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CS Executive · Capital Market and Securities Laws · Securities Contracts (Regulation) Act, 1956

Meridian Stock Exchange wants to frame a bye-law allowing it to levy and recover fees, fines and penalties from its members. Under Section 9 of the Act, how is this power treated?

The exchange may provide for levy and recovery of fees, fines and penalties in its bye-laws, but only subject to SEBI's previous approval. Section 9(2)(o) names the subject and Section 9(1) requires SEBI approval, so neither free exercise nor Central Government approval is correct.

  1. AIt is not permitted, as only SEBI can levy fines
  2. BIt is a matter on which bye-laws may provide, subject to SEBI's previous approvalCorrect
  3. CIt can be exercised freely without SEBI approval once the governing body resolves
  4. DIt requires prior approval of the Central Government in every case

Explanation

Section 9(2)(o) lists the levy and recovery of fees, fines and penalties as a subject for bye-laws, and Section 9(1) makes bye-laws subject to the previous approval of SEBI. The Central Government is not the approving authority after the 1992 substitution.

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