WHICH LAWS GOVERN THE INDIAN STOCK MARKET?
The Securities (Equity shares, stock, bonds, debentures, etc.) in India are governed by a number of Regulatory Frameworks, this is because it is necessary to have a set of rules and regulations which the people have to follow to avoid conflicts, ensure fair trading, governing the market participants, etc.
In India, the Stock Market is mainly governed by the following authorities:
- The SEBI Act, 1992
The Securities and Exchange Board of India has full control over the Stock Market in India. All the participants in the market- brokers, sub brokers, intermediaries, companies, Merchant Bankers, Depositories, Depository Participants and even the investors are required to comply with the provisions laid down in the SEBI Act, 1992. SEBI has the power to penalize everyone and anyone who doesn’t follow the rules and regulations of the Act.
- The Companies Act, 2013
All the Companies who have their shares listed on the Exchange (BSE or NSE) and are registered as a Company under the Companies Act, 2013 have to work according to the provisions and limits set under the Companies Act, 2013. This act specifies the rules and regulations applicable to a Company, and imposes additional fees and penalties on the company and its officers/ directors in case of non-compliance.
- The Securities Contracts (Regulations) Act 1956
This Act is primarily responsible for regulating the trading of securities in the market- the buying, selling and contracting of the shares/ stocks/ bonds/ debentures, etc. It ensures that the trading that is being executed in the market is as per the law and that there is no unlawful activity in the market. This Act is of utmost importance because it ensures that the participants in the market deal in a fair manner.
- The Depository Act, 1996
The main function of this Act is to ensure smooth transferability of shares between the investors/ traders in the market. However, it is necessary that the shares must be in dematerialized format so as to fall under the umbrella of this Act.
These are some of the many Acts of the Government which are applicable to the Stock Market in India. For more such knowledge updates, visit www.stakeindia.in
Stakeindia is the oldest Stock Market/ Share Market training Institute in Nashik, Maharashtra having online batches as well. They also provide a number of other financial services such as insurance, investment advisory, Mutual Funds, etc.
