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CS Executive · Capital Market and Securities Laws · Secondary Market in India

A member of a recognised stock exchange contravenes a bye-law on trading. Under Section 9(3) of the Securities Contracts (Regulation) Act, 1956, which of the following may the bye-laws provide as a punishment?

Bye-laws may provide suspension of the member for a specified period, along with fine or expulsion from membership. The Act also permits other like penalties not involving money. Imprisonment and action against listed companies or investors are not punishments bye-laws can prescribe under this provision.

  1. ASuspension from membership for a specified periodCorrect
  2. BImprisonment of the member for two years
  3. CCancellation of the listed company's registration
  4. DAttachment of the investors' demat holdings

Explanation

Section 9(3)(b) allows bye-laws to provide for fine, expulsion from membership, suspension from membership for a specified period, or any other penalty of a like nature not involving payment of money. Imprisonment, cancelling a listed company's registration and attaching investors' holdings are not among them.

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