Transfer of Assets and Liabilities to SEBI under Section 10

Understand Transfer of Assets and Liabilities to SEBI

Key rules to remember

Section 10(1)(a): references

Reference to existing Board in any law (other than the Act), contract or instrument = reference to the Board

Applies from the date of establishment of the Board.

Section 10(1)(b): property

All properties and assets, movable and immovable → vest in the Board

The word is 'vest'. No separate transfer deed is needed.

Section 10(1)(c) and (d): rights, liabilities, contracts

Rights and liabilities transferred; debts, obligations, contracts → deemed incurred or entered into by the Board

Clause (d) covers matters existing immediately before that date.

Section 10(1)(e) and (f): dues and proceedings

Sums due → due to the Board; suits and proceedings → may be continued or instituted by or against the Board

Covers proceedings already pending and those that could have been instituted.

Section 10(1)(g): employees

Same tenure and terms; may opt out within 6 months from that date

Terms include remuneration, leave, provident fund, retirement and other terminal benefits.

Section 10(2): no compensation

Absorption in regular service → no compensation under the Industrial Disputes Act, 1947 or other law

No court, tribunal or other authority can entertain such a claim.

How to solve Transfer of Assets and Liabilities to SEBI questions

1. 1Identify the two bodies: the existing Securities and Exchange Board (old, non-statutory) and the Board (statutory, under the 1992 Act).
2. 2State the trigger: the transfer operates on and from the date of establishment of the Board under Section 10(1).
3. 3Sort the facts into heads: references, property, rights and liabilities, contracts, money due, legal proceedings, employees.
4. 4Apply the matching clause (a) to (g) to each head in plain words.
5. 5For employees, check three things: same tenure and terms, the six-month opt-out, and Section 10(2) on compensation.
6. 6Write a clear conclusion that answers the exact question asked, citing Section 10 and the relevant sub-section or clause.

Quickest way: Remember Section 10 as a succession checklist

Common mistakes in Transfer of Assets and Liabilities to SEBI

• Treating the old SEBI as a statutory body or saying it was abolished with its affairs left unsettled.

  Students merge the old and new bodies into one SEBI.

  Fix: Write that the old body was non-statutory and that Section 10 passes its assets, liabilities and staff to the Board.

• Saying employees were automatically and compulsorily transferred.

  Students remember the continuity rule but forget the opt-out.

  Fix: State that employees continue on the same terms unless they opt out within six months from that date.

• Writing that pending suits abated or lapsed.

  Students assume a change of body ends proceedings.

  Fix: Quote clause (f): suits and proceedings may be continued or instituted by or against the Board.

• Forgetting Section 10(2) and saying absorbed employees can claim retrenchment compensation.

  Sub-section (2) is short and easy to skip.

  Fix: Add that absorption gives no compensation under the Industrial Disputes Act, 1947 or other law, and no claim is entertained.

• Confusing Section 10 with Section 9 or Section 35.

  All three deal with continuity or staff.

  Fix: Section 9 is about the Board appointing its own officers and employees. Section 35 repeals the 1992 Ordinance and saves actions taken under it. Section 10 is about the existing Board's transfer.

Worked examples