This document provides an overview of Indian securities law. It discusses the key statutes that govern the securities market such as the SEBI Act 1992, SCRA 1956, and Depositories Act 1996. It describes SEBI as the primary regulator with quasi-legislative, executive and judicial powers. The document also outlines the various rules and regulations framed by the central government and SEBI to administer the securities market.

1. Sumit Agrawal
Assistant Legal Advisor, Legal Affairs Department
Securities and Exchange Board of India (SEBI)
@National Law University Jodhpur– March 24th, 2015
Indian Securities Law: An overview

2. STATUTORY DISCLAIMER
The views expressed, discussions generated, any
opinion expressed, or any analysis provided are personal
and for academic purposes alone.
Views do not necessarily state the views of SEBI or its
Officer(s).
This material is not intended to provide legal advice.
1

3. Overview
 Organs of the State and Role of the Regulators
 Theme of a Securities Regulator
 Principle Statutes – Indian Securities Law
 Regulatory framework – Enforcement & Processes by SEBI
 Appellate Mechanism in Securities Laws
 Current Issues in Capital Market
 Recruitment Avenues in Securities Market
 General Readings & Books for Capital Market Lawyers
Slide 2

4. Constitutional Debate
Sectoral v/s Subject Matter Debate
Organs of the State and Role of the Regulators

5. Organs of the State and Role of the Regulators
 3 Organs of the State:
 Legislature - To enact the law.
 Executive - To investigate the breach of law and implement / administer the
law.
 Judiciary – To interpret the law and to declare what the law is.
 Statutory Regulators –
 Quasi-Legislative ;
 Quasi-Executive ; and
 Quasi-Judicial
(Exception to ―Separation of Powers‖ - With Statutory Checks and Balances -
Clariant International Ltd. vs. SEBI AIR 2004 SC 4236)
Slide 4

6.  SEBI
 Issuer
 Investor
 Intermediary
 RBI
 Banks
 NBFCs
 TRAI
 Licensed service providers
 IRDA
 Insurer
 Intermediary
 Insurance agents
 Loss assessors and surveyors etc.
 FMC
 Commodities Exchanges
 CCI (Subject matter regulation)
 Anti-competitive Agreements
 Abuse of dominant position
 Combinations
SECTORAL REGULATORS V/S. SUBJECT-MATTER REGULATORS
5
IMPORTANT REGULATORS IN THE COUNTRY

7. SEBI & RBI - A Snapshot
SEBI RBI
STOCK
EXCHANGES
CLEARING
CORPORATIONS DEPOSITORIES
MUTUAL
FUNDS
BANKS
BROKER
DEALERS
MERCHANT
BANKERS
DEPOSITORY
PARTICIPANTS
REGISTRAR &
TRANSFER
AGENTS
PRIMARY
DEALERS

8. Financial Sector & Ministries
GOVERNMENT OF INDIA
SEBI
MINISTRY OF
FINANCE MINISTRY OF
CORPORATE
AFFAIRS
MINISTRY OF
COMMERCE &
INDUSTRY
RBI
FIPB
DEPARTMENT
OF ECONOMIC
AFFAIRS
DEPARTMENT OF
INDUSTRIAL
POLICY &
PROMOTION
REGISTRAR
OF
COMPANIES

9. Theme of a Securities Regulator
Characteristics
Caveat Emptor & Caveat Venditor
Sunlight – Best Disinfectant

10. Theme of a Securities Regulator
CHARACTERISTICS OF A REGULATOR
 Statutorily established and empowered
 Strong legal backing (Federal in Nature)
 Independence from the Executive
 Process of Appointment & Removal of Regulatory Boards / Chairperson
 Financial & Operational Autonomy of Institution
 Accountability to Judicial Body or Parliament
9

11. Theme of a Securities Regulator
 Caveat Emptor (the buyer takes on the risk regarding the quality or
condition of the thing purchased. Consumer is entitled to a refund, an
exchange or a credit for goods that are defective)
 Caveat Venditor (unless a seller explicitly disclaims liability for
something it will be held liable for any defective goods)
 Technology in market products, Trading, Clearing and Settlement
Houses
DISCLOSURE DRIVEN REGULATORS
 Publicity is justly commended as a remedy for social and industrial
diseases. Sunlight is said to be the best of disinfectants; electric light
the most efficient policeman. ~ US Supreme Court Justice Louis
Brandeis
10

