Capital Market and Securities Laws · Issue of Capital and Disclosure Requirements

Section 11A of the SEBI Act, 1992: SEBI's Powers Explained

Updated 11 October 2026 · Fact-checked

Section 11A of the SEBI Act, 1992 lets SEBI, for investor protection, specify by regulations the matters of capital issue, transfer of securities and their disclosure, and by orders prohibit a company from issuing a prospectus, offer document or advertisement soliciting money, or set conditions for issuing it. It also covers listing requirements.

Understand SEBI Powers under Section 11A of SEBI Act, 1992

SEBI exists to protect investors and develop the securities market. Section 11A gives it two tools to do this when companies raise money from the public: regulations and orders.

The first tool is regulation-making. Under section 11A(1)(a), SEBI may specify by regulations (i) the matters relating to issue of capital, transfer of securities and other matters incidental to them, and (ii) the manner in which companies must disclose these matters. This is the source of detailed rules such as the issue of capital and disclosure regulations that you study in this chapter.

The second tool is the general or special order under section 11A(1)(b). SEBI may (i) prohibit any company from issuing a prospectus, any offer document, or an advertisement soliciting money from the public for the issue of securities, or (ii) specify the conditions under which such a prospectus, offer document or advertisement, if not prohibited, may be issued. So SEBI can stop an issue document, or allow it with conditions.

Section 11A(2) adds a listing power. SEBI may specify the requirements for listing and transfer of securities and incidental matters. This is expressed to be without prejudice to section 21 of the Securities Contracts (Regulation) Act, 1956.

The opening words say the power works without prejudice to the Companies Act, 1956. Under section 24 of the Companies Act, 2013, SEBI administers the provisions on issue and transfer of securities, and non-payment of dividend, for listed companies and those intending to list. In doing so it exercises powers under sections 11A among others of the SEBI Act. For other companies, the Central Government administers these provisions.

Key rules to remember

Regulation power: Section 11A(1)(a): SEBI specifies by regulations (i) issue of capital, transfer of securities and incidental matters, and (ii) the manner of disclosure by companies; Purpose is the protection of investors. It works without prejudice to the Companies Act, 1956 as the section is worded.
Prohibition power: Section 11A(1)(b)(i): by general or special orders, prohibit any company from issuing a prospectus, offer document or advertisement soliciting money from the public for issue of securities; Done by order, not by regulation. The order may be general or special.
Conditions power: Section 11A(1)(b)(ii): specify conditions subject to which the prospectus, offer document or advertisement, if not prohibited, may be issued; This is the alternative to a full prohibition.
Listing power: Section 11A(2): SEBI may specify requirements for listing and transfer of securities and incidental matters; Without prejudice to section 21 of the Securities Contracts (Regulation) Act, 1956.
Link with Companies Act, 2013: Section 24(2) of the Companies Act, 2013: SEBI exercises powers under sections 11A, 11B and 11D (and parts of section 11) of the SEBI Act for matters under section 24(1); Section 24(1) covers issue and transfer of securities and non-payment of dividend by listed companies or those intending to list.

How to solve SEBI Powers under Section 11A of SEBI Act, 1992 questions

Use this method for any question on SEBI's powers under section 11A, whether it is theory or a short case.

1Name the provision first: section 11A of the SEBI Act, 1992, and state its purpose, which is the protection of investors.
2Split the power into its parts: regulations under 11A(1)(a), orders under 11A(1)(b), and listing under 11A(2).
3For a case, identify which document is involved: prospectus, offer document or advertisement soliciting money from the public.
4Decide which tool fits: a general rule on disclosure points to regulations; stopping or conditioning a specific issue points to an order.
5Link to section 24 of the Companies Act, 2013 if the question involves a listed company or one intending to list.
6Close with a clear conclusion: say whether SEBI can prohibit, allow with conditions, or only specify requirements.

Quickest way: Three-limb recall of section 11A

When to use it: Use when you have only a few minutes, for example in a short note or a 3-4 mark answer.

Write the opening: SEBI may, for the protection of investors, act under section 11A.
List the three limbs: (a) regulations on capital issue, transfer of securities and disclosure manner; (b) orders prohibiting or conditioning prospectus, offer document or advertisement; (2) listing and transfer requirements.
Add one line on section 24 of the Companies Act, 2013 for listed companies.
End with a one-line conclusion tied to the facts.

