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CMA Foundation · Fundamentals of Business Laws and Business Communication · Primary and Subordinate Legislation

An Act empowers a Board to make regulations on listing norms. The Board frames a regulation that is within its power, but the regulation was never published in the Official Gazette although the Act requires publication. Which statement is most accurate?

The regulation is open to challenge because the Board did not follow a mandatory procedural requirement of the parent Act. Delegated authority must be exercised both within its substantive limits and in the manner prescribed, such as publication in the Official Gazette.

  1. AThe regulation is valid because the Board acted within its subject-matter power
  2. BThe regulation is open to challenge for non-compliance with a mandatory procedural requirement of the parent ActCorrect
  3. CThe regulation is automatically converted into an Act by Parliament
  4. DThe regulation is valid only for listed companies

Explanation

Delegated power must be exercised within the substance and the procedure laid down by the enabling Act. If publication is mandatory, failure to publish is a procedural defect which makes the regulation open to challenge. Having subject-matter power alone does not cure it, and no automatic conversion into an Act occurs.

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