12. •Central Acts
•Rules Framed By Central Govt
•Regulations framed by SEBI
•Circulars, Guidelines, Schemes, clarifications, press releases and bye-laws of
SROs etc.
Principle statutes – Indian Securities Law

13. Indian Securities Law
 SEBI Act, 1992
 Securities Contracts (Regulation) Act, 1956
 Depositories Act, 1996
 Delegated powers under the Companies Act, 2013
(Section 24 & Section 458)
 Rules by Central Govt. and Regulations by SEBI
 Circulars, clarifications, press releases and bye-laws of
self regulatory organizations
Slide 12

14. Principle Statutes – Indian Securities Law
 SEBI Act, 1992
 Incorporates SEBI and vests it with executive, quasi-
legislative and quasi-judicial powers & functions
 Primary authority for regulating the Indian securities markets
 Power to register and regulate working of stock exchanges
and other intermediaries involved in the securities markets
 Power to protect interests of investors through ensuring
prompt disclosures, preventing market manipulation, unfair
trade practices, insider trading, etc.
 Power to conduct inquiries and investigations, debar from
capital market, levy penalties and prosecute
 Power to do search and seize, attach properties and make
recoveries
Slide 13

15. Principle Statutes – Indian Securities Law
 Securities Contracts (Regulation) Act, 1956
 How a special contract in securities is to be governed?
 What are different kinds of securities?
 Regulates contracts relating to trading in securities
 Requires companies to comply with listing agreement
 Gives the government (now majorly SEBI) regulatory jurisdiction and
supervisory control over stock exchanges
 SEBI to supersede the governing body of any recognized stock
exchange and to suspend its business.
Slide 14

16.  Depositories Act, 1996
 Regulation of Depositories in securities by SEBI
 Securities held and transferred in dematerialized (electronic) form
 Clearing and settlement processes on stock exchanges simplified and
speedier
 Greater convenience to investors and brokers – speed, „bad
deliveries‟, no dealing with and storing heaps of paper, theft and
forgery
 Lower costs (no stamp duty) in securities trading
Slide 15
Principle Statutes – Indian Securities Law

17.  Companies Act, 2013 (Section 24 & Section 458)
 The primary statute dealing with Indian company law
 Regulates the issue, allotment and transfer of securities,
and aspects relating to company management
 Also specifies standards of disclosure to be made in public
issues of capital
 SEBI to deal with various aspects under Company law
relating to listed companies or those companies which
intend to get their securities listed
 issue and transfer of securities;
 non-payment of dividend; and
 Forward dealing and insider trading
Slide 16
Principle Statutes – Indian Securities Law

18.  Central Govt. has framed detailed rules covering a wide
range:
 TOTAL of 13 Rules as on March 2015 :-
1. Securities Contracts (Regulation) Rules, 1957
2. SEBI (Annual Report) Rules, 1994
3. SEBI (Form of Annual Statement of Accounts and Records)
Rules, 1994
4. SEBI (Procedure For Holding Inquiry And Imposing
Penalties By Adjudicating Officer) Rules, 1995
5. SEBI (Terms and Conditions of Service of Chairman And
Members) Rules, 1992
6. SAT (Procedure) Rules, 2000
7. SAT (Recruitment) Rules, 2001
Slide 17
Rules – Indian Securities Law

19. 8. SAT (Salaries And Allowances And Other Conditions Of Service
Of The Officers And Employees) Rules, 1997
9. SAT (Salaries, Allowances And Other Terms And Conditions Of
Presiding Officer And Other Members) Rules, 2003
10. Securities Contracts (Regulation) (Appeal To Securities
Appellate Tribunal) Rules, 2000
11. Securities Contracts (Regulation) (Procedure For Holding Inquiry
And Imposing Penalties By Adjudicating Officer) Rules, 2005
12. Depositories (Appeal To Securities Appellate Tribunal) Rules,
2000
13. Depositories (Procedure For Holding Inquiry And Imposing
Penalties By Adjudicating Officer) Rules, 2005
Slide 18
Rules – Indian Securities Law Contd..

