SecuritieS lawS and capital MarketS - ICSI

1 Study Material executive Programme SecuritieS laws and capital MarketS Module 2. Paper 6. i H NS OF COMP N S C S OF N. N FH Q S. Monday to Friday Office Timings to Public Dealing Timings Without financial transactions to With financial transactions to Phones 011-41504444, 45341000. Fax 011-24626727. Website E-mail laser typesetting by aarushi Graphics, Prashant Vihar, New delhi, and Printed at M P Printers/May 2018. ii EXECUTIVE PROGRAMME. SecuritieS laws AND capital MarketS . The SecuritieS MarketS are vital to the growth, development and strength of market economies and the maturity of an economy are decided based on the robustness of SecuritieS market of an economy. Considering that the SecuritieS market is the core area of practice for the Company Secretaries, it becomes very important for the professionals to be fully aware of various laws and regulations, both for practice and guiding the Board of Directors on SecuritieS laws related matters.

2 The SecuritieS market is governed by various regulations enacted in the course of time by the competent legislative body and regulating bodies. This study is divided into two Parts, Part I deals with SecuritieS laws and Part II. deals with capital market & Intermediaries. Part I of the Study provides an in depth analysis of the legal principles applicable to listed companies in addition to the Companies Act, 2013. 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 , thereby also giving paramount importance to the stakeholders. Therefore, this study discusses various legislative and regulatory guidance such as SecuritieS Contracts (Regulation) Act, 1956, Depositories Act, 1996, SEBI (Issue of capital and Disclosure Requirements) Regulations, 2009, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, SEBI (Prohibition of Insider Trading).

3 Regulations, 2015, etc. Part II of the study deals with analyses of the secondary market or the capital market , which is the bridge between the investors and the corporates. There are several intermediaries and institutions involved in dealing with the capital market . SEBI has also jurisdiction over all such intermediaries and persons associated with the SecuritieS market . In connection with the same, SEBI has regulated their functioning through various regulations, which have been discussed in this part. In the era of plethora of legislations, rules, and regulations, a Company Secretary professional is expected to be well aware of these rules and principles, as these compliances make the functioning of the MarketS smooth while violations leads to severe penalties. This study material is published to aid the students in preparing the paper on SecuritieS laws and capital MarketS for Executive Programme.

4 It is part of the educational kit and takes the students step by step through each phase of preparation emphasizing key concepts, principles, legal fundamentals and procedures. Company Secretaryship being a professional course, the examination standards are set very high, with focus on knowledge of concepts, their application, procedures and case laws , for which sole reliance on the contents of this study material may not be enough. This study material may, therefore, be regarded as the basic material and must be read alongwith the Bare Acts, Rules, Regulations, Case Law. The legislative changes made upto April 01, 2018 have been incorporated in the study material. The students to be conversant with the amendments to the laws made upto six months preceding the date of examination. It may happen that some developments might have taken place during the printing of the study material and its supply to the students.

5 The students are therefore advised to refer to the updations at the Regulator's website, Supplement relevant for the subject issued by ICSI and ICSI Journal Chartered Secretary and other publications for updation of study material. iii In the event of any doubt, students may write to the Directorate of Professional Development, Perspective Planning & Studies of the Institute for clarification at Although due care has been taken in publishing this study material, the possibility of errors, omissions and/or discrepancies cannot be ruled out. This publication is released with an understanding that the Institute shall not be responsible for any errors, omissions and/or discrepancies or any action taken in that behalf. Should there be any discrepancy, error or omission noted in the study material, the Institute shall be obliged if the same is brought to its notice for issue of corrigendum in the e-bulletin Student Company Secretary'.

6 Iv Legal and Regulatory Framework The Legal and Regulatory Framework of SecuritieS legal laws andFrameWorK. aNd regulatory capital MarketS in India is given below : the legal and regulatory framework of SecuritieS laws and capital market in india is given below: Legal Framework SecuritieS Contracts Depositories Act, 1996. (Regulation) Act, 1956. SecuritieS and Exchange Board of India Act, 1992. SecuritieS Contracts SEBI (Depositories and (Regulations) Rules, 1957 Participants) Regulations Circulars 1996. Master Circulars General Orders Regulations Governing Guidelines Issue and Listing of Regulations Governing Rules Intermediaries SecuritieS Regulations SEBI (Intermediaries)Regulations, 2008. SEBI (Issue of capital and Disclosure Requirements) Regulations, 2009 SEBI (Bankers to an Issue) Regulations, 1994. SEBI (Listing Obligations and Disclosure SEBI (Debenture Trustee) Regulations, Requirements) Regulations, 2015.

