Stock Market Regulations
Stock exchanges both BSE & NSE are regulated primarily by SEBI, as well as by the Government acting through the Ministry of Finance, Capital Markets Division, under the Securities Contracts (Regulation) Act, 1956 as amended ‘SCRA’ and the Securities Contracts (Regulation) Rules, 1957, as amended ‘SCRR’, which, along with the rules, bye-laws and regulations of the respective stock exchanges, regulate the recognition of stock exchanges, the qualifications for membership thereof and the manner in which contracts are entered into and enforced between members of the stock exchanges.
The SEBI Act under the SEBI was established by the Government in February 1992, granted powers to SEBI to promote, develop and regulate the Indian securities markets, including stock exchanges and other financial intermediaries in the capital markets,
-to protect the interest of investors,
-to promote and monitor self-regulatory organization,
-to prohibit fraudulent and unfair trade practices and insider trading and
-to regulate substantial acquisitions of shares and takeovers of companies.
SEBI has also issued guidelines and regulations concerning minimum disclosure requirements by public companies, rules and regulations concerning investor protection, insider trading, substantial acquisition of share and takeovers of companies, buyback of securities, delisting of securities, employee stock option schemes, stock brokers, merchant bankers, underwriters, mutual funds, FII, credit rating agencies and other capital market participants.
The Companies Act, as amended, has empowered SEBI to administer certain provisions of the Companies Act in so far as they relate to the issue and transfer of securities and non payment of dividends by listing public companies as well as companies intending to list their securities on any recognized stock exchange in India, and to conduct inspection of a company’s records in respect of matters relating to the issue and transfer of securities. The power of prosecute defaulting companies in compliance with the said matter has also been vested with SEBI.