20.  SEBI has framed detailed regulations covering a wide range:
 TOTAL of 43 Regulations as on March 2015, such as:-
 Regulations dealing with Registration of Market Intermediaries.
 Intermediaries Regulations, 2008
 SECC Regulations, 2012
 Regulations dealing with Funds like CIS, MF, AIFs, FIIs.
 Regulations prohibiting/regulating Market Conduct
 Insider Trading, 1992
 PFUTP, 2003
 Takeover Code, 2011
 Regulations dealing with Capital (issuances, buy-back etc)
 ICDR Regulations
 Buy Back Regulations
 ILDS Regulations
Slide 19
Regulations – Indian Securities Law

21. 1. SEBI (Alternative Investment Fund) Regulations, 2012.
2. SEBI (Bankers to an Issue) Regulations, 1994.
3. SEBI (Buy-Back of Securities) Regulations, 1998.
4. SEBI (Central Database of Market Participants) Regulations, 2003.
5. SEBI (Certification of Associated Persons in the Securities Markets)
Regulations, 2007.
6. SEBI (Collective Investment Schemes) Regulations, 1999.
7. SEBI (Credit Rating Agencies) Regulations, 1999.
8. SEBI (Custodian of Securities) Regulations, 1996.
9. SEBI (Debenture Trustees) Regulations, 1993.
10. SEBI (Delisting of Equity Shares) Regulations, 2009.
Slide 20
Regulations – Indian Securities Law Contd…

22. 11. SEBI (Depositories and Participants) Regulations, 1996.
12. SEBI (Employee Service) Regulations, 2001.
13. SEBI (Foreign Venture Capital Investors) Regulations, 2000.
14. SEBI (Infrastructure Investment Trusts) Regulations, 2014.
15. SEBI (Intermediaries) Regulations, 2008.
16. SEBI (Investment Advisers) Regulations, 2013.
17. SEBI (Investor Protection and Education Fund) Regulations, 2009.
18. SEBI (Issue and Listing of Debt Securities) Regulations, 2008.
19. SEBI (Issue and Listing of Non-Convertible Redeemable Preference
Shares) Regulations, 2013.
20. SEBI (Issue of Capital and Disclosure Requirements) Regulations,
2009.
Slide 21
Regulations – Indian Securities Law Contd…

23. 21. SEBI (Issue of Sweat Equity) Regulations, 2002.
22. SEBI (Merchant Bankers) Regulations, 1992.
23. SEBI (Mutual Funds) Regulations, 1996.
24. SEBI (Ombudsman) Regulations, 2003.
25. SEBI (Portfolio Manager) Regulations, 1993.
26. SEBI (Procedure for Board Meetings) Regulations, 2001.
27. SEBI (Procedure for Search and Seizure) Regulations, 2013.
28. SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to
Securities Market) Regulations, 2003.
29. SEBI (Prohibition of Insider Trading) Regulations, 2015.
30. SEBI (Public offer and Listing of Securitized Debt Instruments)
Regulations, 2008.
Slide 22
Regulations – Indian Securities Law Contd…

24. 31. SEBI (Real Estate Investment Trusts) Regulations, 2014.
32. SEBI (Registrars to an Issue and Share Transfer Agents)
Regulations, 1993.
33. SEBI (Regulatory Fee on Stock Exchanges) Regulations, 2006.
34. SEBI (Research Analysts) Regulations, 2014.
35. SEBI (Self Regulatory Organizations) Regulations, 2004.
36. SEBI (Settlement of Administrative and Civil Proceedings)
Regulations, 2013.
37. SEBI (Share Based Employee Benefits) Regulations, 2014.
38. SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992.
39. SEBI (Substantial Acquisition of Shares and Takeover) Regulations,
2011.
40. SEBI (Underwriters) Regulations, 1996.
Slide 23
Regulations – Indian Securities Law Contd…

