THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT 1992 Firms and institutions can raise medium and

long term funds by issuing securities. Securities issued can be tradable or non-tradable. Tradable securities include corporate securities(shares & debentures), govt securities, public securities, bonds, units of mutual fund, are tradable securities i.e. transferable . Non-transferable securities include bank deposits , company deposits, loans and advances of bank & financial institutions and post office certificates & deposits Capital market can be classified into primary & secondary markets Primary markets : provides for channel for sale of new securities. The issuer of securities(create and sell) new securities in the primary market to raise funds, either through public issue or private placement. If the issue is made to particular class of people it is called a private placement Secondary markets : Deals with securities already issued or offered to the public in the primary market. Thus secondary market facilitates exchange of securities of listed companies which is called as Stock Markets. This market enables participants who hold securities to adjust their holdings in response to their assessment of risk and return. They can also sell these securities as per their liquidity needs The securities market has three types of participants 1] issuer of securities 2] investors of securities 3] intermediaries. The issuer and investors are customers of the services rendered by the intermediaries. Those who receive funds in exchange of securities and those who receive securities in exchange of funds often need reassurance that it is safe to do so. This reassurance is provided by laws enforced by regulators. The four main legislations that govern the securities markets : 1. The SEBI Act 1992- which establishes SEBI to protect investors and develop and regulate securities market. 2. The Companies Act which sets out code of conduct for the corporate sector in relation to issue, allotment, transfer of shares & disclosures to be made in public issues. 3. The Securities Contract Regulation Act which provides for regulation of transaction in securities through control over stock exchanges 4. The Depositories act 1996 which provides for electronic maintenance and transfer of ownership of demat securities. OBJECTS OF THE SEBI ACT The purpose of the SEBI Act is to provide for the establishment of a Board called as Securities Exchange Board of India. the following are the objectives: 1. to protect the interest of investors in securities 2. to promote orderly and healthy growth of the securities market 3. to ensure fair practices by the issuers of securities, i.e. companies 4. to regulate securities market and other incidental matters 5. to regulate and develop a code of conduct and fair practice and monitor the activities like brokers, merchant banker etc. There by making them more competitive and professional 6. to prohibit insider trading.

INSIDER TRADING : Any person who is connected with the company and who reasonably expected to have access to unpublished price-sensitive information in respect of securities of a company or who has received or has access to unpublished price-sensitive information. Any agreement to purchase or sell shares on the basis of such information is called as insider trading. SEBI Insider Trading Regulation prohibits a company to deal in securities of another company or associates of that other while in possession of any unpublished information. MUTUAL FUNDS Mutual funds is a professionally managed form of collective investment that pools money from many investors and invest it in stocks, bond, short-term money market investments and/or other securities A fund manager who is also portfolio manager, trades the funds underlying securities, realizing capital gains or losses, and collects the dividend or interest income. The investment proceeds are passed to the individual investors. The value of a share of the mutual fund known as NET ASSET VALUE per share(NAV) calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding. PORTFOLIO MANAGER:Is an individual who controls the asset of a mutual fund. He chooses and monitors appropriate investments and allocates funds accordingly BROKER : Is a member of a recognised stock exchange who is permitted to trade on screen based trading system of different stock exchanges. He is enrolled as a member with the concerned exchange and registered with SEBI SUB-BROKER : Is one who acts on behalf of stock broker as an agent or otherwise for assisting the investor in buying selling or dealing in securities. All the stock brokers and sub-brokers have to be registered with SEBI GOVT. SECURITIES : These are sovereign coupon bearing instruments which are issued by the Reserve Bank of India on behalf of Govt. of India, in furtherance of the Central Govt. s borrowing programme DEBENTURE TRUSTEE : Debentures represents the loan capital of the capital. Since it is not possible for a company to execute charge in favour of debentures holders debenture trustee are appointed. Often the banks and financial institution are appointed as debenture trustee. A trust deed is executed between the debenture trustee and the company whereby the property of the company is conveyed to the debenture trustees and declaring a trust in favour of the debenture holders. A trust deed normally grants a fixed charge over the companys freeholds and leaseholds and a floating charge over the rest of the property. It also contains provisions for redressal for grievances of debentures holders, redemption of debentures. Etc.

STOCK BROKER : Stock broker means the member of stock exchange. CUSTODIAN OF SECURITIES : A custodian of securities means any person who carries on business of providing custodial services. Custodial Services mean safe keeping of securities of a client and providing following services : 1. Collecting benefits of rights accruing 2. Maintaining accounts of securities of a client 3. Keeping the client informed with respect to securities BANKERS TO THE ISSUE : Bankers are appointed to undertake following work in share issue : 1. Acceptance for application of cheques, DDs, submitted along with application form, sending the applications with remittance for allotment. 2. Acceptance of allotment or call money in respect of applicants who have been allotted shares 3. Refund of application money UNDERWRITER : Is a person who agrees to subscribe the prescribed amount of shares of the share issue is not fully subscribed. He gets underwriting commission for this. All underwriters must be registered with SEBI PORTFOLIO MANAGER : Means total holding of securities belonging to a person. He is the person who advises or undertakes on behalf of the client the management or administration of a portfolio or securities or fund of the client. He also keeps account of each client separately. All portfolio managers must register themselves with SEBI ESTIBLISHMENT OF SEBI U/S 3 SEBI is constituted by the notification issued by the central govt. It is established as body corporate having perpetual succession and common seal It has powers to acquire, hold and dispose property both moveable and immovable It can sue and can be sued in the name of SEBI CONSTITUTION OF SEBI U/S3(2) : SEBI consist of the following members to be appointed by the Central Govt. Chairman Two members from amongst the official of ministry of the Central Government dealing with finance and administration of the Companies Act 1956, nominated by the Central Government One member amongst the official of Reserve Bank, nominated by the Reserve Bank of India Five other members of whom at least three shall be the whole time members

MANAGEMENT of the SEBI : The general superintendence, direction and management of the affairs of the SEBI shall vest in a Board of Members. Board of Members may exercise all powers and do all act as may be done by SEBI subject to regulations made by SEBI U/s 19 of SEBI Act empowers the boards to appoint such other officers and employees as it considers necessary for efficient management Qualification/Eligibility of Chairman & Members u/s3(5) : The Chairman and other member shall be persons of ability integrity and standing who have shown capacity in dealing with problems relating to securities market or have special knowledge or experience of law, finance, economics, and accountancy, administrative or in any other discipline, which in the opinion of the Central Govt. shall be useful to SEBI Appointment of Chairman and Members : The term of office and other conditions of service of Chairman & other members of the SEBI appointment by the Central Govt are prescribed by the rules made under the Act The central Govt. has right to terminate the services of Chairman & other members appointed to the SEBI (other than its own official or of the Reserve Bank of India on the Board). The Chairman & other members shall equally have the right to relinquish office at any time before the expiry of their tenure by giving notice of 3 months in writing to Central Govt. Removal of members u/s 6 : Central Govt. shall remove a member from office if he 1. Is adjudicated as an insolvent 2. Is of unsound mind 3. Has been convicted of an offence which in the option of the Central Govt. involved moral turpitude.(anything contrary to justice, honesty, good morals) 4. If in opinion of Central Govt. he has abused his position as to render his continuation in office detrimental to the public interest Before removing any member reasonable opportunity of being heard must be given to such member. Meetings of SEBI u/s 7 : 1. SEBI shall meet at such times and places and shall observe such rules of procedure with regards to the transaction of business at its meeting as stated in the regulation made by the Central Govt. u/s 30 of the SEBI Act 2. If the Chairman is unable to attend a meeting of the Board, members present can choose any other member to preside at the meeting 3. All questions which comes up before any meeting of the board shall be decided by a majority votes of the members present. In case of equality in votes the chairman has casting vote or second vote

