A Guide to the Securities Contracts (Regulation) Rules, 1957

A Guide to the Securities Contracts (Regulation) Rules, 1957

24 min read

The Securities Contracts (Regulation) Rules, 1957 prescribe various provisions for stock exchanges in India.

These Rules prescribe various provisions for stock exchanges in India including;

  1. recognition
  2. fees for application for recognition
  3. documents to be filed
  4. procedure for renewal of recognition
  5. forms for various purposes
  6. qualifications for membership of a recognised stock exchange, audit of member accounts and procedure for withdrawal of recognition.

Brief History of the Rules

The Securities Contracts (Regulation) Rules, 1957 by the Central Government under the power to make rules conferred by Section 30 of the Securities Contracts (Regulation) Act, 1956 and the copy of the original rules were first notified by Notification No. S.R.O. 576 dated 21st February, 1957.

Relevant Act
Securities Contracts (Regulation) Act, 1956

Download the rules:
Securities Contracts (Regulation) Rules, 1957

List of Amendments

  • Securities Contracts (Regulation) (Amendment) Rules, 1967
  • Securities Contracts (Regulation) (Amendment) Rules, 1988
  • Securities Contracts (Regulation) (Amendment) Rules, 1994
  • Securities Contracts (Regulation) (Amendment) Rules, 1996
  • Securities Contracts (Regulation) (Amendment) Rules, 2000
  • Securities Contracts (Regulation) (Amendment) Rules, 2003
  • Securities Contracts (Regulation) (Amendment) Rules, 2008
  • Securities Contracts (Regulation) (Amendment) Rules, 2010
  • Securities Contracts (Regulation) (Second Amendment) Rules, 2010
  • Securities Contracts (Regulation) (Amendment) Rules, 2013
  • Securities Contracts (Regulation) (Amendment) Rules, 2014
  • Securities Contracts (Regulation) (Second Amendment) Rules, 2014
  • Securities Contracts (Regulation) (Third Amendment) Rules, 2014
  • Securities Contracts (Regulation) (Amendment) Rules, 2015
  • Securities Contracts (Regulation) (Amendment) Rules, 2020 

1. Definitions

Act means the Securities Contracts (Regulation) Act, 1956.

Form means a form appended to these rules.

Government Company means a company in which not less than fifty-one per cent of the share capital is held by the Central Government or by any State Government or Governments or partly by the Central Government and partly by one or more State Governments.

Public means persons other than,

(i) the promoter and promoter group

(ii) subsidiaries and associates of the company.

Public Sector Company means a body corporate constituted by an Act of Parliament or any State Legislature and includes a government company.

Public Shareholding means equity shares of the company held by the public and shall exclude shares which are held by custodian against depository receipts issued overseas.


2. Procedure for Recognition and Renewal of Recognition under the Rules

  1. The rules state that application for the recognition of stock exchanges shall be made to the Securities and Exchange Board of India (SEBI) in Form A. Fees of INR 500 has to be paid along with this application.
  2. The rules mandate that every application has to be accompanied with four copies of the applicable rules, memorandum, articles of association and bye- laws of the stock exchange seeking recognition. Recognition granted to a stock exchange has to be under Form B.
  3. If the recognition is not specifically granted on a permanent basis, then it has to be granted for a period not less than one year.
  4. The recognition granted is conditional on the compliance of all the conditions as may be prescribed from time to time.
  5. If a recognised stock exchange wishes to renew its recognition, then it has to make an application before three months of expiry in Form A. The fees for renewal of recognition is INR 200. 

3. Qualifications for Membership of a Recognised Stock Exchange

No person shall be eligible to be elected as a member if-

  1. he is less than twenty-one years of age
  2. he is not a citizen of India (the governing body may in suitable cases relax this condition with the prior approval of SEBI)
  3. he has been adjudged bankrupt or a “receiving order” in bankruptcy has been made against him or he has been proved to be insolvent even though he has obtained his final discharge
  4. he has compounded with his creditors unless he has paid 16 annas in the rupee
  5. he has been convicted of an offence involving fraud or dishonesty
  6. he is engaged as principal or employee in any business other than that of securities or commodity derivatives except as a broker or agent not involving any personal financial liability unless he undertakes on admission to sever his connection with such business (provided that no member may conduct business in commodity derivatives, except by setting up a separate company which shall comply with the regulatory requirements, such as, net worth, capital adequacy, margins and exposure norms as may be specified by the Forward Market Commission, from time to time)
  7.  he has been at any time expelled or declared a defaulter by any other stock exchange
  8. he has been previously refused admission to membership unless a period of one year has elapsed since the date of such rejection.