25. 41. SEBI {KYC (Know Your Client) Registration Agency} Regulations,
2011.
42. SEBI (Foreign Portfolio Investors) Regulations, 2014.
43. Securities Contracts (Regulation) (Stock Exchanges and Clearing
Corporations) Regulations, 2012.
Slide 24
Regulations – Indian Securities Law Contd…

26. Draft Regulations (In-the Pipeline)
 SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015
 SEBI (Issue and Listing of Debt Securities by Municipality)
Regulations, 2015
 Discussion / Concept Paper available at SEBI Website
Slide 25

27. Regulatory framework – Kinds of
Enforcement And Processes by SEBI

28.  Enforcement Actions:
 Directions by the Board [Such as under Section 11, 11B, 11D]
 (Disgorgement –a new feature explicit under 2014 amendment) - [Shailesh
S. Jhaveri v. SEBI, SAT Order dated October 4, 2012]
 Enquiry (Suspension/cancellation of certificate of registration)
 Adjudication (Monetary penalties)
 Prosecution (fine, jail term or both)
An Alternate Enforcement Action:
 Consent / Compounding
27
Regulatory framework – Kinds of Enforcement And
Processes by SEBI

29. •Securities Appellate Tribunal (SAT)
•Supreme Court
•High Court
Appellate Mechanism in Securities Laws

30. Slide 29
SEBI ORDER (Sec
11/11B/11D/12)
ADJUDICATION ORDER (Ch VIA)
SECURITIES APPELLATE
TRIBUNAL (Sec 15T)
SUPREME COURT (Sec15Z)
Appellate Mechanism in Securities Laws
Review of AO by
SEBI [Sec. 15 I (3)]

31. •Tribunalisation and Scope of SAT or proposed FSAT
•Merger of FMC with SEBI
•Capital Markets in International Financial Service Centre at GIFT City
•Commercial Courts Bill, 2015
Current Issues in Capital Markets

32. Tribunalisation and Scope of SAT or proposed FSAT
 Whether Tribunals could replace high courts in their appellate
jurisdiction when it comes to addressing substantial issues of law.
 Supreme Court in Madras Bar Association v. Union of India ( Sept. 2014)
 National Tax Tribunal Act declared unconstitutional –
 While the Court reiterated that Parliament has the power to enact legislation vesting
adjudicatory functions — thereby maintaining that the passing of the NTT Act or any
such similar legislation — is not per se violative of the Constitution, it took
exception to the manner in which the Tribunal was proposed to be constituted.
 ―Substantial‖ questions of law can only be addressed by the judiciary and had
reservations about who could appear before the NTT and the constitution of the
Bench.
 IN VIEW OF THIS JUDGEMENT:-
 FSLRC Report and creation of FSAT?
 Scope of Current SAT?
Slide 31

33. Budget Speech by Hon'ble Finance Minister (2015-16)
On Merger of FMC and SEBI
“ 57. I also propose to merge the Forwards Markets Commission with
SEBI to strengthen regulation of commodity forward markets and
reduce wild speculation. Enabling legislation, amending the
Government Securities Act and the RBI Act is proposed in the Finance
Bill, 2015. ”
Capital Markets in International Financial Service Centre at GIFT City
“ 87. While India produces some of the finest financial minds, including
in international finance, they have few avenues in India to fully exhibit
and exploit their strength to the country’s advantage. GIFT in Gujarat
was envisaged as International Finance Centre that would actually
become as good an International Finance Centre as Singapore or
Dubai, which, incidentally, are largely manned by Indians. The proposal
has languished for years. I am glad to announce that the first phase of
GIFT will soon become a reality. Appropriate regulations will be issued
in March. ” Slide 32

34. Budget Speech by Hon'ble Finance Minister (2015-16)
On Commercial Courts Bill, 2015
“ 88. For the quick resolution of commercial disputes, the Government
proposes to set up exclusive commercial divisions in various courts in
India based on the recommendations of the 253rd Report of the Law
Commission. The Government proposes to introduce a Bill in the
parliament after consulting stakeholders in this regard. ”
Slide 33