4. Any member who is a director of a company and has any direct or indirect pecuniary interest in any matter which is to be discussed at the meeting , shall disclose the nature of his interest at such meeting. Such disclosure shall be recorded in the proceedings of the Board. Such member cannot take part in any deliberation or decision of the Board with respect to that matter Functions of SEBI u/s 7 : The SEBI act empowers the SEBI to take following measures for the purpose of performance of its duties : 1. Regulating the business in stock exchanges and any other securities markets 2. Registering and regulating the working of stock brokers sub-brokers , share transfer agents, bankers to an issue, trustee of trust deeds, registrars, to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated securities markets in any manner. 3. Registering and regulating the working of the depositories, participants, custodians of securities, foreign institutional investors, credit rating agencies and such other intermediaries as the board may, by notification , specify in this behalf 4. Registering and regulating the working of the working of venture capital funds and collective investments schemes including mutual funds 5. Promoting and regulating self-regulatory organisations 6. Prohibiting fraudulent and unfair trade practices relating to securities markets 7. Promoting investors education & training of intermediaries of securities markets 8. Prohibiting insider trading in securities 9. Regulating substantial acquisition of shares and take-over of companies 10. Calling for information, undertaking inspection, conducting inquiries and audits of the stock exchanges, mutual funds and other persons associated with the securities market and intermediaries and self-regulatory organisations in securities market 11. Calling for information and record from any bank or any other authority or board or corporation established or constituted by any Central, State or Provincial Act in respect of any transaction in securities which is under investigation or inquiry by the board 12. Performing such function and exercising such powers under the provisions of Securities Contracts (Regulation)Act 1956, as may be delegated to its by the Central Govt. 13. Levying fees or other charges for carrying out the purpose of this section 14. Conducting research for the above purposes 15. Calling for furnishing to any such agencies as may be specified by the Board, necessary information for the efficient discharge of its function 16. Performing such other function as may be prescribed

POWERS of SEBI : 1. U/S11(3) Power to inspect : If the board has reasonable grounds to believe that a company in involve in insider trading or fraudulent and unfair trade practices relating to securities market, it can undertake inspection of a. Any book b. Register c. Other documents d. Record of such listed public company or a public company which intends to get its securities listed on any recognised stock exchange 2. U/S 11(3)Power of Civil Court exercisable by SEBI : SEBI can exercise power of Civil Court in following manner : a. The discovery and production of books of account and other documents , at such place and such time as may be specified by the board b. Summoning and enforcing the attendance of person and examining them on oath c. Inspection of any books registers and other documents of any person referred to in sect.12 at any place d. Inspection of any books registers and other documents or record of the company e. Issuing commissions for the examination of witness or documents 3. U/S 11(4)Power of SEBI where inquiry or investigation is pending : SEBI Act empowers the board on following measures- either pending investigation or inquiry or on completion of such investigation/inquiry can be taken in the interest of investors after recording the reasons in writing. The measures are as follows : a. Suspend the trading of any security on recognised stock exchange b. Restrain/prohibit person/s associated with such securities from accessing the securities market c. Suspend any office-bearer of any stock exchange of self-regulatory organisation from holding such position d. Impound and retain the proceedings or securities in respect of any transaction which is under investigation e. Attach bank account or accounts of any intermediaries or any person associated with the securities market in any manner involved of any violation of any provisions of this Act. Such attachment is made by passing an order on an application made for approval, by the judicial magistrate of the first class having jurisdiction, for more than a month f. Direct any intermediary or any person associated with the securities market in any manner not to dispose of or alienate an asset forming part of any transaction which is under investigation

4. U/S 11(A)Power relating prohibition and regulation of issue of prospectus: SEBI Act empowers the board regulate or prohibit issue of prospectus, offer documents or advertisement soliciting money for issue of securities for the protection of investors. The board can take following measures : a. Specify by regulations: i. Matters relating to issue of capital, transfer of securities and to other matters related ii. The manner in which such matters shall be disclosed by the companies b. By general or specific orders : i. Prohibit any company from issuing prospectus any offer document or advertisement soliciting money from the public for the issue of securities ii. Specify the conditions subject to which the prospectus any offer document or advertisement may be issued c. The board may specify the requirements for listing and transfer of securities and other matter incidental thereto. 5. U/S 11 B Power to issue directions: Conditions under which directions are issues a. In the interest of investors/development of securities market b. To prevent affairs of any intermediary or person being conducted in a manner detrimental to the interest of investors/securities market c. To secure the proper management of any such intermediary or person The board can issue the above direction to following : Any person or class of persons referred to in u/s12 or associated with the securities market Any company in respect of matters as specified in u/s11A as may be in the interest of investors in securities and securities market 6. U/S 11(C) Powers of SEBI to order investigation Section 11 (C):If SEBI believe that : a. The transactions in securities are being dealt with in a manner detrimental to the investors or the securities market b. Any person or intermediary associated with securities has violated the provisions of his Act Investigating Authority : SEBI is empowered to appoint a person as investigating authority. Such appointment is done by making an order in writing. Order of appointment specifies to investigate the affairs of a person or intermediary associated with securities and to report thereof to the board Duties of the Intermediary : It is duty of :- Every manager, Managing Director, Officer & other employee of the company and every intermediary referred to in u/s12 or every person associated with the securities market- to preserve and to produce before the Investing Authority or any person authorised by it in his behalf... all books, registers, other documents, and records of , or relating to company or intermediary or such person which are in custody and power.

