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

Western Bourse's bye-laws specify certain bye-laws whose contravention makes a contract void. A member, Kavita Brokers, breaches one ordinary bye-law that carries a penalty clause. Which of the following can the bye-laws validly provide as punishment for the member under the Act?

Suspension from membership for a specified period is a permitted punishment. The Act lets bye-laws provide for fine, expulsion, suspension for a specified period or a similar penalty not involving money payment, but not imprisonment or confiscation of property.

  1. AImprisonment of the member's partners for one year
  2. BConfiscation of the member's personal property
  3. CSuspension from membership for a specified periodCorrect
  4. DCancellation of the listed companies' registration

Explanation

The Act allows bye-laws to provide that contravention renders the member liable to fine, expulsion, suspension for a specified period, or a like non-monetary penalty. Imprisonment, confiscation and cancellation of companies' registration are not among these punishments.

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