35. Commercial Courts Bill, 2015
 Law Commission of India, Report Number 253 (January
2015) - Commercial Division and Commercial Appellate
Division of High Courts and Commercial Courts Bill, 2015
 Is this at variance with FSLRC Report?
 Proposed Section 16 - An appeal or a writ petition filed in a
High Court against the orders of the following tribunals:
 (a) Competition Appellate Tribunal; (b) Debt Recovery
Appellate Tribunal; (c) Intellectual Property Appellate
Board; (d) Company Law Board or National Company
Law Tribunal; (e) Securities Appellate Tribunal; (f)
Telecom Disputes Settlement and Appellate Tribunal
Slide 34

36. Recruitment Avenues for Corporate Lawyers
Recruitment Avenues in General
Opportunities in Securities Market
Most Common Interview Questions

37. Recruitment Avenues in General
 Corporate Law Firms such as Amarchand, AZB, Luthra, Khaitan, JSA,
Trilegal etc.
 Legal Departments of Corporate Houses such as Tata group, Reliance ,
Infosys, Wipro etc. [Nifty /Sensex Companies]
 Banks and Financial Institutions such as IDFC, ICICI, Nomura, HDFC
etc.
 Unlisted Companies like Google, Amazon, Flipkart etc.
 Publishing Houses Like Taxmann, Lexis Nexis, Thomson Reuters etc.
 BPOs, KPOs and LPOs for research oriented
 Media Houses and Journalism – CNBC, Economic Times, Wall Street
Journal, NDTV Profit etc.
 Regulators – SEBI, RBI, CCI, IRDA, TRAI etc.
 Public Sector Undertakings - ONGC, SAIL etc.
 Litigation and Solicitors Slide 36

38.  Stock Exchanges, Depositories, Clearing Corporations
 Foreign Institutional Investors and Private Equity Firms
 Analyst – Forecast Analyst, Financial Analyst, Mkt. Research
Analyst, Technical Analyst
 Researchers – Research and Analytics
 Advisors and Consultants – Mutual Fund Advisors, Financial
Consultants etc.
 Investment Manager, Portfolio Manager, Marketing Specialist,
Finance Manager etc.
 Legal Consultant, Merchant Bankers, Registrars etc.
 Technical or IT related jobs – Software Developer, Data Mining
etc.
Slide 37
Opportunities in Securities Market

39. Recruitment at SEBI
 Either through a National Level Entrance Test OR Campus
Recruitment – SEBI (Employees' Service) Regulations, 2001
 Permanent or Contractual
 Cost To Company (CTC) For Grade-A Officer in SEBI - Approx. 12
Lacs p.a.
 Pay Grade Allowance
 Dearness Allowance
 House Allowance (for Mumbai)
 Special Allowance
 Family Allowance
 Local Allowance
 P.F.B.C.
 House cleaning (Domestic Help)
 Petrol Allowance @ 150 ltr per month
 Telephone reimbursement
 Financial Dailies
 Subsidized Lunch and Sodexho Coupons
 House Furnishing, Book Grant, Health Check-up, Eye Refraction, Briefcase
etc. etc. 38

40. Departments in SEBI
39
1. Market Intermediaries Regulation and Supervision Department
(MIRSD)
2. Market Regulation Department (MRD)
3. Corporation Finance Department (CFD)
4. Investment Management Department (IMD)
5. Integrated Market Surveillance Department (ISD)
6. Investigations Department (IVD)
7. Enforcement Department (EFD)
8. Legal Affairs Department (LAD)
9. Enquiries and Adjudication Department (EAD)
10. Office of Investor Assistance and Education (OIAE)
11. Department of Economic and Policy Analysis (DEPA)
12. General Services Department (GSD)
13. Human Resource Division (HRD)
14. Office of the Chairman (OCH)
15. Office of International Affairs (OIA)

