The securities laws amendment bill, 20 a bill further to amend the securities and exchange board of india act, 1992, the securities contracts regulation act, 1956 and the depositories act, 1996. The ordinance has enlarged the scope and kind of entities which would be covered under the definition of collective investment scheme cis as defined under section 11aa of the sebi act, 2002. In april, 1988 the sebi was constituted as the regulator of capital markets in india under a resolution of the government of india. Provided that any scheme or arrangement which is otherwise regulated or. Jun 14, 2017 needless to say that the corpus of money accumulated by the appellants by way of contributions to the holiday scheme is well above the limit of inr 100 crore set under the proviso of clause 1 of subsection 2 of section 11aa of the sebi act, crossing which, a scheme is deemed to be a cis. Ca final law sebi chapter short summary students forum. Section 30 of sebi act, section 31 of the scr act and section 25 of. The bill proposes to amend the sebi act, 1992, securities contracts regulation act, 1956, and the depositories act, 1996. Jun 16, 2015 we also hold that the activity of the pgf limited, namely, the sale and development of agricultural land squarely falls within the definition of collective investment scheme under section 2ba read along with section 11aa ii of the sebi act and consequently the order of the second respondent dated 06. The effect of the amendment inter alia is that any pooling of funds under any scheme or arrangement, even if such scheme is not registered with sebi, in so far as it has a corpus amount of.
Sebi order in august 2014 for refunding the amount illegally mobilized was upheld by sat in. Aug 14, 20 recent amendments 6 to the sebi act provide more powers to sebi for enforcement against unregistered pooling vehicles. Be it enacted by parliament in the sixtyfourth year of the republic of india as follows. The power of sebi to issue disgorgement orders has been questioned in the past on the ground that the sebi act does not expressly confer this power on sebi. The need for these changes stems from the various scams such as the saradha and sahara scams which duped a large number of investors resulting in losses amounting to many. Perusal of the above section shows that any arrangement or scheme to be considered as collective investment scheme has to satisfy the four conditions mentioned in section 11aa order in the matter of emerging india infra limited 2 of sebi act and the same should not fall within any of the exceptions mentioned in section 11aa 3 of sebi act. In one such case 2 the steps undertaken and the oversight and control exercised by sebi for the protection of the investors over the investment schemes were resisted by the opposite party on the ground that the scheme in question was not covered under the definition of cis under section 11aa of the sebi act. With reference to section 11aa of the sebi act, the appellants contend that first and foremost, the holiday plans offered to its customers entitle them to the utilization of room nights andor other services, thereby, making the contract between the company and the customers purely a contract for services. Honble supreme court was challenge to vires of section 11aa of sebi act, 1992 and. The securities and exchange board of india sebi act 1992. As per the order, pacl was mobilizing money without obtaining the requisite registration under the sebi act and the cis regulations, 1999, and therefore, pacl and its directors had c on tr av ed r gul i n 4 2 f he sebi pfut regulat ions, 2 03.
Securities and exchange board of india act, 1992 sebi. Introduction to securities and exchange board of india. This sebi act deemed to have come into force on the 30th day of january, 1992 and extended to whole of india as per section 1 of the sebi act, 1992. Ciss are regulated by the securities market regulator sebi under sebi collective investment scheme regulations, 1999. Order in respect of emerging india infra limited sebi. Act read with regulation 3 of sebi collective investment. 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. Unit linked insurance products ulip and regulatory tangle. Suveera gill barbie08 jagmeet10 priyadeep 23 ridhima24 2. In other words, the sebi regulates the working of the financial markets in india, visavis investor protection and laying down of ethical standards for the working of the financial markets in. Oct 25, 2018 perusal of the above section shows that any arrangement or scheme to be considered as collective investment scheme has to satisfy the four conditions mentioned in section 11aa order in the matter of emerging india infra limited 2 of sebi act and the same should not fall within any of the exceptions mentioned in section 11aa 3 of sebi act. In these circumstances, the conclusion of the division bench in holding that the nature of activity of the pgf limited under the guise of sale and development of agricultural land did fall under the definition of collective investment scheme under section 2ba read along with section 11aa of the sebi act was perfectly justified and hence, we. Sebi which is an abbreviation for securities and exchange board of india has functions similar to the sec or securities exchange commission in the usa. In the year of 1995, the sebi was given additional statutory power by the government of india through an amendment to the securities and exchange board of india act, 1992.