No person eligible for admission as a member under the above sub- rule shall be admitted as a member unless-

  1. he has worked for not less than two years as a partner with, or an authorised assistant or authorised clerk or commissioned dealer’s representative or apprentice to a member
  2. he agrees to work for a minimum period of two years as a partner or representative member with another member and to enter into bargains on the floor of the stock exchange and not in his own name but in the name of such other member
  3. he succeeds to the established business of a deceased or retiring member who is his father, uncle, brother or any other person who is, in the opinion of the governing body, a close relative (provided that the rules of the stock exchange may authorise the governing body to waive compliance with any of the foregoing conditions if the person seeking admission is in respect of means, position, integrity, knowledge and experience of business in securities, considered by the governing body to be otherwise qualified for membership).

No person who is a member at the time of application for recognition or subsequently admitted as a member shall continue as such if-

  1. he ceases to be a citizen of India
  2. he is adjudged bankrupt or a receiving order in bankruptcy is made against him or he is proved to be insolvent
  3. he is convicted of an offence involving fraud or dishonesty
  4. he engages either as principal or employee in any business other than that of securities or commodity derivatives except as a broker or agent not involving any personal financial liability, provided that the governing body may, for reasons, to be recorded in writing, permit a member to engage himself as principal or employee in any such business, if the member in question ceases to carry on business on the stock exchange either as an individual or as a partner in a firm, in the case of those members who were under the rules in force at the time of such application permitted to engage in any such business and were actually so engaged on the date of such application, a period of three years from the date of the grant of recognition shall be allowed for severing their connection with any such business and nothing herein shall affect members of a recognised stock exchange which are corporations, bodies corporate, companies or institutions.

A company as defined in the Companies Act, shall be eligible to be elected as a member of a stock exchange if-

  1. such company is formed in compliance with the provisions of section 322 of the Companies Act
  2. a majority of the directors of such company are shareholders of such company and also members of that stock exchange
  3. the directors of such company, who are members of that stock exchange, have ultimate liability in such company (provided that where the Securities and Exchange Board of India makes a recommendation in this regard, the governing body of a stock exchange shall, in relaxation of the requirements of this clause, admit as member the following corporations, bodies corporate, companies or institutions, namely the Industrial Finance Corporation, established under the Industrial Finance Corporation Act, 1948, the Industrial Development Bank of India, established under the Industrial Development Bank Act, 1964.
  4. any insurance company granted registration by the Insurance Regulatory Development Authority under the Insurance Act, 1938
  5. the Unit Trust of India, established under the Unit Trust of India Act, 1963
  6. the Industrial Credit and Investment Corporation of India, a company registered under the Companies Act, 2013
  7. the subsidiaries of any of the corporations or companies specified in (1) to (6) and any subsidiary of the State Bank of India or any nationalised bank set up for providing merchant banking services, buying and selling securities and other similar activities.
  8. any bank included in the Second Schedule to the Reserve Bank of India Act, 1934
  9. the Export Import Bank of India, established under the Export Import Bank of India Act, 1981
  10. the National Bank for Agriculture and Rural Development, established under the National Bank for Agriculture and Rural Development Act, 1981
  11. the National Housing Bank, established under the National Housing Bank Act, 1987
  12. Central Board of Trustees, Employees’ Provident Fund, established under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
  13. any pension fund registered or appointed or regulated by the Pension Fund Regulatory and Development Authority under the Pension Fund Regulatory And Development Authority Act, 2013
  14. any Standalone Primary Dealers authorised by the Reserve Bank of India constituted under the Reserve Bank of India Act, 1934.

