On examination of the matter, sebi prima facie found that the scheme of zeestar was in the nature of collective investment scheme cis, as defined under section 11aa of the securities and exchange board of india act, 1992. The sebi act 1992 has been amended by enacting securities and exchange board of india amendment act, 2002. 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. Subject to the provisions of this act, it shall be the duty of the board to protect the interests of investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit. The appellants challenged the interim order before this tribunal vide. The interest of investors is the first and foremost mandate for sebi. Board means the securities and exchange board of india established under section 3 of the sebi act, 1992. The section runs as under section 11aa of the sebi act, 1992. Accordingly, sebi initiated proceedings under sections 11 and 11b of the sebi act against the company. Important definitions according to section 2 of the sebi act, 1992, following are some of the important definitions of terms used in the act board. Does section 11b of the sebi act envisage noncompliance of.
Section 11 in the securities and exchange board of india. The sebi act itself permits adjudication proceedings under chapter via of the sebi act, issue of directions under sections 11 and 11b of the sebi act and prosecution under section 23 of the sebi act for violating provisions of the sebi act or the rules made thereunder. Sebi was set up to regulate the functions of securities market. In a first of its kind sebi has order dated 18th december, 2014 ordered the arrest of a defaulter against whom notices of demand were issued and recovery proceedings initiated. Establishment of the securities and exchange board of india establishment and incorporation of board. Sebi has its headquarters located in mumbai with regional offices in kolkata, chennai, new delhi and ahmedabad.
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. Section 11 in the securities and exchange board of india act, 1992. Subject to the provisions of this act, it shall be the duty of the board to protect the interests of investors in securities and. All other bilateral mou signed by sebi with other regulators of other countries were after this date. 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. The securities and exchange board of india act,1992. Oct 03, 20 the sebi act 1992 has been amended by enacting securities and exchange board of india amendment act, 2002. The first issue is whether the noticees have violated the provisions of section 121b of sebi act, 1992 read with regulation 3 of cis regulations by running collective investment scheme without obtaining certificated of registration from sebi. Its headquarters is in mumbai, and has northern, eastern, southern and western regional offices in new delhi, kolkata, chennai and ahmedabad respectively. In view of section 22 of sebi act read with section 2a of the securities contracts regulation act, 1956, the expression company under section 11aa of sebi act, 1992 would have to be construed as a company registered under the companies act, 1956. Special offer on gst package for cas as per the mou with icai. Dissecting sebis powers under section 11b of the sebi act. Introduction to securities and exchange board of india. Further, it was also found in the final order that the schemes floated by kil satisfied all the four conditions prescribed under section 11aa 2 of the sebi act.
Dec 19, 2014 in a first of its kind sebi has order dated 18th december, 2014 ordered the arrest of a defaulter against whom notices of demand were issued and recovery proceedings initiated. 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. Sebi was established under securities and exchange board of india act, 1922 and it derives power, rights and authority from the act. Scope of classifying as collective investment scheme broadened section 11aa of sebi act laid down qualifying criteria to be a cis for schemes or arrangements, which pooled funds from public. The sebi act itself permits adjudication proceedings under chapter via of the sebi act, issue of directions under sections 11 and 11b of the sebi act and prosecution under section 23 of the sebi act. Hence, sebi has acted as a regulatory body by introducing orderly reforms effectively as provided under the 1992 act. 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. The section wise 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 domestic as well as foreign.
Sebi commands increased authority litigation, mediation. Apr 18, 2018 further, it was also found in the final order that the schemes floated by kil satisfied all the four conditions prescribed under section 11aa 2 of the sebi act. Order in respect of emerging india infra limited sebi. 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. 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. Dec 29, 2017 the first issue is whether the noticees have violated the provisions of section 121b of sebi act, 1992 read with regulation 3 of cis regulations by running collective investment scheme without obtaining certificated of registration from sebi.
Unit linked insurance products ulip and regulatory tangle. Order in the matter of parivar dairies and allied limited and. 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. Section 11ab interest on delayed payment of duty omitted. Does section 11b of the sebi act envisage noncompliance. The securities and exchange board of india sebi act 1992. This act provides for the establishment of sebi full with statutory powers for working towards the. Apr 19, 2017 advanced auditing and professional ethics.