Section 11 in the securities and exchange board of india act. Order in the matter of capacious farming private limited sat. Collective investment schemes as defined in s 2ba read with s 11aa of sebi act has the following features. Chapter ii establishment of the securities and exchange board of india 3. The sectionwise study of the statute includes extensive reference to judicial pronouncements and their analysis, the recommendations of various expert committees, comparative study of similar powers of other regulators both. But all the time bill failed to be passed in parliament. Section 11aa 3 of the sebi act excludes ulips launched by the said companies are not contracts of insurance under the insurance purely in the category of contract of insurance act 1938,from the purview of collective but have components of investment products. Thus, jurisdiction of sebi under section 11aa of sebi act is in relation to schemes made or offered by any.
Establishment and incorporation of board 1 with effect from such date as the central government may, by notification, appoint, there shall be established, for the purposes of this act, a board by the name of the securities and exchange board of india. Sebi was founded on april 12, 1992, under the sebi act, 1992. The securities and exchange board of india sebi is the regulator for the securities market in india owned by government of india. It is working since 1988 but was granted the statutory status in 1992 by the sebi act of 1992. It was held that since investor protection was the pith and substance behind enacting section 11aa of sebi act, the incidental encroachment upon sale and purchase of land in state list doesnt denude the parliaments power to make law in this regard, therefore, section 11aa was held to. It was established in 1988 and given statutory powers on 30 january 1992 through the sebi act, 1992. Sebi and its power to issue directions pen acclaims. The securities and exchange board of india sebi was established in the year 1988 and given statutory powers on 12 april 1992 through the sebi act, 1992. Exchange board of india act, 1992this book serves as one of the first comprehensive legal commentaries on the sebi act, 1992. Parta introduction 1 partb substantive additions in sebi lodr regulations, 2015 in 880 comparison to companies act, 20 chapter i preliminary 8 chapter ii principles governing disclosures and obligations of listed 15 entity chapter iii common obligations of listed entities 16 chapter iv obligation of listed entity which has listed its specified 20.
Section 11aa of the sebi act, 1992 hereinafter referred to as sebi act. Section 11aa in the securities and exchange board of india. Act, 1947 or the securities contracts regulation act, 1956 shall have the same meanings respectively assigned to them in those acts. Order in the matter of nikhara bharath construction compay. Securities and exchange board of india sebi economics. Under these schemes, the contributions, or payments made by the investors are. The securities laws amendment act, 2014 home the securities laws amendment act, 2014 after being successively promulgated as an ordinance thrice, provisions enhancing the regulatory powers of the securities regulator have finally been etched in stone as the securities laws amendment act, 2014 which came into force on the august 25, 2014. The securities and exchange board of india sebi is the regulator of the securities and commodity market in india owned by the government of india. The regulatory body securities exchange board of india sebi having extended sebi s jurisdiction over corporates in the issuance of capital and transfer of securities, during the course of time has come out with several regulations for smooth functioning of the market. The schemesfunds have been launched floated by these entities without. Section 11aa of sebi act laid down qualifying criteria to be a cis for schemes or arrangements, which pooled funds from public. The central government acting through the ministry of finance, on august 01, 2014, has issued a capit notification declaring onshore rupee bonds issued by multilateral institutions. Sections 11 and 11b of act of the deals with the directions.
What is sebi, functions, powers of sebi, regulations. The appellants challenged the interim order before this tribunal vide. In recent past, sebi had received complaints and grievances from investors in relation to certain entities who were pooling funds but had not registered themselves as a cis with sebi. The capital market had witness a heavy growth during 1980s. Recent amendments 6 to the sebi act provide more powers to sebi for enforcement against unregistered pooling vehicles. Securities exchange board of india act, 1992 defines collective investment schemes in section 11aa 7 as any scheme or arrangement made or offered by any company under which a the contributions, or payments made by the investors, by whatever name called, are. Important definitions according to section 2 of the sebi act, 1992, following are some of the important definitions of terms used in the act.