Common mistakes in SEBI Powers under Section 11A of SEBI Act, 1992

Saying SEBI can prohibit issue of securities by regulations.
Students merge the two tools in section 11A(1).
Fix: Remember: regulations under clause (a) specify matters and disclosure; prohibition and conditions come by general or special orders under clause (b).
Stating that SEBI can only prohibit and cannot allow with conditions.
The heading stresses 'regulate or prohibit' and students focus on prohibition.
Fix: Add section 11A(1)(b)(ii): SEBI can specify conditions under which the document or advertisement may be issued if not prohibited.
Leaving out advertisements and offer documents and mentioning only the prospectus.
The prospectus is the document most students know.
Fix: Always write the full list: prospectus, offer document or advertisement soliciting money from the public for the issue of securities.
Forgetting the listing power in section 11A(2).
It is a short sub-section after a long sub-section (1).
Fix: End every answer with sub-section (2): SEBI may specify the requirements for listing and transfer of securities and incidental matters.
Saying SEBI administers all issue provisions of every company under the Companies Act, 2013.
Students overlook the limits in section 24(1).
Fix: Say SEBI administers them for listed companies or those intending to list; in any other case, the Central Government does.
Omitting the purpose clause 'for the protection of investors'.
Students treat it as a mere introduction.
Fix: State it in the first line. It is the stated purpose of the power and examiners look for it.

Worked examples

Example 1

Explain the powers of SEBI under section 11A of the SEBI Act, 1992 with regard to the issue of prospectus and other documents soliciting money from the public.

Show the solution

Provision: section 11A of the SEBI Act, 1992 empowers SEBI, for the protection of investors, to regulate and prohibit certain documents. It works without prejudice to the Companies Act, 1956 as the section is worded.
Regulations: under section 11A(1)(a), SEBI may specify by regulations the matters relating to issue of capital, transfer of securities and incidental matters, and the manner in which companies disclose them.
Orders: under section 11A(1)(b), by general or special orders, SEBI may prohibit any company from issuing a prospectus, offer document or advertisement soliciting money from the public for the issue of securities.
Conditions: if the document is not prohibited, SEBI may specify the conditions subject to which it may be issued.
Listing: under section 11A(2), SEBI may specify requirements for listing and transfer of securities and incidental matters, without prejudice to section 21 of the Securities Contracts (Regulation) Act, 1956.

Answer: SEBI can specify issue and disclosure rules by regulations, and by general or special orders it can prohibit a prospectus, offer document or advertisement soliciting money, or allow it on specified conditions. It can also specify listing and transfer requirements.

Example 2

Sundaram Textiles Ltd, a company intending to list its shares, plans to issue an advertisement inviting the public to subscribe to its shares. SEBI feels the advertisement may mislead investors. Can SEBI act, and how?

Show the solution

Provision: section 11A(1)(b) of the SEBI Act, 1992 covers advertisements soliciting money from the public for the issue of securities.
Facts: the advertisement invites the public to subscribe, so it falls within that description. SEBI's concern is investor protection, which is the purpose of the section.
Competence: under section 24(1) of the Companies Act, 2013, issue of securities by a company intending to list is administered by SEBI, and section 24(2) lets SEBI exercise powers under section 11A.
Action: SEBI may, by a general or special order, prohibit Sundaram Textiles Ltd from issuing the advertisement. Alternatively, it may specify conditions, for example on content or manner of disclosure, subject to which it may be issued.
Wider step: SEBI may also frame regulations under section 11A(1)(a) on the manner of disclosure by companies.

Answer: Yes. SEBI can issue a special order under section 11A(1)(b) either prohibiting the advertisement or allowing it only on specified conditions, as the company intends to list and falls within section 24 of the Companies Act, 2013.

Exam tips

Write the section number and the purpose, protection of investors, in the first line of every answer.
Use the structure 'regulations, orders, listing' so that no limb is missed.
Keep the words 'prospectus, offer document or advertisement' together as examiners expect the full phrase.
In case questions, add the link to section 24 of the Companies Act, 2013 and end with a clear conclusion.
Do not quote regulation numbers unless you are sure; the section itself is enough for a full answer.

Practice questions from Issue of Capital and Disclosure Requirements

SEBI Powers under Section 11A of SEBI Act, 1992 in other exams

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

SEBI Powers under Section 11A of SEBI Act, 1992: frequently asked questions

What is section 11A of the SEBI Act, 1992?

It gives SEBI power, for investor protection, to specify by regulations the matters of capital issue, transfer of securities and disclosure. It also lets SEBI prohibit or set conditions for prospectuses, offer documents and advertisements soliciting money, and specify listing requirements.

Can SEBI prohibit a company from issuing a prospectus?

Yes. Under section 11A(1)(b)(i), SEBI may by general or special orders prohibit any company from issuing a prospectus, offer document or advertisement soliciting money from the public for the issue of securities.

What is the difference between SEBI's regulations and orders under section 11A?

Regulations under clause (a) lay down rules on issue of capital, transfer of securities and the manner of disclosure. Orders under clause (b) deal with prohibiting or placing conditions on the issue of the prospectus, offer document or advertisement.

How is section 11A linked to the Companies Act, 2013?

Section 24(2) of the Companies Act, 2013 says SEBI exercises powers under sections 11A, 11B and 11D and parts of section 11 of the SEBI Act for matters in section 24(1). Those matters are issue and transfer of securities and non-payment of dividend by listed companies or those intending to list.