A company as defined under the Companies Act shall also be eligible to be elected as a member of a stock exchange if-

  1. such company is formed in compliance with the provisions of section 12 of the Companies Act
  2. such company undertakes to comply with such financial requirements and norms as may be specified by SEBI for the registration of such company under sub-section (1) of section 12 of the Securities and Exchange Board of India Act, 1992
  3. the directors of the company are not disqualified from being members of a stock exchange under clause (1) except sub-clause (b) and sub-clause (f) thereof or clause (3) except sub-clause (a) and sub-clause (f) thereof and the Directors of the company had not held the offices of the Directors in any company which had been a member of the stock exchange and had been declared defaulter or expelled by the stock exchange
  4. not less than two directors of the company are persons who possess a minimum two years’ experience in dealing in securities or as portfolio managers or as investment consultants.

Where any member of a stock exchange is a firm, the provisions of sub-rules (1), (3) and (4), shall, so far as they can, apply to the admission or continuation of any partner in such firm.

A limited liability partnership as defined in the Limited Liability Partnership Act, 2008, shall also be eligible to be elected its a member of a stock exchange if-

  1. such “limited liability partnership” undertakes to comply with such financial requirements and norms as may be provided by the Securities and Exchange Board of India for registration of such limited liability partnerships under sub- section (1) of section 12 of the Securities and Exchange Board of India Act, 1992
  2. the designate partners of the ‘limited liability partnership’ are not disqualified from being members of a stock exchange under sub-rule (1) except clause (b) and (f) thereof or sub-rule (3) except clause (a) and clause (f) thereof and the designated partners of the ‘limited liability partnership’ had not held the offices of Directors in any company or body corporate or partner in any firm or ‘limited liability partnership’, which had been a member of the stock exchange and had been declared defaulter or expelled by the stock exchange
  3. not less than two designated partners of the ‘limited liability partnership’ are persons who possess a minimum experience of two years in dealing in securities or as portfolio managers or as investment consultants.

Any provident fund represented by its trustees, of an exempted establishment under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, shall also be eligible to be elected as a member of a stock exchange.


4. Other Procedures under the Rules

The rules provide that all contracts between the members of a recognised stock exchange have to be in writing and enforced as per the rules and bye- laws of such recognised stock exchange.

The Securities and Exchange Board of India has been entrusted with nominating up to three persons as members of the governing body of the recognised stock exchange. The Securities and Exchange Board of India is also empowered to take action as it deems fit or direct the governing body to take disciplinary action of imposing fines, expelling or suspending offending members.

The rules also state that every member of a recognised stock exchange has to get his accounts audited by a chartered accountant when the Securities and Exchange Board of India requires it. Withdrawal of recognition of stock exchange can be made by a written notice in Form C of the rules. 

The Securities and Exchange Board of India can conduct inquiry by appointing persons who will be referred to as “inquiring authority” under the rules. The procedure and requirements of inquiry have been showcased below-

  1. where the inquiring authority consists of two or more persons, one of them shall be appointed as the chairman or senior member
  2. the inquiring authority shall hand over a statement of issues to be inquired into to the governing body or the member concerned, as the case may be, who will be given a reasonable opportunity to state their or his side of the case
  3. if any witness is called for examination, an opportunity shall be provided to the governing body or the member whose affairs are being inquired into, as the case may be, to cross-examine such witness
  4. where the inquiring authority consists of more than one person, the views of the majority shall be deemed to represent the findings of such authority and, in the event of an equality of votes, the chairman or senior member shall have a casting vote
  5. the inquiring authority shall submit its report in writing to the Securities and Exchange Board of India within the period specified in the order of appointment
  6. temporary absence from any hearing or hearings of any member of the inquiring authority shall not vitiate its proceedings
  7. where SEBI has directed the governing body of a stock exchange to make an inquiry under clause (b) of sub-section (3) of section 6 of the Act, the governing body concerned shall appoint one or more members thereof to make the inquiry and the provisions of sub-rule (1) shall apply to such inquiry once the necessary changes are made.

5. Documents, Requirements and their Procedures under the Rules

Books of Accounts and other Documents to be Maintained and Preserved by Every Recognised Stock Exchange

  1. Minute books of the meetings of members, governing body and any standing committee or committees of the governing body or of the general body of members.
  2. Register of members showing their full names and addresses. Where any member of the stock exchange is a firm, full names and addresses of all partners shall be shown
  3. Register of authorised clerks.
  4. Register of commissioned dealer’s representatives of authorised assistants.
  5. Record of security deposits.
  6. Margin deposits book.
  7. Ledgers.
  8. Journals.
  9. Cash book.
  10. Bank pass-book.