Cg can grant only if sebi has made a recommendation to cg for granting immunity to any person who is alleged to have violated any of the provisions of the sebi act. May 18, 2016 the sebi was given statutory status on 30th january 1992 through and ordinance, later it was replaced by an act of parliament, securities and exchange board of india act, 1992. Chapter 3 the securities and exchange board of india s ebi. The section runs as undersection 11aa of the sebi act, 1992. Sebi commands increased authority litigation, mediation. The securities and exchange board of india act, 1992 no. However, sebi act defines collective investment scheme cis under section 11aa of the sebi act, 1992 and lays down the conditions which need to be satisfied before any scheme or arrangement launched by a particular company can be called a cis. Sebi has its headquarters located in mumbai with regional offices in kolkata, chennai, new delhi and ahmedabad. Order in the matter of capacious farming private limited. Securities and exchange board of india, 1992 sebi section 11, 11aa, 11b,11c 2. Securities and exchange board of india act, 1992 india code. The book has been authored by two serving officers of sebi, and has been edited by amit agrawal who also occasionally contributes to this blog as a guest. Under the amendments sebi has been granted powers to regulate any scheme or arrangement, if such scheme is not registered with sebi, and involves a corpus of inr 100 crore inr 1 billion or more. Sebi was set up to regulate the functions of securities market.
Sebi, after a very long time, woke up to the known secret that ulips are in disguise mutual fund schemes, which were operated in full swing for so many years, thanks to the exorbitant commission paid to the agents and even made banks to forget who they are and act as a bunch of salesmen. The securities and exchange board of india is the regulator of the securities and commodity market in india owned by the government of india. We also hold that the activity of the pgf limited, namely, the sale and development of agricultural land squarely falls within the definition of collective investment scheme under section 2ba read along with section 11aa ii of the sebi act and consequently the order of the second respondent dated 06. Securities and exchange board of india sebi is a statutory regulatory body entrusted with the responsibility to regulate the indian capital markets. Section 11aa in the securities and exchange board of india act, 1992. The fundamental object behind the act is to provide for the constitution of sebi with a view to care for the depositor in securities and to advance the progression of sebi. A copy of the relevant extract of the inspection report was also forwarded to sebi by mca for taking further necessary action. Sebi laws and regulations legal support the laws and regulations of the securities and exchange board of india sebi are to be strictly and rigorously followed by all concerned people and entities who are engaged in the trading of securities on registered stock exchanges of india. The proviso of subsection 1 to section 11aa was amended by the sebi amendment act 1999, w.
The securities and exchange board of india act, 1992. Sebi act, depositories act, 1996 and securities contracts regulation act, 1956 scra. Sebi order in august 2014 for refunding the amount illegally mobilized was upheld by sat in august 2015. These are schemes or arrangements by a company othere than schemes exempt under section 11aa 3. The board shall be a body corporate by the name aforesaid, having perpetual succession and a common seal, with power subject to the provisions of this act, to acquire, hold and dispose of property, both. Needless to say that the corpus of money accumulated by the appellants by way of contributions to the holiday scheme is well above the limit of inr 100 crore set under the proviso of clause 1 of subsection 2 of section 11aa of the sebi act, crossing which, a scheme is deemed to be a cis.
However, in india, as in us, the definition of cis excludes mutual funds or unit trust schemes etc and is given a strict definition in section 11aa of the sebi act, 1992. It empowers sebi to regulate any pooling of funds of rs 100. Collective investment scheme cis sebi ozg criminal. Appellants filed their reply to the show cause notice wherein they denied to have violated section 11c3 of sebi act. If cg is satisfied that such person has made a full and true disclosure in respect of the alleged violation, cg may grant immunity subject to conditions as it thinks fit. We also hold that the activity of the pgf limited, namely, the sale and development of agricultural land squarely falls within the definition of collective investment schemed under section 2ba read along with section 11aa ii of the sebi act and consequently the order of the second respondent dated 6. Section 11aa of the sebi act 11aa 2 2 any scheme or arrangement made or offered by any person under which, i the contributions, or payments made by the investors, by whatever name called, are pooled and utilized for the purposes of the scheme or arrangement. Oct 03, 20 the sebi was given statutory power under the securities and exchange board of india act in 1992 enacted by the central government. Order in the matter of parivar dairies and allied limited. Sebi interprets what qualifies as a collective investment scheme background for the last few years, securities and exchange board of india sebi, the indian securities regulator, has intensified its scrutiny of investment structures that raise domestic capital on an unregulated basis. The regulator of indian stock market, is securities and exchange board of india sebi. It monitors and regulates the securities market and protects the interests of the investors by enforcing certain rules and regulations. Cis is defined under section 11aa of sebi act which was inserted by the sebi amendment.
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