7 1993. SEBI (Share Based Employee Benefits) SEBI (Portfolio Managers) Regulations, Regulations, 2014 1993. SEBI (Issue of Sweat Equity) SEBI (Registrars to an Issue and Share Regulations, 2002 Transfer Agents) Regulations, 1993. SEBI (Underwriters) Regulations, 1993. SEBI (Buy Back Of SecuritieS ). Regulations, 1998 SEBI (Merchant Bankers) Regulations, 1992. SEBI (Prohibition of Insider Trading). SEBI (Stock Brokers and Sub-Brokers). Regulations, 2015. Regulations, 1992. SEBI (Substantial Acquisition of Shares SEBI (Mutual Funds) Regulations, 1996. and Takeovers) Regulations, 2011. SEBI (Delisting of Equity Shares). Regulations, 2009. SEBI (Foreign Portfolio Investors). SEBI (Issue and Listing of Debt Regulations, 2014. SecuritieS ) Regulations, 2008. SEBI (Ombudsman) Regulations, 2003. Other Regulations SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to SEBI (Prohibition of Fraudulent and Unfair SecuritieS market ) Regulations, 2003 Trade Practices relating to SecuritieS market ).

8 Regulations, 2003. SEBI (Collective Investment Schemes). Regulations, 1999. v Executive Programme Module 2. Paper 6. SecuritieS laws and capital MarketS (MAX Marks 100). SYLLABUS. Objective Part I To provide expert knowledge in the legislations, rules and regulations governing the entities listed on the stock exchanges. Part II To provide the basic understanding of the working of capital MarketS in India. Part I : SecuritieS laws (70 Marks). Detailed Contents 1. SecuritieS Contracts (Regulation) Act, 1956 : Objectives of the SCR Act, Rules and Regulations made there under; Important Definitions; Recognized Stock Exchange, Clearing Corporation; Public issue and listing of SecuritieS ; Rules relating to Public Issue and Listing of SecuritieS under SecuritieS Contracts (Regulation) Rules, 1957. 2. SecuritieS and Exchange Board of India Act, 1992: Objective; Powers and functions of SEBI.

9 SecuritieS Appellate Tribunal; Penalties and appeals. 3. Depositories Act, 1996 : Depository System in India; Role & Functions of Depositories; Depository Participants; Admission of SecuritieS ; Dematerialization & Re-materialisation; Depository Process;. Inspection and Penalties; Internal Audit and Concurrent Audit of Depository Participants. 4. An Overview of SEBI (Issue of capital and Disclosure Requirements) Regulations, 2009. 5. An Overview of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. 6. An Overview of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. 7. SEBI (Buyback of SecuritieS ) Regulations, 1998 : Conditions of buy-back; Buy back Methods: Tender Offer, Open market (Book building and Stock Exchange); General obligations; Penalties. 8. SEBI (Delisting of Equity Shares) Regulations, 2009 : Delisting of Equity Shares; Voluntary Delisting.

10 Exit Opportunity; Compulsory Delisting. 9. An Overview of SEBI (Share Based Employee Benefits) Regulations, 2014. 10. An Overview of SEBI (Issue of Sweat Equity) Regulations, 2002. 11. SEBI (Prohibition of Insider Trading) Regulations, 2015 : Unpublished price sensitive information (UPSI); Disclosures; Codes of fair disclosure and conduct; Penalties and Appeals. 12. Mutual Funds : Types of Mutual Funds and Schemes; Key players in Mutual Funds: Sponsor, Asset Management Company, Trustee, Unit holder, Evaluating performance of Mutual funds- Net Asset Value, Expense Ratio, Holding Period Return. vi 13. Collective Investment Schemes : Regulatory Framework; Restrictions on Business Activities;. Submission of Information and Documents; Trustees and their Obligations. 14. SEBI (Ombudsman) Regulations, 2003 : Procedure for Redressal of Grievances; Implementation of the Award; Display of the particulars of the Ombudsman, SCORES, SEBI (Informal Guidance) Scheme, 2003.