THE SECURITIES LAWS (AMENDMENT) ORDINANCE, 2013

The President of India on 18th July promulgated The Securities Laws (Amendment) Ordinance, 2013 which has amended the Securities and Exchange Board of India Act 1992, the Securities Contracts (Regulations) Act, 1956 and the Depositories Act, 1996.

The said amendments shall come into force with immediate effect.

Major amendments in the Securities Laws are as follows:

• Collective Investment Scheme:

Section 11AA has been amended which states that "any pooling of funds under any scheme or an arrangement, which is not registered with SEBI and involves a corpus amount of Rs. 100 crore or more shall be deemed to be a Collective Investment Scheme and as a consequence shall be barred from operation unless registered with SEBI."

• Power to SEBI with Retrospective Effect:

The Ordinance 2013 by amending Section 11 has empowered SEBI to call for information or furnish information to other authorities in matters relating to violations in respect of Securities Laws whether Indian or Foreign. Provided that SEBI for the purpose of furnishing any information to any authority outside India, may enter into an arrangement or agreement or understanding with such authority with the prior approval of the Central Government.

This shall be with retrospective effect from March 6, 1998.

• Transfer to IEPF:

Any amount disgorged pursuant to directions issued by SEBI under section 11B of SEBI Act 1992 or section 12A of SCRA, 1956 or Section 19 of the Depositories Act, 1996, as the case may be shall be credited to IEPF, for utilization in accordance with the regulations made under this Act.

• Search and Seizure Powers to SEBI:

Search and Seizure powers have been granted to SEBI after amending Section11C(8) of the Act which pertains to any person or enterprise who, during the course of investigation, has omitted to provide information or would not provide information, or would destroy, mutilate information or documents.

• Settlement of Administrative and Civil Proceedings:

The Securities Laws are amended by insertion of new Section 15JB  in SEBI Act 1992, Section 23JA in SCRA 1956 and 19-IA in Depositories Act, 1996 which allows any person against whom any proceeding has been initiated or may be initiated under certain sections to file an application to SEBI proposing a settlement of the proceedings initiated or to be initiated for alleged defaults. These sections have been inserted with retrospective effect from April 20, 2007.

• Establishment of Special Courts:

Section 26A in SEBI Act, 1992 and SCRA and Section 22C of Depositories Act, 1996 has been inserted to allow constitution of Special Courts for speedy trial of offences. The Special Court so constituted shall consist of a single Judge appointed by the Central Government.

All such Offences whether committed before or after the passing of this ordinance shall be eligible to be tried by Special Courts. As per the transitional provisions, any offence committed under this Act, which is triable by Special Court shall, until a Special Court is established, be tried by a Court of Session exercising jurisdiction over the area. Any appeal against the order of such a Special Court shall lie with the High Court having jurisdiction over such court.

It has also been inserted that the provisions of Code of Criminal Procedure, 1973 shall be applicable to the proceedings before a Special Court.

• Omission of provisions to appeal of consent orders to SAT:

Section 15T(2) of SEBI Act, 1992 has been omitted which prohibited any appeal from being made to SAT of any consent order.

• Amendment to provisions pertaining to Cognizance of Offence by Courts:

Section 26(2) of SEBI Act, 1992 and SCRA and Section 22(2) of Depositories Act, 1996 has been omitted which prohibited any court inferior to that of a Court of Session to try offence punishable under these acts.