41. Organization Structure (SEBI)
HEAD OFFICE,
MUMBAI
NORTHERN REGIONAL
OFFICE, NEW DELHI
CHANDIGARH
LUCKNOW
SRINAGAR
DEHRADUN
SHIMLA
SOUTHERN REGIONAL
OFFICE, CHENNAI
BENGALURU
HYDERABAD
COCHIN
EASTERN REGIONAL
OFFICE, KOLKATA
GUWAHATI
BHUBANESWAR
PATNA
RANCHI
WESTERN REGIONAL
OFFICE, AHMEDABAD
JAIPUR
INDORE
Raipur
PANAJI
REGIONAL
OFFICES
LOCAL
OFFICES

42. CHAIRMAN & WTMs
EXECUTIVE DIRECTORS
CHIEF GENERAL MANAGERS
GENERAL MANAGERS DEPUTY GENERAL MANAGERS
ASSISTANT GENERAL MANAGERS
SECRETARIAL STAFF
Organizational Hierarchy in SEBI
MANAGERS
ASSISTANT MANAGERS

43. Wide exposure – steep learning curve
42
Exposure to entire Financial Sector, Regulatory Regime, Govt.
policies, international arena
Interaction with Corporate Chiefs Industry-wide early on in the
career - Networking
Cutting edge issues – across functions
High level of responsibility
Immense contribution to policy formulation/regulation
Deputation to other/foreign Regulators

44. Most Common Interview Questions
Mix of Psychological and Subject related questions – Interview Panel
1. Can you tell us a little about yourself?
2. Why do you want to work with a regulator and not a law firm?
3. Tell us some burning issue in capital market, which you think
regulator is grappling with?
4. Which newspaper or magazine do you read?
5. Which is the latest regulation or Supreme Court Judgment in the
industry, which is talk of the town?
6. Where do you see yourself in five years?
7. What do you like the most and least about working in this industry?
8. What do you consider to be your weaknesses?
9. Why should we hire you?
10. What is your salary expectation?
11. Do you have any questions for us?
Slide 43

45. •Newspaper Columns, Balwgs
•Government Websites, Press Releases, FAQs
•Google Alerts
•TV Channel Programmes & Discussions
•Books in Securities & Corporate Lawyer‟s Library
General Readings for Corporate Lawyers

46. General Readings for Corporate Lawyers
 SEBI Annual Reports – New Laws and Important Rulings of the Year
 Basic Reading - Various Modules of NISM, NCFM, BSE
 Blawgs like India Corporate Law
 Newswire of Law Firms and Audit Firms, like:
 Amarchand – Insight ; Khaitan & Co. – Ergo ; etc.
 Key terms like “SEBI” “Ministry of Finance” on Google Alerts for collated news and
monitoring the web for updated information.
 Certain Newspaper Columns like:
 Livemint – In the Money
 Business Standard - Without Contempt
 CNBC TV18's 'The Firm' - Fri:10.30 pm/Sat:11.30 am/Sun:9:30am, 11.00pm
 SEBI Press Releases and FAQs on SEBI Websites
 www.sebi.gov.in/
 http://investor.sebi.gov.in/
Slide 45

47. Books in Securities & Corporate Lawyer’s Library
 A Ramaiya’s Guide to Companies Act 2013, 18th Edition,
LexisNexis Butterworths
 Shishir Jose Vayttaden on SEBI's Takeover Regulations,
LexisNexis Butterworths
 Sumit Agrawal & Robin Baby’s Commentary on SEBI Act, 1992,
Taxmann Publications
 Kaushik Laik on Unfair Trade Practices in Securities
Market, Taxmann Publications
 Anil Choudhary & Rajneesh Deka, Securities Regulation - Primary
Market Offerings in India,, CCH
 Sandeep Parekh on Fraud, Manipulation and Insider Trading in the
Indian Securities Market, CCH
Slide 46

48. Work-Life Balance
My mission in life is not merely to survive,
but to thrive; and to do so with some
passion, some compassion, some humor,
and some style. ~ Maya Angelou
Slide 47

49. Thank You
in.linkedin.com/in/sumitatsebi
mailsumitagrawal@gmail.com
+91-9987729337
Slide 48