Functions Duties and power of SEBON - SECTION - 5
- Registration of securities
- license to securities business
- revocation of license of SB
- Supervision of Securities business and classification
- license to stock exchange
- suspension revocation of license
- monitoring of stock exchange
- Grant permission for operating CIS
- Advise to GON
- Regulate and Systematize issue, transfer of securities
- approve and amend bye-laws of stock exchange and securities business
- Regulation of securities volume and mode of transaction
- Prevent insider trading
- Review Financial statement, give Directives
- to regulate and make transparent the act of acquiring ownership thereby gaining control over the management
- Co-ordination and co-operation exchange among the concerned agencies
Special power of the board Section 90
- failure of body corporate to call meeting - call such meeting or order
- Failure of body corporate to allot securities - order such body to refund the money
- direct the body to enlist securities or stop transaction in securities
- Close the stock exchange for max 5 days
- order stock exchange to amend bye laws or order to issue new bye laws (similar to above)
- Financial statement submitted by listed corporate bodies and securities business to be reviewed by experts
- order listed companies to restructure BOD
- order to make correction in management, financial arrangement and other related provision
- in the event of receipt of information under section 52, take action against the member or revoke membership
- SE, SB, BC, director, officer - fail to follow act, directive, bye laws - take necessary action
- SE,SB,BC - fails to appoint auditor or audit - to appoint auditor and to audit
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Appointment of chairperson -
Removal of chairperson - Inquiry committee - for recommendation to remove - damage to the board - contrary to the interest of the board and development of capital market
Make a notice - to Board and shareholders - such matters as may be necessary to evaluate its financial statements.
matters as may be capable of affecting the stock exchange or value of securities
Stock Exchange - only body corporate to make application with MOA. CRO shall register only on recommendation of the board.
Matters to be set in the application for stock exchange license-
- MOA/AOA - should indicate that SE was formed for that purpose
- Appropriate provision to hear complaint against members
- adequate infrastructure can be provided
- provisions relating to settlement of transaction publishing records, and statements
- maintenance of minimum capital of - 5 crores
- matters relating to enlisting or any other matters to transact securities through itself.
- interest of investors to be protected through the systems and provisions to be adopted by the stock exchange
- action can be taken on members in case doesn't follow act, bye laws, directives
will give license only if all these particulars are submitted and it is in the interest of the investors and the capital market
Power of the board to refuse
Not necessary- development of industry and feasibility , Not just for interest of investors
Cancellation of license by the board
- Stops operating stock exchange or SB
- Operates in a manner contrary to the interest
- Violates the conditions set forth in the license
- Violates acts rules
- Fails to observe direction of board
- Insolvent. (Also in refusal of license of SB)
- Wound - up
- Makes application for revocation
- Removed an agent and doesn't reappoint another
- doesn't submit financial statements to the Board
- Fails to submit fees required to be paid under section 50
Suspension( same applied to Securities business)
Acted in contravention
Functions duties and power of SE
- Transaction fair and transparent
- mange employee
- manage infrastructure
- protect interest of investors
- monitor and supervise members
- Emergency and security
- Frame bye laws
Disclosure to be made with regards to members
- members do not follow bye laws
- committed financial irregularity or economic status is suspicious
- failed to fulfil obligations
Disclosure to be made to board within 3 months after the expiry of fiscal year
Charge to be paid section 50 - 0.03% of Turnover of securities of each month. to be remitted to board at the end of every month. if delay - 10% interest and committed an offence.
Documents to be submitted for license of securities business
- Type of securities business
- Agent is to be appointed or to be carried out with other person
- recommendation of SE if needed to be the member of SE
- Ground proving the ability to conduct SB
Grounds for providing license-
- Applicant is able to carry on securities business
- agents qualification meet the criteria
Board shall also consider - social status and characters of directors , economic and educational backgrounds , experience , financial status
Refusal to give license to a SB
- It is not appropriate
- Not in the interest of investors
- not submitted all the documents required
- It is proved that such body or company has been insolvent
Cancellation of license -
Not Given - Fails to Renew the license
Collective Investment Scheme - Registration - Documents Required Not Mentioned
Standards / Code of Conduct - Securities business person
- To maintain high standard of the SB
- To perform functions with due care and diligence
- to perform functions maintaining higher standard
- To provide information to the investor
- to gain information from the investor
- maintain proper records and statements
- To Avoid conflict of interest - disclose to customer- act in their interest
- to make such provision to fulfill commitments
- Provide necessary training
Contract Note -
To be provided within closing of following day
If prepared as an agent - provide to customer - if for himself - mention the matter and retain
Type of business, name, date, date of settlement, number of shares, value, total amount to be paid, commission rate and amount, Fee if any etc. to be mentioned.
Auditor and Roster of auditors - Securities business person
Select auditor from among the Roster of Auditors maintained by the board. if auditor wishes to be listed, make an application. Director, shareholder, employee, etc. disqualified. Removal, discontinuance report to the board.
Published By
Aadesh Kandel
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