Books of Accounts and other Documents to be Maintained and Preserved by Every Member of a Recognised Stock Exchange

  1. Register of transactions (Sauda book).
  2. Clients’ ledger.
  3. General ledger.
  4. Journals.
  5. Cash book.
  6. Bank pass-book.
  7. Documents register showing full particulars of shares and securities received and
    delivered.
  8. Member’s contract books showing details of all contracts entered into by him with other members of the same exchange or counterfoils or duplicates of memos of confirmation issued to such other members.
  9. Counterfoils or duplicates of contract notes issued to clients.
  10. Written consent of clients in respect of contracts entered into as principals.

Submission of Annual Report

The Annual Report of the recognised stock exchange which are furnished to SEBI has to contain the following detailed information under the rules-

  1. changes in rules and bye-laws, if any
  2. changes in the composition of the governing body
  3. any new sub-committees set up and changes in the composition of existing ones
  4. admissions, re-admissions, deaths or resignations of members
  5. disciplinary action against members
  6. arbitration of disputes (nature and number) between members and non-members 
  7. defaults
  8. action taken to combat any emergency in trade
  9. securities listed and delisted
  10. securities brought on or removed from the forward list.

Submission of Periodical Returns

Recognised stock exchanges are required to furnish the following periodical returns to SEBI-

  1. the official rates for the securities enlisted thereon
  2. the number of shares delivered through the clearing house
  3. the making-up prices
  4. the clearing house programmes
  5. the number of securities listed and delisted during the previous three months
  6. the number of securities brought on or removed from the forward list during the previous three months
  7. any other matter as may be specified by SEBI.

Documents to be submitted with respect to the listing of securities on a recognised stock exchange

  1. Memorandum and articles of association and in the case of a debenture issue, a copy of the trust deed.
  2. Copies of all prospectuses or statements in lieu of prospectuses issued by the company at any time.
  3. Copies of offers for sale and circulars or advertisements offering any securities for subscription or sale during the last five years.
  4. Copies of balance-sheets and audited accounts for the last five years, or in the case of new companies, for such shorter periods for which accounts have been made up.
  5. A statement showing dividends and cash bonuses, if any, paid during the last ten years (or such shorter period as the company has been in existence, whether as a private or public company) and dividends or interest in arrears, if any.
  6. Certified copies of agreements or other documents relating to arrangements with or between vendors and/or promoters, underwriters and sub-underwriters and/or brokers and sub-brokers.
  7. Certified copies of agreements with managing agents, secretaries, treasurers, selling agents, managing directors, technical directors, general manager, sales manager, manager and secretary.
  8. Certified copy of every letter, report, balance-sheet, valuation contract, court order or other document, part of which is reproduced or referred to in any prospectus, offer for sale, circular or advertisement offering securities for subscription or sale, during the last five years.
  9. A statement containing particulars of the dates of, and parties to all material contracts, agreements (including agreements for technical advice and collaboration), concessions and similar other documents (except those entered into in the ordinary course of business carried on or intended to be carried on by the company) together with a brief description of the terms, subject-matter and general nature of the documents.
  10. A brief history of the company since its incorporation giving details of its activities including any reorganisation, reconstruction or amalgamation, changes in its capital structure, (authorised, issued and subscribed) and debenture borrowings, if any.
  11. Particulars of shares and debentures issued for consideration other than cash, whether in whole or part, at a premium or discount and in pursuance of an option.
  12. A statement containing particulars of any commission, brokerage, discount or other special terms including an option for the issue of any kind of the securities granted to any person.
  13. Certified copies of acknowledgement card or the receipt of filing offer document with SEBI and agreements, if any, with the Industrial Finance Corporation, Industrial Credit and Investment Corporation and similar bodies.
  14. Particulars of shares forfeited.
  15. A list of the highest ten holders of each class or kind of securities of the company as on the date of application along with particulars as to the number of shares or debentures held by and the address of each such holder.
  16. Particulars of shares or debentures for which permission to deal is applied for. (Provided that a recognised stock exchange may either generally by its bye-laws or in any particular case call for such further particulars or documents as it deems proper).

