Securities and Exchange Board of India Act, 1992;

• The Securities Contracts (Regulation) Act, 1956;

• The Depositories Act, 1996; and

• Certain provisions of the Companies Act, 1956.

Securities and Exchange Board of India Act, 1992

SEBI was established under the SEBI Act 1992 with statutory powers for, (a) to protect investor's interests, (b) for promoting the development of the securities market, and (c) regulation of the securities market. The regulatory jurisdiction of SEBI extends to the corporates concerning, issue of capital and transfer of securities, which includes all persons and intermediaries associated with the securities market. It is empowered to conduct inquiries, audits, and inspection and adjudicate offenses under the Act. It is also empowered to register and regulate all market intermediaries. SEBI has powers to penalize them in case of any violations of the provisions of the Act or Rules and Regulations made under it. SEBI has complete autonomy and authority to regulate and develop the securities market.

Securities Contracts (Regulation) Act, 1956

The Securities Contracts (Regulation) Act 1956 has provision for direct and indirect control of practically every aspect of securities trading, and the functioning of the stock exchanges, to prevent unwanted transactions. The act gives the Central government and SEBI regulatory jurisdiction over (a) stock exchanges through continuous supervision, (b) securities contracts, and (c) securities listing on stock exchanges. The stock exchanges have to comply with the prescribed conditions from the central government, as a condition for recognition. Trading in securities happens in an organized manner on specified recognized stock exchanges. The stock exchanges have their listing regulations, and they have to conform to the minimum listing criteria as set out in the Securities Contracts Rules.

Depositories Act, 1996

The Depositories Act of 1996 provides for the establishment of depositories to ensure free transfer of securities with accuracy, security, and speed by (a) making the securities freely transferable (b) dematerialization of the securities in the depository mode; and (c) maintenance of ownership records in a book-entry form. For streamlining the settlement process, the Act provides for the electronic transfer of ownership of securities by book entry. This has made the securities of all companies freely transferable in the depository mode, thus restricting the company’s right to use discretion while effecting the transfer of securities. The requirement of transfer deed requirements in the Companies Act has therefore been dispensed with.

Companies Act, 1956

Companies Act deals with the issue of securities, their allotment and transfer, and the different aspects concerning the management of companies. The Act provides for a standard of disclosure in public issues of capital, especially in areas of company management and projects, information about other listed companies that are under the same management, and perception of management on risk factors. The Act also regulates underwriting, the application of premium and discounts on an issue, bonus and rights issues, payment of dividends and interest, and providing annual reports and other related information.