Power of Investing Authority: For the purpose of investigation any person or intermediary associated to securities markets are required to furnish such information or produce books & registers or other documents or records The Investing Authority may keep the books & registers or other documents or records in custody for 6 months and after 6 months to returned the same to the concern persons, however Investing Authority may call for books & registers or other documents or records again if required If the person on whose behalf books & registers or other documents or records are produced requires certified copies of the same, Investing Authority shall give it to such person on whose behalf books & registers or other documents or records are produced Investing Authority can examine on oath any manager, Managing Director, Officer & other employee of the company and every intermediary referred to in u/s12 or every person associated with the securities market, in relation to the affairs of the business Notes of any examination shall be taken in writing. It can be used as evidence only after it is read over and signed by the person examined A person shall be punishable with imprisonment for term which may extent 1 yeay or fine up to 1 crore or with both and also with a further fine upto f lakhs for every day during which the failure or refusal continues of if he fails without reasonable cause or refuses o To produce to the Investing Authority or the authorised person books & registers or other documents or records o To furnish any information which he is bound to do under this act o To appear before the Investing Authority personally when required to do so or to answer any question in relation to the inquiry o To sign notes of any examination referred above The Investing Authority may make an application to the judicial magistrate of the first class having jurisdiction for an order for the seizure of such books & registers or other documents or records if believed to be in relation to every intermediary or every person associated with the securities market, in any manner may be destroy/tamper/alter/falsified. After considering the application & hearing Investing Authority if necessary the Magistrate may, by order authorise the Investing Authority o To enter the place where such books & registers or other documents or records are kept o To search that place in the manner specified o To seize such books & registers or other documents or records consider necessary for the purpose of investigation The Investing Authority shall keep in custody seizure of such books & registers or other documents or records consider necessary for the purpose of investigation The Investing Authority shall return the same to the company/body corporate/managing director/manager or any person from which custody or power they seizure

Investing Authority after returning of such books & registers or other documents or records shall inform the magistrate

Investing Authority shall place identification marks on such books & registers or other documents or records Every search and seizure made under this section shall be carried out in accordance with the provision of Code of Criminal Procedure 1973

Power of SEBI to make cease and desist proceedings u/s11D : If the board finds after causing an inquiry to be made that there is a violation done or possibility of violation in future , it may pass order against such person to cease and desist from committing or causing such violation They shall pass such order in respect of any listed public company other than intermediaries u/s 12 unless the board has reasonable grounds to believe that some activity of insider trading or market manipulation REGISTRATION OF CERTIFICATE U/S 12 : Following parties have to obtain registration certificate from Board to buy, sell or deal in securities are also called as intermediaries : Stock-broker Sub-broker Share transfer agent Banker to an issue Trustee of trust deed Registrar to an issue Merchant banker Underwriter Portfolio manager Investment adviser Such other intermediary who may be associated with securities If the above mentioned were associated with securities market before the establishment of the Board for which no registration was necessary prior to such establishment it may continue to do so for period of three months from the date of such establishment & if application is made within the three months then till disposal of such application REGISTRATION OF INTERMEDIARY : Registration is compulsory for the following intermediary Depository Participant Custodian of securities Foreign institutional investors Credit rating agency Such other intermediary who may be associated with securities market

REGISTRATION CERTIFICATE BY SPONSOR : A person cannot sponsor or cause to be sponsored or carry on any venture capital fund or collective investment schemes including mutual funds unless he obtains certificate of registration from Board in accordance of regulation. Every application for registration shall be prescribed form and with fees as may be determined by regulation SEBI can suspend or cancel a certificate of registration but must give the concern person/party a reasonable opportunity of being heard Provision for Finance Accounts & Audit U/S 13 Grant by the Central Govt. : 1) Central Govt. may grant to SEBI sum of money for being utilised for the purpose of this Act. 2) All grants, fees, charges, sums received by the Board shall be credited to a special fund called as Securities and Exchange Board of India General Fund 3) Securities and Exchange Board of India General Fund shall be used for following : a) The salaries, allowance and other remuneration of members, officers and other employees of the Board b) The expenses of the board in the to discharge its function u/s 11 c) The expenses on objects and for purpose authorised by this Act Accounts and Audits : 1) The board shall maintain proper accounts and other relevant records and prepare an annual statement of accounts in such form as may be prescribed by the Central Govt in consultation with Comptroller and Auditor General of India(CAG of India) 2) The accounts of the board shall be audited by CAG at such intervals as specified. Any expenditure incurred in connection with such audit shall be payable by the Board of CAG of India 3) The CAG or the person appointed by CAG has same rights/privileges and authority as the CAG itself while doing the audits. He shall have the right to demand the production of books, accounts, vouchers and other documents and other related documents as may be required for audit 4) The accounts of the board as certified by CAG or any person appointed by him together with audit report shall be forwarded to the Central Govt. and the Govt. shall laid it before the House of Parliament. --------------------------------------X--------------------------------------------

SEBI-- ISSUE of CAPITAL & DISCLOSURE REQUIREMENT(ICDR) REGULATION GUIDELINES 2009 Introduction : Primary role of the SEBI is to protect the interest of Investors SEBI issues guidelines for disclosure of certain information so that investor can make informed decision In absence of such SEBI norms the investor may be taken for granted by the misrepresentation or concealing certain important information In order to regulate the market SEBI initially framed the Disclosure & Investor protection guidelines (DIP Guidelines) in 2000 Prior to that of DIP guidelines there is no regulatory standard in relation to disclosure other than provided in Schedule II of Companies Act 1956 However the DIP guidelines were replaced with SEBI ICDR Regulation 2009 ICDR were framed in tune to the emerging market practice in relation to the disclosure standards Intended towards equipping investors to make sound & well-informed decisions It is not expected that every investor will read everything in the prospectus, so investor friendly measures such as executive summary , management discussion & analysis as well as risk factor are provided to invite attention of investor Applicability of ICDR regulation to :A public issue A right issue aggregate value of specified securities => 50 lakhs A preferential issue A issue of bonus shares by a listed issuer A qualified institution placement by a listed issuer An issue of IDR(INDIAN DEPOSITORY RECEIPTS) The Merchant Banker are specialised in intermediaries who ensure that all the requirement of the ICDR are complied with while submitting the draft offer document to SEBI, any non compliance on that attract penal action from SEBI