Requirements and compliance by the Applicant for listing of securities

The articles of association of an applicant company has to contain-

  1. that the company shall use a common form of transfer
  2. that the fully paid shares will be free from all lien, while in the case of partly paid shares, the company’s lien, if any, will be restricted to moneys called or payable at a fixed time in respect of such shares
  3. that any amount paid-up in advance of calls on any share may carry interest but shall not entitle the holder of the share to participate in respect thereof, in a dividend subsequently declared
  4. there will be no forfeiture of unclaimed dividends before the claim becomes barred by law
  5. that option or right to call of shares shall not be given to any person except with the sanction of the company in general meeting (provided that a recognised stock exchange may provisionally admit to dealings the securities of a company which undertakes to amend its articles of association at its next general meeting so as to fulfil the foregoing requirements and agrees to act in the meantime strictly in accordance with the provisions of this clause).

The minimum offer and allotment to the public in terms of an offer document has to contain-

  1. at least twenty five per cent of each class or kind of equity shares or debenture convertible into equity shares issued by the company, if the post issue capital of the company calculated at offer price is less than or equal to INR 1600 crores
  2. at least such percentage of each class or kind of equity shares or debentures convertible into equity shares issued by the company equivalent to the value of INR 400 crores, if the post issue capital of the company calculated at offer price is more than INR 1600 crores but less than or equal to INR 4,000 crores
  3. at least ten per cent of each class or kind of equity shares or debentures convertible into equity shares issued by the company, if the post issue capital of the company calculated at offer price is above INR 4,000 crores (provided that the company referred to in sub-clause (ii) or sub-clause (iii), shall increase its public shareholding to at least twenty five per cent within a period of three years from the date of listing of the securities, in the manner specified by SEBI and this clause shall not apply to a company whose draft offer document is pending with SEBI on or before the commencement of the Securities Contracts (Regulation) Third Amendment Rules, 2014, if it satisfies the conditions prescribed in clause (b) of sub-rule (2) of rule 19 of the Securities Contracts (Regulation) Rules, 1957 as existed prior to the date of such commencement).

The applicant company has to also undertake the following as condition precedent-

