Study Notes

Securities and Exchange

Board of India (SEBI) Act
1992
(Summary Sheet)
SEBI Act 1992

Securities and Exchange Board of India (SEBI) Act, 1992 (Summary Sheet)

Chapter Section Description Brief Explanation

Chapter I Section 1 Short Title, Extent Extends to whole India with force
Preliminary and from 30th Day of January 1992
Commencements
Section 2 Definitions Board means SEBI
Chapter II Section 3 Establishment and SEBI to be established by Central
Establishment Incorporation of Government. Board to be a
of the SEBI Board corporate body with perpetual
succession and a common seal.
Section 4 Management of Chairperson, 2 members from
Board Ministries, 1 member from RBI, 5
other members (at least 3 as
whole time) to be appointed by
Central Government.
Section 5 Terms & conditions Central Government has right to
of service of terminate by giving 3 months’
Chairperson notice or 3 month’s salary. Right
and Board Members to relinquish office beforeexpiry
by giving a notice of 3 months
Section 6 Removal of CG may remove member in case of
Board insolvent, unsound mind, moral
Members turpitude or any action
detrimental to publicinterest.
Section 7 Meetings of Board Meet periodically.
As per Section 7A members with
pecuniary interest in any matter
should not attend such meetings.
Section 8 Vacancies No act or proceeding of the Board
not to shall be invalid merely by reason of
invalidate vacancy or defect in constitution of
Board Board, defect in appointment of
member, irregularity in procedure
of Board not affecting merits of
case.
Section 9 Officers and Board to appoint employees as it
employeesof Board considers necessary for the efficient
discharge of its functions.
Chapter III Section 10 Transfer of assets, All rights and liabilities, debts, due
Transfer of liabilities, etc., of sums, suits and legal proceedings
Asset, existing Securities of the existing Securities and
Liabilities etc. andExchange ExchangeBoard shall be
Board to the transferred to the Board.
Board
Chapter IV Section 11 Powers and Duty of Board – Protect the
Power and Functionsof Board interests of investors, promote
Functions of development of and regulate
Board securities market.

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SEBI Act 1992

Chapter Section Description Brief Explanation

Register and regulate various market
intermediaries.

Promote investor education, prohibit

fraudulent and unfair trade practice.
Section 11A Board to regulate or Board may, for protection of interests
prohibit issue of of investors specify matters relating
prospectus, offer to issue of capital etc and may
document or prohibit any company from issuing
advertisement prospectus, any offer document, or
soliciting money for advertisement soliciting money from
issue of securities the public
Section Collective Investment Any Scheme in which contributions
11AA Scheme and payments are pooled in for the
purpose of scheme or arrangement,
with a view to receive profits. Such
scheme is managed on behalf of
investors and investors do-not have
day-to-day control over the
management of scheme/arrangement
Section 11B Power to issue Board may levy penalty and issue
directions and levy directions, if necessary, in interest of
penalty investors, or orderly development of
securities market, to prevent
detrimental affairs or secure proper
management of intermediary
Section 11C Investigation Board may direct any person by
written order to investigate the affairs
of any intermediary who has violated
the provisions of this Act
Section 11D Cease and Desist Board may order any person to
Proceedings cease and desist from committing or
causing violation
Chapter V Section 12 Registration of Stock To deal in securities market, all
Registration Brokers- sub brokers, market intermediaries require
Certificate share transfer agents Certificate of Registration to be
etc- Registration issued by the Board
Certificate
Chapter VA Section 12A Prohibition of No person to directly or indirectlybe
manipulative and involved in unfair trade practices.
Deceptive Devices,
Insider Trading and
Substantial
Acquisition
of Securities or
Control

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SEBI Act 1992

Chapter Section Description Brief Explanation

Chapter VI Section 13 Grants by Central CG to provide grant after due
Finance, Govt. appropriation of Parliament.
Accounts Section 14 Fund to be Fund inflows/credits:
and Audit constituted called • all grants, fees and charges
the ‘SEBI General received by SEBI
Fund’ • any other sum received by
SEBI as decided by Central
Govt.
Fund to be applied for meeting:
• staff expense like salary,
allowance and other
remuneration of the members,
employees of SEBI,
• expenses in discharge of
functions of SEBI
• expenses for meeting objects
of SEBI
Section 15 Accounts and Audit • Maintain proper accounts and
other relevant records and
prepare annual statement of
accounts
• accounts of SEBI shall be
audited by the Comptroller and
Auditor-General of India (CAG)
• audited financials of SEBI to be
forwarded annually to the Central
Government and laid
before each House of Parliament
Chapter VIA Section 15A- Penalties & Penalty for failure to furnish
15JB Adjudication information, return, etc.
(details in 2nd note)