CONTENTS OF ISSUE of CAPITAL & DISCLOSURE REQUIREMENT(ICDR) REGULATION GUIDELINES 2009 CHAPTERS & SCHEDULES CHAPTERS: 1) DEFINITIONS 2) COMMON CONDITIONS OF PUBLIC & RIGHTS ISSUE 3) PROVISIONS AS TO PUBLIC ISSUE i) ELIGIBILITY REQUIREMENT ii) PRICING IN PUBLIC ISSUE iii) PROMOTERS CONTRIBUTION iv) RESTRICTION ON TRANSFERABILITY v) LOCK-IN OF PROMOTERS CONTRIBUTION vi) MINIMUM OFFER TO PUBLIC, RESERVATION 4) RIGHT ISSUE 5) MANNER OF DISCLOSURE IN THE OFFER DOCUMENT 6) GENERAL OBLIGATIONS OF ISSUER & INTERMEDIARIES WITH RESPECT OF PUBLIC & RIGHT ISSUE 7) PREFERENCIAL ISSUE 8) QUALIFIED INSTITUTIONAL PLACEMENT 9) BONUS ISSUE 10) ISSUE OF INDIAN DEPOSITORY RECEIPTS 11) ISSUE OF SPECIFIED SECURITIES BY SMALL & MEDIUM ENTERPRISES 12) MISC SCHDULES: A. INTER SE ALLOCATION RESPONSIBILITIES B. FORMAT OF AGREEMENT BETWEEN LEAD MERCHANT BANKER TO THE ISSUE & ISSUER COMPANY C. MANDATORY COLLECTION CENTRES D. FEE TO BE PAID ALONG WITH THE OFFER DOCMENT MANNER OF SUBMISSION OF SOFT COPY OF DRAFT OFFER DOCMENT & OFFER DOCMENT TO THE BOARD E. FOMAT FOR DUE DILIGENCE CERTIFICATE F. NATURE UPDATION/CHANGE IN THE OFFER DOCMENT & CONSEQUENT STEPS THEREIN REQUIREING FILING OF UPDATED OFFER DOCMENT G. FORMAT OF REPORT TO BE SUBMITTED BY MONITORING AGENCY H. FACILITIES OF SERVICES INCLUDED IN THE TREM INFRASTUCTURE SECTOR I. BOOK BUILDING PROCESS J. FORMAT OF REPORT FOR GREEN SHOE OPTION K. FORMAT OF ADVERTISEMENT FOR PUBLIC ISSUE L. ILLUSTRATION EXPLAINING MINIMUM APPLICATION SIZE M. ILLUSTRATION EXPLAINING PROCEDURE OF ALLOTMENT N. FORMAT OF POST ISSUE REPORTS O. FORMAT OF UNDERTAKING DEVELOPMENT STATMENT P. DISCLOSURE IN PLACEMENT DOCUMENTS Q. DISCLOSURE IN PROSPECTUS & ABRIDGED PROSPECTUS FOR ISSUE OF INDIAN DEPOSITORY RECEIPTS R. AMENDMENTS TO OTHER REGULATIONS

Definitions Abridged Prospectus : Means the memorandum as prescribed in Form 2A u/s 56(3) of Companies Act It is a document containing all the salient features of a prospectus It is accompanied by the application form of public issue Act : Means the securities and Exchange Board of India Act 1992 Advertisement: Includes notices, brochures , pamphlet, circular, showcard , catalogues, posters, films or any other documents or any print medium, radio, television program through any electronic medium Application Supported by Blocked Amount (ASBA) : An application for subscribing to an issue containing an authorisation to block the application money in a bank account ASBA Investor : Investor who intend to apply through ASBA process Resident retail individual investor Is bidding at cut-off with single option as to the number of shares bid for Is applying through blocking of funds in a bank account with SCSB Has agreed no to revise his/her bid Is not bidding under any of the reserved categories Book building- U/S 2(1)(f) of ICDR regulation Book Building as a process undertaken by which a demand for the securities proposed to be issued by a body corporate is elicited and build up and price for such securities is assessed for the determination of the quantum of such securities to be issued by means of a notice , circular, document, memorandum or offer document. Collection Centre: Place where the application for subscribing to the public or rights issue is collected by the banker or on behalf of the issuer company Composite Issue : An issue of securities by a listed company on a public cum- right basis offered through single offer document where the allotment of both public & right component is made simultaneously Convertible Debts Instruments : An instrument/securities which creates or acknowledges indebtedness and is convertible into equity share at a later date at or without the option of the holder whether constituting a charge on the assets of body corporate or not Credit Rating Agency : A body corporate registered under SEBI Regulation 1999 Designated financial Institution : Means public financial institution included in or notified u/s 4A of Companies Act, Industrial development Corporation established by state Government & financial institution approved u/s 36(I)(VIII) of Income Tax Act 1961 Debt Instrument: Which creates/acknowledges indebtedness includes debentures, stock, bonds, other securities whether constituting a charge on the assets of body corporate or not

Depository :- Means body corporate registered under SEBI regulations 1996

Is an organisation which holds the funds securities of investors in electronic form at the request of the investor through a registered depository It also provides services related to transaction in securities Depository works through an agent called as depository participant Depository participant is interface with investor Depository participant can offer services of Depository only after it is registered with SEBI

DESIGNATED STOCK EXCHANGE: Means a stock exchange in which securities of the company are listed or proposed to be listed and which is chosen by the company for the purpose of a particular issue under the required guidelines If any of stock exchange has nationwide trading terminals the company shall choose one of them as the designated stock exchange A company may choose a different exchange as a designated stock exchange for any subsequent issue subject to the above clause Employee : Means A permanent employee of the company working in India or outside India OR A director of the company whether full/part time or otherwise OR An employee as defined in sub clause (a) or (b) of a subsidiary in India or out of India or of a holding company of the company Fast Track Issue : Issue of public or right issue made by the listed company which satisfies all requirement of fast track issue Firm Allotment : Allotment on a firm basis in public issue by issuing company made to: Indian & Multilateral Development Financial Institutional Indian Mutual fund Foreign Institutional Investors including non-resident Indian Overseas corporate body Permanent/Regular Employee of the issuer company Green Shoe Option : an option of allocating shares in excess of the shares included in public issue and operating a post-listing price stabilizing mechanism which is granted by a company to be exercised through a stabilising agent Infrastructure Company : A company wholly engaged in the business of developing , maintaining, operation infrastructure facilities Issuer Company : A company which has filed offer document with SEBI for making issue of securities in terms to their guidelines Listed Company: A company which has any of its securities offered through an offer document listed on a recognised stock exchange and also includes PSUs whose securities are listed on a recognised stock exchange

Market Maker : In stock maker some for shares there is less or no trading , this may become hurdle for secondary marker. Market maker selects some shares and develop market for these shares. They help in reducing the market concentration and help in widening the trading in secondary market Merchant Banker : Entity registered under SEBI (MERCHANT BANKER) REGULATION 1992 Is a bank that deals in international finance, long term loans for companies and underwriting Merchant bank do not provide regular banking services to the general public Net Worth : Aggregate value of paid up Equity Capital and Free Reserve(excluding reserves created out of revaluation) Reduced by aggregate value of accumulated losses and deferred expenditure not written off (including miscellaneous expenses not written off as per the audited balance sheet Offer Document : Means Prospectus in case of a issue or offer for sale and letter of offer in case of rights issue Offer for Sale : Offer of securities by existing shareholders of a company to the public for subscription through an offer document Preferential Allotment : An issue of capital made by the company in pursuance of a resolution passed u/u 81(1A) of Companies Act 1956 Public Issue : An institution by a company to public to subscribe to the securities offered through a prospectus Public Financial Institutional : Institution included in or notified for the purpose of u/s 4A of Companies Act 1956 Retail Resident Investor : Who applies or bids for securities of or for a value less than Rs. 1 Lakhs Qualified Institutional Buyer: Defined u/s 4A of Companies Act 1956 A scheduled commercial bank A mutual fund registered with the board A foreign institutional investor and sub-account registered with SEBI other than a subaccount which is a foreign corporate or foreign individual A venture capital fund registered with SEBI A multi-lateral and bilateral development financial institution A foreign venture capital investor registered with SEBI State Industrial Development Corporation An insurance company registered with IRDA A Provident Fund with minimum corpus of 25 crores A Pension Fund with minimum corpus of 25 crores National Investment Fund set up by resolution no. 2/3/2005-DD II DATE Nov. 23, 2005 of Govt of India published in official Gazette of India

