 60 days from the date of communication of the
decision or order of the Securities Appellate Tribunal to him on any question of
law arising out of such order

Note –
1) No appeal shall be made to SAT if the order passed by SEBI was with the consent of the parties.
2) The SAT may entertain an appeal after the expiry of the said period of 45 days if it is satisfied that
there was sufficient cause for not filing it within that period
3) The SC may entertain an appeal after the expiry of the said period of 60 days if it is satisfied that
there was sufficient cause for not filing it within that period
4) The SAT shall send a copy of every order made by it to the SEBI / IRDA / PFRDA and the parties to
the appeal and to the concerned Adjudicating Officer.
5) The SAT shall not follow the procedure laid down by the Code of Civil Procedure, 1908.
6) Securities Appellate Tribunal shall have powers to regulate their own procedure including the places
at which they shall have their sittings

Powers of SAT –
The SAT shall have the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 which
are as follows –
a) summoning and enforcing the attendance of any person and examining
him on oath;
b) requiring the discovery and production of documents;
c) receiving evidence on affidavits;
d) issuing commissions for the examination of witnesses or documents;
e) reviewing its decisions;
f) dismissing an application for default or deciding it ex parte;
g) setting aside any order of dismissal of any application for default or any
order passed by it ex parte;
h) any other matter which may be prescribed

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What if the bench of SAT consists of only 2 members and there is difference of opinions?
 If a Bench of the Securities Appellate Tribunal consisting of two members differ in opinion
on any point, they shall state the point or points on which they differ, and make a reference
to the Presiding Officer of the Securities Appellate Tribunal who shall either hear the point
or points himself or refer the case for hearing only on such point or points by one or more
of the other members of the Securities Appellate Tribunal and such point or points shall be
decided according to the opinion of the majority of the members of the Securities Appellate
Tribunal who have heard the case

Public Servants – Section 15X

Presiding Officer and other officers and employees of SEBI and SAT shall be deemed to be public servants

Jurisdiction of Civil Court – 15Y

Civil court has no jurisdiction to entertain any suit or proceedings which is to be determined by SEBI or SAT.

PART - C
Other related aspects with SEBI Act, 1992

Powers of Central Government (CG) –

Power to issue 1) CG has the power to issue directions in writing to the SEBI on questions of policy as it may
directions – deem fit from time to time
Section 16 2) Before giving directions to SEBI, CG shall provide an opportunity to the SEBI to express its
views
3) The decision of CG shall be final.
Power to 1. If at any time the Central Government is of opinion that –
Supersede the SEBI a) SEBI is unable to discharge the functions and duties imposed on it by or under the
– Section 17 provisions of this Act due to any emergency
b) the SEBI has persistently (continuously) made default in complying with any direction
issued by the Central Government
c) in public interest, it is necessary to do so
then, CG will supersede the SEBI for a maximum period of 6 months

2. Effect of CG superseding SEBI –

a) All the existing members shall vacate their office
b) All the powers of SEBI shall be exercised by the officers appointed by CG
c) All the property of SEBI shall be transferred to CG, until SEBI is reconstituted.

3. After the expiry of supersession, CG may reconstitute SEBI by a fresh appointment and in
such case any person or persons who vacated their offices because of supersession shall
not be deemed disqualified for appointment.

4. CG will prepare a report about the action taken under this section and the circumstances
to such action to be laid before each House of Parliament at the earliest.
Power to grant A) When immunity may be granted?
Immunity – Section - Central government on the recommendations by the SEBI, if satisfied that any
24B person has violated any rules or regulations made by SEBI and has made a full and
true disclosures in respect of such violations then CG has the power to grant
immunity from prosecution or also from the imposition of any penalty to such
person subject to conditions specified by CG
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B) When immunity should not be granted?

- No immunity shall be granted if the prosecution has been initiated before the
receipt of application for grant of such immunity.
- Recommendations of the SEBI shall not be binding upon the Central Government.
C) When immunity can be withdrawn?
- Immunity granted to any person can be withdrawn if such person does not comply
with the terms and conditions on which immunity was granted or gives false or
incorrect information / evidence.
- Once immunity is withdrawn then prosecution shall be initiated in the same
manner as if no immunity was granted and penalty may also be imposed.