Chapter VI Section 15K- Establishment, Functioning of appellate tribunal to

B 15Z Jurisdiction, challenge judgment of the Board.
Authority and
Procedure of SAT
(details in 2nd note )
Chapter VII Section 16 Power of Central Board is bound to act by such
Miscellaneo Govt. to issue order directions on questions of policy as
us the CG may give in writing
Section 17 Power of Central In case of grave emergency or
Govt. to supersede persistent default in complying CGs
Board direction; CG may supersede Board
for period not exceeding 6 months
Section 18 Returns and Board to furnish returns and reports
Reports in prescribed format to CG within 90
days after the end of financial year.
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SEBI Act 1992

Chapter Section Description Brief Explanation

Section 19 Delegations Board in writing may delegate to
any member its powers and functions
(except section 29).
Section 20 Appeals Any person aggrieved by any order to
Board, before the commencement of
Securities Laws (Second
Amendment) Act 1999 may appeal to
CG.
Section 20A Bar of Jurisdiction No order passed by the Board or the
Adjudicating Officer under this Act
shall be appealable (except Section
15T, 20). No civil court shall have
jurisdiction to pass any order and no
injunction can be granted by any
court/authority.
Section 21 Savings This act doesn’t protect any person
from any suit or any proceedings
brought against them.
Section 22 Members, officers All members to be public servant
and Employees of within the meaning of section 21 of
Boards to be public Indian Penal Code.
servant
Section 23 Protection of action No suit or proceedings against CG
in good faith or members of board for actions done
in good faith.
Section 24 Offences Any person who contravenes or
attempt to contravenes or abet
contravention shall be punishable
with imprisonment which may extend
to 10 years or with fine which may
extend to 25 crore rupees or both.
Section 24A Composition of Any offence (not punishable with
certain offences imprisonment only or with
imprisonment and fine) may be
compounded before or after
institution of proceedings
Section 24B Power to grant CG may on recommendation of
immunity Board, grant to any person immunity
from prosecution if he has made full
and true disclosure before initiation of
proceedings for prosecution.
Immunity can also be withdrawn by
CG if conditions are not complied
with or if false evidence is given.
Section 25 Exemption from tax The Board shall not be liable to pay
on wealth and wealth or income tax.
income

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SEBI Act 1992

Chapter Section Description Brief Explanation

Section 26 Cognizance of No court shall take cognizance of
offences by courts any offence punishable under this
act, save on a complaint made by the
Board.
Section 26A Special Courts Establishment, composition and role
– 26E (details in 2nd note) of Special Courts

Section 27 Offences of For offences of companies every

Companies responsible person at the time of
offence shall be liable.
Section 28 Omitted Omitted by Securities Laws
(Amendment) Act 1995, w.e.f. 25-1-
1995
Section 28A Recovery of Recovery officer can recover the
Amounts amount due by attachment and sale
of person’s movable or immovable
property, by attachment of bank
accounts, by arrest and detention, by
appointing a receiver for
management of property
Section 28B Continuance of Legal representative shall be liable to
Proceedings pay any sum which the deceased
would have been liable to pay but the
liability to pay penalty shall be limited
to one imposed before the death of
deceased. Liability of LR shall be
limited to the extent to which estate
of deceased is capable of meeting.
Section 28C Powers of Board Power of Board shall not extend to
not to apply to IFSC and shall be exercised by IFSC
International in regulation financial products,
Financial Services services and institutions permitted in
Centre. IFSC
Section 29 Power to Make CG, by notification, make rule for
Rule carrying out the purposes of this act.

Section 30 Power to make Board, by notification to make

regulations regulation consistent with this act.

Section 31 Rules and Rules and regulations under this act

regulations to be to be passed by both Houses of
laid before Parliament.
parliament
Section 32 Application of other Provisions of this act are in addition
laws not to be to and not in derogation of other law.
barred
Section 33 Repealed Repealed by Repealing &
Amending Act, 2001

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SEBI Act 1992

Chapter Section Description Brief Explanation

Section 34 Power to remove CG to make provisions consistent
difficulties with this act to remove difficulties,
within 5 years of commencement of
this Act.
Section 34A Validation of certain Any act done under principal Act, in
acts respect of calling for or furnishing
information and in respect of
administrative and civil proceedings
shall be valid and effective
Section 35 Repeal and SEBI ordinance, 1992 is repealed.
Savings