Resident Retail Investor: An investor who is resident in India as defined as in Foreign exchange Management act 1999 Retail Individual Shareholder: A shareholder of listed company who : As on record date(i.e. the date fixed for purpose of determining eligible shareholder) is holding shares on basis of closing price of the share as on previous day of worth upto Rs. 1 Lakh AND Applies or bid for securities of or for value upto Rs. 1 Lakh Right Issue : Means issue of capital to be offered to the existing share of company through a letter of offer Schedule : schedule annexed to these regulation Self Certified Syndicate Bank(SCSB) : Is a bank to an issue registered under SEBI(Bankers to an Issue) Regulation 1994 which offer the service of making an Application Supported by Blocked Amount & recognised as such by the board Shelf Prospectus : A prospectus within the meaning of clause (b) of the explanation of u/s 60A of Companies Act 1956 Underwriting : An agreement with or without condition to subscribe the securities when the existing shareholders of such company or the public do not subscribe to the securities offered to them COMMON CONDITIONS FOR PUBLIC & RIGHTS ISSUES Public Limited Companies which are listed can raise their capital by issue of shares and can raise further capital by issue of right shares in accordance with provision of the Companies Act. Any such companies before offering such securities o the public shall comply with the provision as shown below: Appointment of Merchant banker and other intermediaries Restriction on further capital issues Rules relating to oversubscription Filing of offer documents Underwriting of shares Timeframe with respect to issue opening date Provisions with respect to minimum subscription Monitoring agency in case of issue exceeding prescribed limits mentioned in the act Provisions with respect to allotment , refund and payment of interest Provisions to be complied in case of convertible debt instruments PROVISIONS AS TO PUBLIC ISSUE Eligibility requirement for listed and unlisted companies Pricing the issues Promoters contribution Restriction on transferability(Lock in) of promoters contribution Minimum offer to public reservation(Time frame prescribed)

RIGHT ISSUE : Means issue of capital to be offered to the existing share of company through a letter of offer. Provision for the same are as follows: Determination of record date for the purpose of determining shareholders elegible for applying for the proposed right issue Restriction on the issue of right issue Letter of offer, pricing and period within which it should be subscribed Pre issue advertisement for right issue Utilisation of funds raised in right issue MANNER OF DISCLOSURE OF OFFER DOCUMENTS : Offer document is crucial document based on the review of which the investor decides to subscribes shares of that particular company The authenticity and correctness of this documents plays a very important role from disclosure perspective It includes prospectus , letter of offer and abridged prospectus ant the disclosures made in them GENERAL OBLIGATION OF ISSUER AND INTERMEDIARIES WITH RESPECT TO PUBLIC ISSUE AND RIGHT ISSUE: It is the post issue mandatory requirement to be complied Prohibition on payment of incentives to any person for making an application for offer of securities Rules relating to publicity materials , public communications, advertisement & research reports Redressal of investor grievances by the lead banker Appointment of compliance officer Due diligence Post issue advertisement & research reports Obligation on the merchant bankers to coordinate with the intermediaries PREFERENTIAL ISSUE : Conditions for making a preferential issue Manner of disclosures Allotment pursuant to the issue of preferential shares Locked in specified securities Transferability of locked in specified securities and warrants issued on preferential basis QUALIFIED INSTITUTIONAL PLACEMENT(QIP) It applies to any issue of equity shares/ fully convertible debentures/ partly convertible debentures or any securities other than warrant which are convertible into or exchangeable with equity shares at a later date referred as specified securities made to Qualified Institutional Buyer by a listed company will have to fulfil following provisions : Conditions for qualified institution placement Appointment of merchant banker Pricing Restriction on allotment Minimum number of allottee Restriction on the amount raised by QIP

BONUS ISSUE Is applicable to company which have already issued shares earlier. Bonus shares are generally allotted to existing share holders . Following are the provisions: Eligibility of company to issue bonus shares Restriction on issue of bonus shares Issue of bonus shares only against certain reserves Completion of bonus issue ISSUE OF INDIAN DEPOSITORY RECEIPTS(IDR) Depository receipt is a negotiable instrument issued by a bank to represent a foreign companys publicly traded securities. The depository receipt can be traded on a local stock exchange Depository receipt makes it easer to buy shares in foreign companies because the shares of the company dont have to leave home state Eg. When the Depository bank is in USA the instrument is known as American Depository Receipt(ADR), European bank issue European Depository Receipt and other banks issue global Depository Receipt (GDR) ISSUE OF INDIAN DEPOSITORY RECEIPT(IDR) As per provisions of the Companies (ISSUE OF INDIAN DEPOSITORY RECEIPT) Rules 2004: Eligibility for Issue of IDRs Conditions for Issue of IDRs Minimum subscription Filing of draft prospectus , due diligence certificate, payment of fees and issue of advertisement for IDR Disclosure in prospectus and abridged prospectus Finalisation on basis of allotment ISSUE OF SPECIFIED SECURITIES BY SMALL AND MEDIUM ENTERPRISES An issuer whose post-issue face value capital does not exceed 10 crore shall issue its specified securities as per the Act An issuer whose post-issue face value capital exceeds 10 crore and up to 25 crore shall issue its specified securities as per the Act The provisions of these regulation in respect of the matters not specifically dealt or excluded under this chapter shall mutatis mutandis apply to any issue of specified securities under this chapter(it applies or extends legislative provisions to same/similar subjects- a adaptation of similar securities)

---------------------------------------------------x-----------------------------------------

SECURITIES CONTRACT (REGULATION) ACT 1956 (SCRA) A securities is an inclusive term referring to share, debentures, marketable securities, bond, units are all similar products. These are tradable securities Traditionally stock exchanges in India were organisations formed generally on non-profit basis and the trading members besides rendering services were owning, controlling and managing the stock exchanges this demanded a situation to corporatize the stock exchanges. Advantage of corporatisation of stock exchange was public interest . in order to prevent undesirable transactions in securities and to promote healthy stock market the SECURITIES CONTRACT (REGULATION) ACT 1956 was enacted by the parliament. OBJECTIVE OF SCRA: To provide for regulation of stock exchanges To provide for regulation of transactions in securities To prevent undesirable speculation in securities To regulate the buying and selling of securities outside the limits of stock exchanges by licensing dealers To provide for certain other related matters Non-Applicability of the Act : does not apply to The government Reserve bank of India Any local authority or corporation set up by a special law Any person who has effected any transaction with or through the agency of govt. /RBI/loval authority or any corporation set up by a special law Any convertible bond or share warrant or Any option or right related to the same which entitles the person in whose favour it has been issued , to obtain the shares of the company or other body corporate whether by conversion of the bond or warrant at his option from The company or other body corporate, which has issued the same or Any of its shareholders or Duly appointed agents The shares are obtained on the basis of the price agreed upon when the same was issued.( eg. When a holder of a convertible bond is given a otion either to redeem it or to convert it into equity shares of the company Any class of contract in respect of which as exemption notification has been issued by the Central Govt. In the interest of the trade and commerce or the economic development of the country

