The Securities Laws (Amendment) Act, 2014

The Securities Laws (Amendment) Act, 2014 (Act no. 27 of 2014) was assented by the Hon’ble President of India on 22nd August, 2014 and it was enacted with the object to amend the provisions of three Acts including the Securities and Exchange Board of India Act, 1992 (Act No. 15 of 1992), the Securities Contracts (Regulation) Act, 1956 (Act No. 42 of 1956) and the Depositories Act, 1996 (Act No. 22 of 1996). All which this Amending Act did is to essentially provide for amendments in respect of penalties, settlements, establishment of special Courts, etc. in respect all the three mentioned enactments.

The first Chapter in this Amending Act provides for amendment of several provisions in the Act of 1992 as aforesaid. The Section 11 of the Original Act of 1992 under sub section (2) for the clause (ia) the new clause is sought to be inserted. The Original Section 11 provides for functions which the Board is expected to perform for protecting the interest of investors in securities and also promotion of security market by providing measures thereof and under sub section (2) thereof, such measures to provide on certain matters including, the one provided under Sub clause (ia). The Amending Act provides insertion of said clause as to including calling from any persons including bank or other authorities the information and records relating to transaction in securities for inquiry by the Board. And also another new sub clause i.e. (ib) relating to calling or furnishing of information to other authorities dealing with similar functions as that of Board relating to prevention or detection of violation of securities laws. Similarly, the new sub Section (5) is also provided by this Amending Act as any amount disgorged pursuant to directions under relevant sections is to be credited to the Investor Protection and Education Fund and to be utilized by the Board as per regulations made under this Act. Moreover, the Chapter VIA of the Original Act of 1992, which deals with penalties and adjudication provision, under its 15A section provides for penalty for certain offences under the provisions of that Act or rules thereof. The maximum penalty was provided twenty-five crore rupees, however, by this Amending Act, the minimum penalty is provided as one lack rupees but the penalty may extend to twenty-five crore rupees or more. However, the Amending Act also provides for provisions as to settlement on an application to the Board by any person against who such proceedings have been initiated. And by inserting section 26A the Amending Act seeks to provide for special Courts for determining such disputes speedily. The Amending Act also provides for relevant provisions by inserting and amending several provisions to/of the Original Act of 1992.

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The Second chapter of the Amending Act deals with amendments in relation to the Act of 1956. The important in the amendments is in relation to penalties provided under the said Original Act. The provisions of section 23 and further of that Original Act deals with offences and penalties. The section 23 describes several offences as has been enumerated under that provision. The section 23A, 23B and further provisions deal with penalty for several offences under that Original Act. As per the Amending Act, the maximum penalty, similar to that in case of Original Act of 1992, is twenty-five crore rupees and there is bar in minimum penalty which one lack rupees. Further, similar to what has been amended in case of Act of 1992, the Amending Act also provides in case of this Act of 1956, that there can settlement on an application to the board by any person against who administrative or civil proceedings have been initiated under that Act. Moreover, the Amending Act by inserting new sections 26A to 26E provides for establishment and procedure of special Courts for providing speedy disposal of matters.

And finally, in the Chapter III of the Amending Act, it provides for more or less similar sort of amendments in the Depositories Act, 1996 in respect of punishments, penalties, settlement of matters, recovery of amounts, establishments of special Courts, etc.

by Faim Khalilkhan Pathan.

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