  1. that letters of allotment will be issued simultaneously and that, in the event of its being impossible to issue letters of regret at the same time, a notice to that effect will be inserted in the press so that it will appear on the morning after the letters of allotment have been posted
  2. that letters of right will be issued simultaneously
  3. that letters of allotment, acceptance or rights will be serially numbered,  printed on good quality paper and examined and signed by a responsible officer of the company and that whenever possible, they will contain the distinctive numbers of the securities to which they relate
  4. that letters of allotment and renounceable letters of right will contain a proviso for splitting and that, when so required by the exchange, the form of renunciation will be printed on the back of or attached to the letters of allotment and letters of right
  5. that letters of allotment and letters of right will state how the next payment of interest or dividend on the securities will be calculated
  6. to issue, when so required, receipts for all securities deposited with it whether for registration, sub-division, exchange or for other purposes and not to charge any fees for registration of transfers, for sub- division and consolidation of certificates and for sub-division of letters of allotment, renounceable letters of right, and split, consolidation, renewal and transfer receipts into denominations of the market unit of trading
  7. to issue, when so required, consolidation and renewal certificates in denominations of the market unit of trading to split certificates, letters of allotment, letters of right, and transfer, renewal, consolidation and split receipts into smaller units, to split call notices, issue duplicates thereof and not require any discharge on call receipts and to accept the discharge of members of stock exchange on split, consolidation and renewal receipts as good and sufficient without insisting on the discharge of the registered holders
  8. to accept the discharge of an official of the stock exchange clearing house on the company’s split receipts and consolidation receipts and renewal receipts as good and sufficient discharge without insisting on the discharge of the registered holders
  9. to verify when the company is unable to issue certificates or split receipt or consolidation receipts or renewal receipts immediately on lodgement whether the discharge of the registered holders, on the documents lodged for sub- division or consolidation or renewal and their signatures on the relative transfers are in order
  10. on production of the necessary documents by shareholders or by members of the exchange, to make on transfers an endorsement to the effect that the power of attorney or probate or letters of administration or death certificate or certificate of the Controller of Estate Duty or similar other document has been duly exhibited to and registered by the company
  11. to issue certificates in respect of shares or debentures lodged for transfer within a period of one month of the date of lodgement of transfer and to issue balance certificates within the same period where the transfer is accompanied by a larger certificate
  12. to advise the stock exchange of the date of the board meeting at which the declaration or recommendation of a dividend or the issue of right or bonus share will be considered
  13. to recommend or declare all dividends and/or cash bonuses at least five days before the commencement of the closure of its transfer books or the record date fixed for the purpose and to advise the stock exchange in writing of all dividends and/or cash bonuses recommended or declared immediately after a meeting of the board of the company has been held to finalise the same
  14. to notify the stock exchange of any material change in the general character or nature of the company’s business
  15. to notify the stock exchange of any change in the company’s directorate by death, resignation, removal or otherwise, of managing director, managing agent or secretaries and treasurers or of auditors appointed to audit the books and account of the company
  16. to forward to the stock exchange copies of statutory and annual reports and audited accounts as soon as issued, including directors’ report
  17. to forward to the stock exchange as soon as they are issued, copies of all other notices and circulars sent to the shareholders including proceedings of ordinary and extraordinary general meetings of the company and to file with the stock exchange certified copies of resolutions of the company as soon as such resolutions become effective
  18. to notify the stock exchange prior to intimating the shareholders of any new issue of securities whether by way of right, privilege bonus or otherwise and the manner in which it is proposed to offer or allot the same
  19. to notify the stock exchange in the event of re-issue of any forfeited securities or the issue of securities held in reserve for future issue
  20. to notify the stock exchange of any other alteration of capital including calls
  21. to close the transfer books only for the purpose of declaration of dividend or issue of right or bonus shares or for such other purposes as the stock exchange may agree and to give notice to the stock exchange as many days in advance as the exchange may from time to time reasonably prescribe, stating the dates of closure of its transfer books or, when the transfer books are not to be closed, the date fixed for taking a record of its shareholders or debenture holders and specifying the purpose or purposes for which the transfer books are to be closed or the record is to be taken and in the case of a right or bonus issue to so close the transfer books or fix a record date only after the sanctions of the competent authority subject to which the issue is proposed to be made have been duly obtained, unless the exchange agrees otherwise
  22. to forward to the stock exchange an annual return immediately after each annual general meeting of at least ten principal holders of each class of security of the company along with particulars as to the number of shares or debentures held by, and address of, each such holder
  23. to grant to shareholders the right of renunciation in all cases of issue of rights, privileges and benefits and to allow them reasonable time not being less than four weeks within which to record, exercise, or renounce such rights, privileges and benefits and to issue, where necessary, coupons or fractional certificates or provide for the payment of the equivalent of the value of the fractional right in cash unless the company in general meeting or the stock exchange agrees otherwise
  24. to promptly notify the stock exchange of any action which will result in the redemption, cancellation or retirement in whole or in part of any securities listed on the exchange of the intention to make a drawing of such securities, intimating at the same time the date of the drawing and the period of the closing of the transfer books (or the date of the striking of the balance) for the drawing and of the amount of securities outstanding after any drawing has been made
  25. to intimate the stock exchange any other information necessary to enable the shareholders to apprise the position of the company and to avoid the establishment of a false market in the shares of the company
  26. that in the event of the application for listing being granted, such listing shall be subject to the rules and bye-laws of the exchange in force from time to time and that the company will comply within a reasonable time, with such further listing requirements as may be promulgated by the exchange as a general condition for new listings.

The rules provide similar requirements for the listing of units or other instruments of Collective Investment Schemes on a recognised stock exchange by a Collective Investment Management Company (CIMC).