Definitions Contracts : U/s 2(a) A contract for or relating to the purchase or sale of securities Securities : U/s 2(h) Securities include Shares, scrips, stocks, bonds, debentures other marketable securities of same nature of any incorporated body or body corporate Govt. Securities Such other instruments as may be declared by Central Govt. To be securities Rights and interest in securities Government security : U/s 2(b) Means securities created and issued , whether before or after the commencement of the Act , by the Central /State Govt. For the purpose of raising a public loan and having one of the forms specified in Sect. 2(2) of the Public Debt Act 1944 Spot Delivery Contract :U/s 2(i) means a contract which provides for : Actual delivery of securities and the payment of price there on for either on the same day as the date of contract or on the next day. If the parties to the contract do not reside in the same town/locality the actual period taken for dispatch of the securities or the remittance of money through post is excluded from computation of the period aforesaid Transfer of the securities by the depository from the account of a beneficial owner to the account of another beneficial owner when such securities are dealt with by depository Option in Securities : U/s 2(d) SECURITIES CONTRACT (REGULATION) ACT defines Option in Securities as a contract for the purchase/sale of a right to buy/sell , securities in future and includes a teji, a mandi, a teji mandi , a galli, aput, a call, or a put and call in securities An option to buy is called Call option and option to sell is called Put option An option to exercisable on or before the expiry date is called American option and option to exercisable only after the expiry date is called European option The price at which the option is to be exercised is called Strike price or Exercise price Option contract is type of Derivatives Contract which gives the buyer/holder of the contract the right to buy/sell the underlying asset at a predetermined price within or at end of specified period. The buyer /holder of the option purchases the right from the seller/writer for a consideration which is called the premium The seller/writer of an option is obligated to settle the option as per the terms of the contract when the buyer/holder exercises his right. The underlying asset could include securities an index of prices of securities etc. Derivative: U/s 2(ac) Derivative are the financial instrument that are valued according to the expected price movement of an underling asset which may be a commodity , currency or a security They generally take the form of contract under which the parties agree to payments between them based upon the value of an underlying asset or data at a particular point in time The main use of derivatives is to reduce risk for one party while offering the potential for a high return to another.

Derivatives can be based on different type of assets such as commodities, equities, bonds, interest rates, exchange rates, or indexes(such as stock market index, consumer price index(CPI) see inflation derivatives or index of weather conditions. Derivatives includes: 1. A security derived from debt instrument, share loan whether secured or unsecured, risk instrument or contract for differences or any other form of security 2. A contract which derives its value from the prices or index of prices of underlying securities Examples of Derivatives : a) Futures: These are agreements to buy or sell a fixed quantity of a particular security, commodity or currency for delivery at a fixed date and fixed price in the future. In these contracts the price at which assets will change hands in the future is agreed upon at the time of entering into contract. It involves definite purchase or sale b) Options : These are rights to buy/sell a fixed quantity of a security, commodity, currency, etc. of a particular date at a particular price. The purchaser of an option is not obliged as in futures, to buy/sell at the existing price and will only do so if it is profitable c) Swaps : Means by which intending parties can exchange their cash flows usually through an intermediary of a bank. For eg. Currency swap will enable parties to exchange the currency they posses for the currency they need STOCK EXCHANGE AND ITS REGULATION Stock Exchange means any body of individuals whether incorporated or not constituted for the purposes of assisting , regulating, or controlling the buying, selling or dealing in securities. Recognised Stock Exchange : Any organisation can function as recognised stock exchange only if it is recognised by the Cent. Govt. E.g. BSE, NSE. In other words no person shall except with the permission of the Cent. Govt, organised or assist in organising or be a member of any stock exchange for purpose of assisting in entering into /performing any contract in securities APPLICATION FOR RECOGNITION TO STOCK EXCHANGE U/s 3 Any stock exchange may make application to Cent. Govt. With particulars as prescribed . It must be accompanied by a copy of bye-laws of the stock exchange for the regulation and control of contract and rules relating in general to the constitution of stock exchange Bye-laws/rules must contain the following provisions : 1. The governing body of such stock exchange 2. Constitution and powers of management 3. Manner in which business is to be transacted 4. Powers & duties of office bearers of stock exchange 5. The admission into the stock exchange of various classes of members and the qualification of membership 6. Exclusion, suspension, re-admission of members from stock exchange 7. Procedure for registration of partnerships as memberships and 8. Nomination and authorized representative and clerks

GRANT OF RECOGNITION TO STOCK EXCHANGE The Central. Govt may grant recognition provided : 1. The rules & bye-laws of stock exchange applying for registration are in conformity with such conditions as may be prescribed by Central Govt. , with a view to ensure fair dealing and to protect the investor 2. Stock exchange is willing to comply with conditions as to number of members which the Central Govt may impose as per object of this Act 3. It is in the interest of trade and also public interest to grant recognition to the stock exchange 4. Central govt may ask required information from the stock exchange for such grant 5. Application for grant of recognition can be refused by the Central govt. , however before refusing opportunity of being heard must be given to the stock exchange. The reasons of such refusal of application shall be communicated to the stock exchange RECOGNITION SUBJECT TO CONDITIONS : Central Govt. may impose conditions relating to following1. Qualification for membership of stock exchange 2. The manner in which contract shall be entered into and enforced between the members of stock exchange 3. Appointment of maximum three representative of Central Govt. on each stock exchange 4. Maintenance of accounts of members and their audit by chartered accountants SEBI is authorised to call for periodical return from the recognised stock exchange & inquire ni to their affairs Recognition of stock exchange is effective from the date of its publication in the Official Gazette of India(Official Gazette is a govt. book or publication , which appears on a fixed day or day every week & is official organ for the publication of govt. notifications, list of public appointments and honours & other public notices) Application for renewal in the prescribed format can be made if recognition is for particular period A recognised stock exchange has powers to make bye-laws from time to time after obtaining the approval from SEBI. Bye-laws shall have effect from the date of its publication in the Official Gazette of India U/s 10 SEBI has powers to make or direct any stock exchange to amend its bye laws . These amended laws shall be published in the Official Gazette of India WITHDRAWAL OF GRANT OF RECOGNITION TO STOCK EXCHANGE The recognition granted to the stock exchange can be withdrawn in the interest of trade and also public interest to grant recognition to the stock exchange. Procedure as follows: 1. A written notice must be served on the governing body of the stock exchange 2. The notice shall specify the reasons for the proposed withdrawal of recognition 3. Governing body of the stock exchange shall be given an opportunity of being heard 4. To withdraw the recognition of a stock exchange, notification in the Official Gazette must be given 5. Withdrawal of recognition does not effect the validity of any contract entered into or made before the date of notification

