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CMA Final · Corporate and Economic Laws

SEBI Laws and Regulations for CMA Final Paper 13

SEBI Laws and Regulations covers how the securities market is regulated in India: the SEBI Act, 1992, the Securities Contracts (Regulation) Act, 1956, penalties and adjudication, and appeals to the Securities Appellate Tribunal. Learn who has which power, the conditions attached, and apply them to case facts.

What this chapter covers

This chapter explains who controls the securities market and how. SEBI is the regulator. It is set up under the SEBI Act, 1992, with powers to protect investors, develop the market and make regulations. The Securities Contracts (Regulation) Act, 1956 (SCRA) deals with stock exchanges, their recognition, their bye-laws, listing and contracts in securities.

The chapter has two halves. The first half is the SEBI Act: establishment, functions, regulation-making power, penalties, adjudication and appeals. The second half is SCRA: recognition of stock exchanges, bye-laws, listing and dealings. Both halves share one idea. A body gets a power, the law sets limits on it, and a wrong decision can be appealed.

The chapter connects to the rest of Paper 13. Listing links to company law on public issues and shares. Depositories link to dematerialised holding. The Securities Appellate Tribunal sits in the same appeal ladder you meet in other economic laws. Paper 13 opens with a case study with 4 MCQs, then 11 independent MCQs. Statutory details such as time limits, approvals and who may appeal suit MCQs well.

This chapter is rule-heavy and condition-heavy, which makes it good for scoring. Questions test whether you know the exact power, the approval needed and the remedy available. A student who learns these precisely can answer MCQs quickly and write short, structured answers on case facts. It also overlaps with listed-company topics elsewhere in the paper, so the effort pays back more than once.

SEBI Laws and Regulations: topics in the order to study them

  1. 1SEBI Act 1992: Establishment, Powers and FunctionsStart here. It tells you what SEBI is and what it is meant to do, and every later topic builds on it.
  2. 2SEBI Regulation-Making Power and Application of Other LawsNext, see how SEBI turns its powers into regulations and how the Act sits alongside other laws.
  3. 3Penalties, Adjudication and Securities Appellate TribunalOnce you know the powers, learn what happens on breach and where an aggrieved person can appeal.
  4. 4Securities Contracts (Regulation) Act 1956: Recognition of Stock ExchangesMove to SCRA with the basic question: how does a stock exchange get recognised, and what must it submit, including its bye-laws and rules on governing body and membership.
  5. 5Listing, Contracts and Dealings in Securities under SCRAFinish with the operating rules: bye-laws, listing, contracts, refusal to list and the appeal to the tribunal. They make most sense after recognition.

How to prepare SEBI Laws and Regulations

Treat this chapter as a set of powers, limits and remedies. Build a one-page map for each Act, then test yourself on conditions.

  1. Read the SEBI Act topics first and write SEBI's functions in your own words: protect investors, promote development, regulate the market.
  2. For every power, note the condition attached: who approves, who must be heard, what time limit applies. Examination questions turn on these.
  3. Learn the SCRA bye-law power in groups. Section 9 lets a recognised stock exchange make bye-laws for regulation and control of contracts, subject to SEBI's previous approval. Group the listed matters: trading hours, clearing house, margins, listing, disputes, fees and penalties.
  4. Learn the punishments a bye-law may provide for contravention: fine, expulsion, suspension for a specified period, or a similar non-monetary penalty. Also learn that bye-laws take effect from publication in the Gazette of India after approval.
  5. Compare the two appeal provisions. Under SCRA section 22A, a company refused listing is entitled to reasons and may appeal to the Securities Appellate Tribunal within fifteen days of the reasons being furnished. The tribunal should try to dispose of the appeal within six months.
  6. Note how the tribunal works. It is not bound by the Code of Civil Procedure, 1908, is guided by natural justice, and has certain civil court powers such as summoning witnesses and receiving evidence on affidavits. SCRA section 22B and Depositories Act section 23B say the same.
  7. Finish with timed MCQs on sections, approvals and time limits, then write two short case answers that name the power, apply it to the facts and state the outcome.

Common mistakes in SEBI Laws and Regulations

  • Saying a stock exchange can make bye-laws on its own.

    Fix: Always add that bye-laws need SEBI's previous approval and take effect on Gazette publication.

  • Mixing up the authority that receives the recognition application with SEBI's approval of bye-laws.

    Fix: Under section 3 the application for recognition is made to the Central Government. Section 9 requires SEBI's approval for bye-laws. Keep the two steps separate.

  • Writing that the listing appeal time is any period or a month.

    Fix: Remember fifteen days from the date reasons for refusal are furnished, with the tribunal able to allow a further period of up to one month in the omission or failure case.

  • Saying the tribunal must follow civil court procedure strictly.

    Fix: Say it is not bound by the Code of Civil Procedure, is guided by natural justice, and has civil court powers only for listed matters.

  • Listing penalties for bye-law breach without limiting them to what the Act permits.

    Fix: Stick to the four: fine, expulsion, suspension for a period, or a like penalty not involving payment of money.

  • Writing general theory in case-based answers.

    Fix: Name the power, quote the condition, apply it to the named company or exchange and state the result in one line.

Last-day revision: SEBI Laws and Regulations

  • SEBI is the securities market regulator under the SEBI Act, 1992.
  • SEBI's role covers investor protection, market development and market regulation.
  • A recognised stock exchange may make bye-laws only with SEBI's previous approval (SCRA section 9).
  • Bye-laws may cover trading hours, clearing house, margins, listing, dispute settlement, fees and fines.
  • Penalties for bye-law breach: fine, expulsion, suspension for a specified period, or a like non-monetary penalty.
  • Approved bye-laws are published in the Gazette of India and take effect from that publication date.
  • SEBI may dispense with previous publication by written order giving reasons, where trade or public interest needs immediate bye-laws.
  • An application for recognition goes to the Central Government with the bye-laws and the rules on the exchange's constitution (SCRA section 3).
  • A company refused listing must be given reasons and can appeal to the tribunal within fifteen days of receiving them (section 22A).
  • The tribunal should try to dispose of a listing appeal within six months of receiving it.
  • The tribunal is not bound by the Code of Civil Procedure, 1908, but follows natural justice (SCRA section 22B, Depositories Act section 23B).
  • Tribunal proceedings are deemed judicial proceedings, and it has civil court powers such as summoning and receiving affidavit evidence.

SEBI Laws and Regulations practice questions

SEBI Laws and Regulations in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

SEBI Laws and Regulations: frequently asked questions

What does the SEBI Laws and Regulations chapter cover in CMA Final Paper 13?

It covers the SEBI Act, 1992, SEBI's regulation-making power, penalties and adjudication, the Securities Appellate Tribunal, and the Securities Contracts (Regulation) Act, 1956 on recognition of exchanges, listing and contracts. You must know powers, conditions and remedies.

Can a stock exchange make its own bye-laws?

Yes, a recognised stock exchange may make bye-laws for the regulation and control of contracts, but only with SEBI's previous approval. Approved bye-laws are published in the Gazette of India and take effect from that date.

Where can a company appeal if a stock exchange refuses to list its securities?

It can appeal to the Securities Appellate Tribunal. The company is entitled to reasons for refusal and must generally appeal within fifteen days of receiving them. The tribunal should try to decide within six months.

Is the Securities Appellate Tribunal bound by the Code of Civil Procedure?

No. It is guided by natural justice and can regulate its own procedure. It still has the powers of a civil court for specified matters, such as summoning persons, requiring documents and receiving evidence on affidavits.