The securities exchange board of india is the securities market regulator in india. Section 15j of the sebi act enumerates by way of illustrations the factors which the adjudicating officer should take into consideration for determining the quantum of penalty imposable. The government has framed rules under securities contracts regulation act, 1956, securities and exchange board of india act, 1992 and depositories act, 1996. Section 91 of the act illustrates what activities amount to offence under this act as detailed below. 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 domestic as well as foreign. Section 11aa of the securities and exchange board of india act. Section 9 of the central excise act, 1944 act for short deals with the offences and penalties meant for such offences offences. The sebi has framed regulations under the sebi act and the depositories act for registration and regulation of all market intermediaries, for prevention of unfair trade practices, and. 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. The recovery officer has issued this arrest order us 28a of the sebi act, 1992. The addition of the explanation to section 11b of the sebi act clarifying that sebi has and should be deemed to always have had the power to pass disgorgement orders spells positive news for persons who have suffered financial loses owing to offences committed by persons in violation of securities laws. In section 26 of the principal act, sub section 2 shall be omitted. Aug 14, 20 for an entity to be able to undertake the activities as a cis, it is mandatory for it to obtain a certificate of registration from sebi under section 121b 5 of the sebi act and regulation 3 of the sebi collective investment schemes regulations, 1999 cis regulations. Securities and exchange board of india act 1992 1 objects of the sebi act protection of the interests of investors promoting orderly and healthy growth of the securities market regulation of the securites market and other incidental matters promoting the fair dealings by the issuer.
Be it enacted by parliament in the sixtyfourth year of the republic of india as follows. Section 11ab interest on delayed payment of duty omitted central excise act, 1944. Jun 15, 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. Without prejudice to the provisions contained in subsection 2, the board may take measures to undertake. According to learned counsel section 11aa of the sebi act should be read down in a manner that the business activities of the nature carried out by the pgfl, i. Section 11aa in the securities and exchange board of india. Page 1 of 23 securities and exchange board of india. Section 11 in the securities and exchange board of india act. Sebis press release says that, it is alleged that the company is engaged in fund mobilising activity from the public by floating sponsoring launching collective investment scheme as defined in section 11aa of the sebi act without obtaining a certificate of registration from sebi. Under the circumstances, sebi has to take immediate steps to prevent activities of. Section 11aa in the securities and exchange board of india act, 1992. The securities laws amendment act, 2014 finsec law. 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.
This book serves as one of the first comprehensive legal commentaries on the sebi act, 1992. The securities and exchange board of india has been established under the section 3 of the sebi act of 1992. Thus, jurisdiction of sebi under section 11aa of sebi. 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 one hundred crore rupees or more. 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. The imposition of penalty depends upon satisfaction of the substantive provisions as contained in sections 15a to section 15ha of the sebi act. For an entity to be able to undertake the activities as a cis, it is mandatory for it to obtain a certificate of registration from sebi under section 121b 5 of the sebi act and regulation 3 of the sebi collective investment schemes regulations, 1999 cis regulations. 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. The securities and exchange board of india act, 1992. The recovery proceedings have been going on for 4 years. Dissecting sebis powers under section 11b of the sebi act, 1992. 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. Jun 14, 2017 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.
Securities and exchange board of india establishment and incorporation of board. May 18, 2016 the government has framed rules under securities contracts regulation act, 1956, securities and exchange board of india act, 1992 and depositories act, 1996. Securities and exchange board of india sebi economics. The section 11aa dwells on the aspects as to what shall determine to be in the nature of collective. Section 11aa of sebi act laid down qualifying criteria to be a cis for schemes or arrangements, which pooled funds from public. This sebi act deemed to have come into force on the 30 th day of january, 1992 and extended to whole of india as per section1 of the sebi act, 1992. The securities and exchange board of india act, 1992 no. Important definitions according to section 2 of the sebi act, 1992, following are some of the important definitions of terms used in the act. Order in the matter of parivar dairies and allied limited. Section 11aa of the sebi act without obtaining a certificate of registration from sebi for operating cis as required under section 121b of the sebi act read with regulation 3 of the sebi collective investment schemes regulations, 1999 hereinafter referred to as cis regulations. Mcas clarifications are making changes to the companies act. 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.
1132 4 1589 1255 656 829 1058 1265 610 1232 99 977 860 1580 1320 548 1368 701 859 129 476 883 1158 1560 141 651 1154 342 683 1261 1393 251 692 4 471