CONTRACT IN SECURITIES Contracts in Notified Areas u/s 13 : Central govt. has power to declare a state or areas as notified. While notifying any such state or areas due consideration is given to the nature or volume of transaction or securities in state/areas Effect of declaration of areas as notified areas : Every contract in securities in such notified state or areas is legal ifa. Such contract is entered into between the members of a recognised stock exchange/s. Contract entered between the persons other than members of a recognised stock exchange will be considered illegal b. Any contract entered into through or with a member of a recognized stock exchange c. Such contracts are subject to terms and conditions as stipulated by recognised stock exchange . Recognised stock exchange can lay such terms and conditions with prior approval of SEBI EXCEPTION : Sect.13 are not applicable to spot delivery contracts Contracts in Notified Areas declared as Void in certain circumstances u/s 14 : Any contract entered into any state or areas which is declared notified by the Central Govt. & which are in contravention of any such bye-laws specified shall be void with respect to : The rights of any member of the recognised stock exchange who has entered into such contract in contravention of any such bye-laws The rights of any other person who has knowingly participated in such transaction POWER OF CENTRAL GOVERNMENT TO PROHIBIT CONTRACTS a. Central govt. can declare that any contract for sale or purchase of any security shall not be made without the permission of Central Govrenment. b. Such decision can be made by government only if necessary to prevent undesirable speculation in specified securities in any state/areas. c. Central Government has to issue notification in the official gazette specifying such state and the securities . it shall also declare that no person in such state/areas shall enter into any contract of sale or purchase of such securities d. Any agreement for sale/purchase of securities shall be illegal if made in contravention of above provisions LICENSING OF DEALERS IN CERTAIN SECURITIES U/S 17: A person dealing in securities need to obtain license from SEBI for the business of dealing in securities in any state which is not notified u/s 13 but notified u/s 17 It implies that licensing can be made compulsory only in respect of stat/areas not notified u/s 13 Exception : Spot delivery contracts & Doing of anything by/on behalf of a member of any recognised stock exchange

PUBLIC ISSUE & LISTING OF SECURITIES U/S 17A : Securities cannot be offered to public or listed on any recognised stock exchange unless the issuer fulfils the criteria and complies with the requirement as may specified by SEBI Every issuer intending to offer certificates or instruments to public , shall make application before issuing the offer document to the public to one or more stock exchanges for permission for such certificates/instruments to be listed on the stock exchanges Where permission applied for listing has not been granted or refused by the recognised stock exchange, the issuer shall forthwith repay all money, if received from applicants in pursuance of the offer document In case of failure to pay such money within 8 days after the issuer becomes liable to repay it, the issuer & every director/trustee thereof who is in default shall on and from the expiry of 8th day be jointly liable to repay money with interest rate of 15% p.a. in calculating 8 days public holidays shall be excluded. LISTING OF SECURITIES Listing of securities means grant of approval for dealing in certain securities(shares & debentures) at a stock exchange. The main objective of listing of securities on stock exchange is to provide liquidity and marketability to securities and also to provide a mechanism for effective management of trading However listing is not compulsory for companies not making public issue of shares and debentures Application for listing shall be made by company to concern stock exchange along with the following documents : Memorandum and Article of association and copy of trust deed(in case of debentures) Copies of all prospectus and statement in lieu of prospectus issued in past Copies of offer of sale circulars or advertisement offering securities in last five years Copies of balance sheet and profit and loss account for last five years Statement of dividend and cash bonus during last 10 years Copies of agreement with vendors/promoters, underwriters, brokers Copies of agreement with managing directors, technical director, general manager etc. Copies of any documents referred in any prospectus or offer for sale in last five years Statement of material contract , agreements including technical agreements Particular of shares and debentures issues for consideration other than cash Statement of commission , brokerage, discount on other special terms for issue of any kinds of securities Receipt of filing of offer document with SEBI Agreements with ICICI, IFCI and other similar bodies Particulars of forfeited shares Particulars of shares/debentures for which permission for listing is applied

LISTING AGREEMENTS : Agreement between the company and stock exchange wherein a detailed undertaking is submitted by a company whose securities are to be admitted for trading on the stock exchange It also contains provisions with respect to time bound registration of shares, issue of new share certificate in case of defaced pr torn certificate and timely intimation to stock exchange regarding board of directors meeting on important matters Listing agreements specifies the terms and conditions of listing disclosures that shall be made by a company on a continuous basis to stock exchange for the wide spread information to the market Consequence of non-listing : In case the company has not applied for listing or stock exchanges have not granted permission before the expiry of 8-10 weeks from the date of closure of subscription list then following consequences will followa. Any allotment of shares and debentures to an applicant shall be void b. Any application money collected is to be refunded without interest within 8 days after the company becomes liable to repay it c. After the expiry of 8 days the company and its every officer shall jointly and severely liable to repay the amount with interest at prescribed rate REFUSAL OF LISTING AND APPEAL U/S 22 : 1) Stock exchange can refuse listing to a company only after furnishing reasons for such refusal 2) Where stock exchange refuses or unable to grant listing within the time frame prescribed in the Companies Act the company may appeal to the Securities Appellate Tribunal 3) The appeal must be filed within 15 days i) From date on which the reasons for such refusal are furnished to it or ii) From the date of expiy of the time specified in sect. 73 of Companies Act which is 10 weeks from the date of closing of subscription list 4) Securities Appellate Tribunal shall deal with the appeal expeditiously and try to dispose it within 6 months from date of receipt of such appeal 5) Securities Appellate Tribunal after hearing the stock exchange may vary or set aside stock exchanges order or grant or refuse permission 6) The order passed by Securities Appellate Tribunal is binding on the stock exchange and it shall act in conformity with orders Powers of Securities Appellate Tribunal: every proceeding pending in the Securities Appellate Tribunal is deemed to be judicial proceeding. It has powers to regulate their own procedure as same as civil court under the code of Civil Procedure 1908 as follows Summoning and enforcing attendance of any person and examining him on oath Requiring the discovery and production of documents Receiving evidence in affidavit

Issuing commission for examination of witness or documents Reviewing the decisions Dismissing an application as default or deciding it ex-parte Any other matters as may be prescribed

Appeal to Supreme Court : U/s 22(f) any person aggrieved by the decision or order of the Securities Appellate Tribunal may file an appeal to the supreme court. It must be filed within 60 days from communication of decision or order of the Securities Appellate Tribunal The time limit of filing within the 60 days can be extended by supreme court on showing of sufficient reasons. Right for legal representation u/s 22(C) : Appellant may appear in person or authorize one or more Chartered Account, Company Secretary ,Cost Accountant or Legal practioner or any of its officer to represent the case No Jurisdiction of Civil Court : Civil Courts shall not have jurisdiction to entertain any suit or proceedings in respect of any matters which Securities Appellate Tribunal is empowered by or under this act Delisting of securities u/s 21(a) : 1) A recognized stock exchange may delist securities of a company on any grounds prescribed in this act 2) The stock exchange may delist the companies which have been suspended for a minimum 6 months for non compliance with the listing agreements 3) The stock exchange shall record the reasons for delisting the securities of the company. They have to give adequate and wide public notice through news papers and also give show cause notice to the company 4) The stock exchange shall provide a time period of 15 days within which representation may be made to the exchange by the person who may be aggrieved by the proposed delisting 5) Where the securities of the company are delisted by a stock exchange the promoters of the company are liable to compensate the security holders of the company by paying them the fair value of the securities , subject to their option to remain security holders with the company Appeal against Order of Delisting A listed company or aggrieved investor may file appeal against the delisting order before Securities Appellate Tribunal Within the 15 days from the decision of stock exchange Securities Appellate Tribunal may allow delay in filing of appeal provided sufficient reasons are shown, but the extension period shall not exceed 1 month