Delegation (transfer) of powers – Section 19

SEBI may delegate its powers to any member, officer of the SEBI or any other person by making order in writing
subject to such terms and conditions as may be specified.

Offences and Punishments – Section 24 / 24A

1) Without prejudice to any award of penalty by the Adjudicating Officer or the SEBI under the SEBI
Act, if any person contravenes or attempts to contravene or abets(assist
/ encourage) the contravention of the provisions of this Act or of any rules
or regulations, he shall be punishable with imprisonment for a term
which may extend to 10 years or with fine which may extend to 25 crore
rupees or with both.
2) If any person fails to pay the penalty imposed by the Adjudicating Officer
or the SEBI or fails to comply with any of his directions or be punishable
with imprisonment for a term which shall not be less than 1 month, but
which may extend to ten years or with fine which may extend to 25 crore rupees or with both.
3) Offences which are not punishable with imprisonment only or with imprisonment and fine, may be
compounded by SAT

Cognizance of offences by Courts – Section 26

No court shall take cognizance of any offence punishable under this Act or any rules or regulations made
thereunder, except on a complaint made by SEBI

Establishment of Special Courts

Special court shall consist of single

CG will establish or designate
judge who shall be appointed by CG
special courts for speedy trial of
the cases in consultation with Chief Justice of
High Court

a person shall not be qualified for appointment as a judge

of a Special Court unless he is, immediately before such
appointment, holding the office of a Sessions Judge or an
Additional Sessions Judge, as the case may be.

Contravention by Companies – Section 27

1) Where a company commits contravention of any –
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a) Provisions of the Act; or

b) Any rules; or
c) Any regulations; or
d) Any direction or orders given by SEBI
then every person who at the time the contravention was committed was in charge of, and was
responsible to, the company for the conduct of the business of the company, as well as the company,
shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and
punished accordingly

2) Provided, no person will be liable if he proves that the contravention was committed without his
knowledge or that he had exercised all due diligence to prevent the commission of such
contravention.
Recovery of amounts – Section 28A

If any person –

a) Fails to pay penalty imposed under this Act; or

b) Fails to comply with the directions of the SEBI for the refund of money; or
c) Fails to comply with a direction of disgorgement (giving up something on demand) order issued
under section 11B; or
d) Fails to pay any fees due to the SEBI.

1) The Recovery Officer may draw up under his signature a statement (certificate) in the specified form
specifying the amount due from the person.
2) Recovery Officer shall proceed to recover amount specified in the certificate by one or more of the
following modes, namely: -
a) attachment and sale of the person’s movable property
b) attachment of the person’s bank accounts
c) attachment and sale of the person’s immovable property
d) arrest of the person and his detention in prison
e) appointing a receiver for the management of the person’s movable and immovable properties
Note –
 Provisions of Income Tax, 1961 with respect to recovery shall apply.
 The recovery of amounts by a Recovery Officer, pursuant to noncompliance with any
direction issued by the SEBI under section 11B, shall have precedence over any other claim
against such person.

Continuance of proceedings – Section 28B

What if a person dies?
a) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have
been liable to pay, if he had not died.
b) However, in case of any penalty payable under this Act, a legal representative shall be liable only in case
the penalty has been imposed before the death of the deceased person
c) Pending case for disgorgement, refund or an action for recovery may be continued against the legal
representative from the stage at which it stood on the date of the death of the deceased
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d) The liability of a legal representative under this section shall be limited to the extent to which the estate of
the deceased is capable of meeting the liability

Consent order
A) Meaning of Consent order –
a) Consent Order means an order settling administrative or civil proceedings between the regulator and a
person (Party) who may prima facie (at first view) be found to have violated securities laws
b) Consent order provides flexibility in resolving cases and thereby avoiding lengthy litigation process and
delays.
c) Settlement for securities laws violations, was introduced in India in the year 2007
B) Objective of consent order –
The main objective of consent order is to reduce regulatory cost which can further help in saving time and
efforts of SEBI.

Prof. Amit Mishra