Grounds for Delisting of Securities

  1. The company has incurred losses during the preceding three consecutive years and it has negative net worth
  2. Trading in the securities of the company has remained suspended for a period of more than six months
  3. The securities of the company have remained infrequently traded during the preceding three years
  4. The company or any of its promoters or any of its director has been convicted for failure to comply with any of the provisions of the Act or the Securities and Exchange Board of India Act, 1992 or the Depositories Act, 1996 or rules, regulations, agreements made thereunder, as the case may be and awarded a penalty of not less than rupees one crore or imprisonment of not less than three years
  5. The addresses of the company or any of its promoter or any of its directors, are not known or false addresses have been furnished or the company has changed its registered office in contravention of the provisions of the Companies Act, 2013
  6. Shareholding of the company held by the public has come below the minimum level applicable to the company as per the listing agreement under the Act and the company has failed to raise public holding to the required level within the time specified by the recognized stock exchange (provided that no securities shall be delisted unless the company concerned has been given a reasonable opportunity of being heard).

6. Forms Prescribed under the Rules

FORM A

(See Rules 3 and 7)

Application for recognition/renewal of recognition of a stock exchange under section 3 of the Securities Contracts (Regulation) Act, 1956

To

………………………………..

………………………………..

Subject:—Application for recognition/renewal of recognition of a stock exchange under section 3 of the Securities Contracts (Regulation) Act, 1956.

Sir,

Pursuant to the Securities and Exchange Board of India Notification No. …………………….. …………….. dated ……………………………/Certificate of recognition dated………………………….We/I on behalf of ……………… (name and address of stock exchange) being a stock exchange as defined in section 2 of the Securities Contracts (Regulation) Act, 1956 hereby apply for recognition/renewal of recognition for the purposes of the said Act in respect of contracts in securities.

2. Four copies of the rules, memorandum and articles of association relating in general to the constitution and management of the stock exchange and four copies of the bye-laws for the regulation and control contracts in securities are enclosed.

3. All the necessary information required in the Annexure to this Form is enclosed. Any additional information will be furnished as and when called for by the Securities and Exchange Board of India.

4. We/I on behalf of the said stock exchange hereby undertake to comply with the requirements of section 4 of the said Act and such other conditions and terms as may be contained in the certificate of recognition or be prescribed or imposed subsequently.

5. Treasury Receipt No. ……dated……for Rs…………is attached.

Yours faithfully,

Signature of applicant

FORM B

(See rules 6 and 7)

The Securities and Exchange Board of India

New Delhi, the 20………….

No. ………………………………The Securities and Exchange Board of India], having considered the application for recognition/renewal of recognition made under section 3 of the Securities Contracts (Regulation) Act, 1956 by………………………… (name and address of exchange) and being satisfied that it would be in the interest of the trade and also in the public interest so to do, hereby grants, in exercise of the powers conferred by section 4 of the Securities Contracts (Regulation) Act, 1956 recognition to the said exchange under section 4 of the said Act for ………………. year/years ending ………………….20 …….on a permanent basis in respect of contracts in securities subject to the conditions stated herein below or as may be prescribed or imposed hereafter.

Seal of the Board                                                                                                                                                   Signature of Officer

Note:—Application for renewal of recognition shall be made so as to reach the Central Government not less than three months before the expiry of the period. (This certificate, will also have to be published as a Notification in the Gazette of India and also in the Official Gazette of the State in which principal office of the recognised stock exchange is situate).

FORM C

(See rule 13)

Notice to show cause against the withdrawal of recognition

THE SECURITIES AND EXCHANGE BOARD OF INDIA

Mumbai, the…..

To ……………………………………………………………………….

……………………………………………………………………….

(name and address of the exchange)

You are hereby called upon to show cause on or before ………………………………. at the office of ……………………………………………. ( designation of the officer) why the recognition granted to you under the Ministry of Finance/the Securities and Exchange Board of India, Notification No. ………………………. dated ………………………………… and Certificate No. ……………………….. dated ………………………… should not be withdrawn for the reasons given in the annexure to this notice.

By order and in the name of the Securities and Exchange Board of India. Seal of the Securities and Exchange Board of India.

Notification : No. 576, dated 21-2-1957.


Ultimate Guide to Fintech Law

Fintech Law is the regulatory ecosystem and legal framework governing the multi-trillion-dollar financial technologies (fintech) sector. Check out the Ultimate Guide to Fintech Law in India.


Manohar Samal