POWER OF CENTRAL GOVERNMENT TO MAKE RULES UNDER THIS ACT Central govt may by notification in the official gazette makes rules for the object of this act : The manner in which application may be made , the particulars they should contain and the levy of fees in respects to such application The manner in which inquiry for purpose of recognising any stock exchange may be made, the conditions which may be imposed for the grant of recognition , including the admission of members if the stock exchange concerned is to be the only recognised stock exchange in the area, and the form in which such recognition shall be granted The particulars which is contained in the periodical returns and annual reports to be furnished to central govt. The documents that should be maintained and preserved and the period for which it is to be preserved u/s6 The manner in which any inquiry by the governing body of stock exchangensahll be made the manner in which the bye-laws to be made or amended under this act shall before so made or amended be published for criticism the manner in which o the application may be made by dealers in securities for licences u/s17, o the fee payable in respect to thereof and the period of licences, o the conditions subject to which licences are to be granted, o including to conditions relating to the forms which may be used in making contracts, o the documents maintained by the licensed dealers and furnishing of periodical information to such authority as may be specified o the revocation of licences for breach of conditions PENALTIES U/S 23 &24 A] Punishment of Imprisonment up to 10 years OR fine up to 25 crores or both for offences 1. Any person who without reasonable excuse fails to comply with any requisition made u/s 4 and 6. Section 6 contains provisions related to power of cent. Govt. to ask periodical return or direct inquiries to be made 2. Any person who enters in contract in contravention of any of the provisions contained in section 13(contracts prohibited by central government) or section 16 (contracts in notified areas) or section 17 (licensing of dealers in securities in certain areas) or section 19 (stock exchanges other than recognized stock exchanges prohibited ) 3. Contracts in derivatives in contravention section 18 (a) or of the rules made u/s 30 4. Any person who own or keeps a place other than that of a recognised stock exchange which is used for purpose of entering into or performing any contract in contravention of any of the provisions of this Act and knowingly permits such place to be used for such purpose

5. Any person who manages, controls, or assists in keeping any place other than that of a recognised stock exchanges which is use for the purpose of entering into or performing any contracts in contravention of any of the provisions of this act or at which contracts are recorded or adjusted or rights or liabilities arising out of contracts are adjusted , regulated , or enforced in any manner whatsoever 6. Any person who not being a member of a recognised stock exchange or his agent authorised as such under the rules or bye-laws of such stock exchange or not being a dealer in securities licensed u/s17 willfully represents to or induces any person to believe that contracts can be entered into or performed under this act through him;or 7. Any person not being a member of a recognised stock exchange or his agent authorised as such under the rules or bye-laws of such stock exchange or not being a dealer in securities licensed u/s 17 advertises or touts in any manner either for himself or for other person for business/contract in contravention to this Act 8. Any person joins, gathers, assist at any place other than place of business as specified in by e-laws of recognised stock exchange for bids/offers or performing contracts in contravention to this Act 9. Any person who enters into contract in contravention of the provisions contained u/s15(member not to act as principals) OR Any persons who fails to comply with the provision of u/s21 (conditions of listing) u/s 21A(delisting of securities) & u/s 22(appeal against refusal to stock exchange to list securities) B] PUNISHMENT FINE OF 1 LAKH FOR EACH DAY DURING WHICH SUCH FAILURE CONTINUES OR 1 CRORE WHICHEVER IS LESS: Offences are Failure to furnish information returns etc. Failure to maintain books of accounts or records Failure by any person to enter into an agreement with clients Failure to redress investors grievance C] PENALTY FOR OFFENCES NOT EXCEEDING 25 CRORES Failure to comply with provisions of listing or delisting conditions Excess dematerialization or delivery of unlisted securities Failure to periodical returns Any contravention of rule/byelaw/article/regulation of recognised stock exchange for which no penalty has been provided D] PENALTY FOR OFFENCES NOT EXCEEDING 1 CRORE : failure to segregate securities/money of clients or using securities/money of clients for self or for other clients U/S 24 if any company contravenes any of the provisions of the Act rules/directions then following persons are deemed to guilty of the offence : 1. Company 2. Every company who at the time when offence was committed was in charge/responsible for the business of the company 3. Director , manager , secretary of the other officer of the company if it is proved that offence was committed with their consent or has resulted gross negligence on their part.

However a person shall not be liable if proved: Offence was committed without his/her knowledge OR That he had exercised all due diligence to prevent the commission of such offence Power to Adjudicate u/s 23(I) : SEBI shall appoint any officer not below the rank of Division Chief of SEBI to be adjudicating officer. He will hold inquiry in the prescribed manner after giving any person concern a reasonable opportunity of being heard for the purpose of imposing any penalty. While holding an inquiry adjudicating officer shall have power to summon and enforce the attendance of any person acquainted with facts & circumstances of the case to give evidence or to produce any document relevant to the subject matter of inquiry If on such inquiry he is satisfied that the person has failed to comply with the provisions of any sections specified he may impose such penalty as he thinks fit in accordance with the provisions of this Act Factor to be taken in to consideration to ascertain the quantum of penalty : The amount of disproportionate gain or unfair advantage wherever quantifiable , made as default Amount of loss caused to an investor or group of investor as result of the default The repetitive nature of the default Crediting the sums realised funds by way of penalties to Consolidated Fund of India Appeal to Securities Appellate Tribunal : An appeal can be filed before Securities Appellate Tribunal if any person is aggrieved by the 1. Order or decision of the recognised stock exchange or 2. Adjudicating officer or 3. Any order made by the SEBI Time period to file the appeal : Every appeal shall be filed within a period of 45 days from the date on which a copy of the order or decision is received by the appellant. Appeal shall be made in prescribed form and must be accompanied by fee as specified. Procedure on Receipt of Appeal : On receipt of appeal the Securities Appellate Tribunal will hold inquiry in the prescribed manner after giving any person concern a reasonable opportunity of being heard pass such order thereon as it thinks fit. It can confirm modify or set aside the order against which appeal in filed Securities Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concern adjudicating officer The appeal filed before the Securities Appellate Tribunal shall be dealt with expeditiously as possible and be made to dispose the appeal within 6 months from the receipt of the appeal --------------------------------x----------------------------------