3. Application for recognition of stock exchanges.—(1) Any stock exchange, which is desirous of
being recognised for the purposes of this Act, may make an application in the prescribed manner to the
Central Government.
(2) Every application under sub-section (1) shall contain such particulars as may be prescribed, and
shall be accompanied by a copy of the bye-laws of the stock exchange for the regulation and control of
contracts and also a copy of the rules relating in general to the constitution of the stock exchange, and in
particular, to—
(a) the governing body of such stock exchange, its constitution and powers of management and
the manner in which the business is to be transacted;
(b) the powers and duties of the office bearers of the stock exchange;
(c) the admission into the stock exchange of various classes of members, the qualifications for
memberships, and the exclusion, suspension, expulsion and re-admission of members therefrom or
thereinto;
(d) the procedure for the registration of partnerships as members of the stock exchange in cases
where the rules provide for such membership; and the nomination and appointment of authorised
representatives and clerks.
4. Grant of recognition to stock exchanges.—(1) If the Central Government is satisfied, after
making such inquiry as may be necessary in this behalf and after obtaining such to further information, if
any, as it may require,—
(a) that the rules and bye-laws of a stock exchange applying for registration are in conformity
with such conditions as may be prescribed with a view to ensure fair dealing and to protect investors;
(b) that the stock exchange is willing to comply with any other conditions (including conditions
as to the number of members) which the Central Government, after consultation with the governing
body of the stock exchange and having regard to the area served by the stock exchange and its
standing and the nature of the securities dealt with by it, may impose for the purpose of carrying out
the objects of this Act; and
(c) that it would be in the interest of the trade and also in the public interest to grant recognition to
the stock exchange;
it may grant recognition to the stock exchange subject to the conditions imposed upon it as aforesaid and
in such form as may be prescribed.
(2) The conditions which the Central Government may prescribe under clause (a) of sub-section (1)
for the grant of recognition to the stock exchanges may include, among other matters, conditions relating
to,—
(i) the qualifications for membership of stock exchanges;
(ii) the manner in which contracts shall be entered into and enforced as between members;
1. Ins. by Act 20 of 2015, s. 133 (w.e.f. 14-5-2015).
2. Ins. by Act 32 of 1999, s. 3 (w.e.f. 16-12-1999).
8
(iii) the representation of the Central Government on each of the stock exchanges by such number
of persons not exceeding three as the Central Government may nominate in this behalf; and
(iv) the maintenance of accounts of members and their audit by Chartered accountants wherever
such audit is required by the Central Government.
(3) Every grant of recognition to a stock exchange under this section shall be published in the Gazette
of India and also in the Official Gazette of the State in which the principal office of the stock exchange is
situate, and such recognition shall have effect as from the date of its publication in the Gazette of India.
(4) No application for the grant of recognition shall be refused except after giving an opportunity to
the stock exchange concerned to be heard in the matter; and the reasons for such refusal shall be
communicated to the stock exchange in writing.
(5) No rules of a recognised stock exchange relating to any of the matters specified in sub-section (2)
of section 3 shall be amended except with the approval of the Central Government.
1
[4A. Corporatisation and demutualisation of stock exchanges.—On and from the appointed date,
all recognised stock exchanges (if not corporatised and demutualised before the appointed date) shall be
corporatised and demutualised in accordance with the provisions contained in section 4B:
Provided that the Securities and Exchange Board of India may, if it is satisfied that any recognised
stock exchange was prevented by sufficient cause from being corporatised and demutualised on or after
the appointed date, specify another appointed date in respect of that recognised stock exchange and such
recognised stock exchange may continue as such before such appointed date.
Explanation.—For the purposes of this section, “appointed date” means the date which the Securities
and Exchange Board of India may, by notification in the Official Gazette, appoint and different appointed
dates may be appointed for different recognised stock exchanges.]
4B. Procedure for corporatisation and demutualisation.—(1) All recognised stock exchanges
referred to in section 4A shall, within such time as may be specified by the Securities and Exchange
Board of India, submit a scheme for corporatisation and demutulisation for its approval:
Provided that the Securities and Exchange Board of India, may, by notification in the Official
Gazette, specify name of the recognised stock exchange, which had already been corporatised and
demutualised, and such stock exchange shall not be required to submit the scheme under this section.
(2) On receipt of the scheme referred to in sub-section (1), the Securities and Exchange Board of
India may, after making such enquiry as may be necessary in this behalf and obtaining such further
information, if any, as it may require and if it is satisfied that it would be in the interest of the trade and
also in the public interest, approve the scheme with or without modification.
(3) No scheme under sub-section (2) shall be approved by the Securities and Exchange Board of India
if the issue of shares for a lawful consideration or provision of trading rights in lieu of membership card
of the members of a recognised stock exchange or payment of dividends to members have been proposed
out of any reserves or assets of that stock exchange.
(4) Where the scheme is approved under sub-section (2), the scheme so approved shall be published
immediately by—
(a) the Securities and Exchange Board of India in the Official Gazette;
(b) the recognised stock exchange in such two daily newspapers circulating in India, as may be
specified by the Securities and Exchange Board of India,
and upon such publication, notwithstanding anything to the contrary contained in this Act or any other
law for the time being in force or any agreement, award, judgment, decree or other instrument for the time
being in force, the scheme shall have effect and be binding on all persons and authorities including all
members, creditors, depositors and employees of the recognised stock exchange and on all persons having
1. Ins. by Act 1 of 2005, s. 3 (w.e.f. 12-10-2004).
9
any contract, right, power, obligation or liability with, against, over, to, or in connection with, the
recognised stock exchange or its members.
(5) Where the Securities and Exchange Board of India is satisfied that it would not be in the interest
of the trade and also in the public interest to approve the scheme under sub-section (2), it may, by an
order, reject the scheme and such order of rejection shall be published by it in the Official Gazette:
Provided that the Securities and Exchange Board of India shall give a reasonable opportunity of being
heard to all the persons concerned and the recognised stock exchange concerned before passing an order
rejecting the scheme.
(6) The Securities and Exchange Board of India may, while approving the scheme under sub-section
(2), by an order in writing, restrict—
(a) the voting rights of the shareholders who are also stock brokers of the recognised stock
exchange;
(b) the right of shareholders or a stock broker of the recognised stock exchange to appoint the
representatives on the governing board of the stock exchange;
(c) the maximum number of representatives of the stock brokers of the recognised stock exchange
to be appointed on the governing board of the recognised stock exchange, which shall not exceed onefourth of the total strength of the governing board.
(7) The order made under sub-section (6) shall be published in the Official Gazette and on the
publication thereof, the order shall, notwithstanding anything to the contrary contained in the Companies
Act, 1956 (1 of 1956), or any other law for the time being in force, have full effect.
(8) Every recognised stock exchange, in respect of which the scheme for corporatisation or
demutualisation has been approved under sub-section (2), shall, either by fresh issue of equity shares to
the public or in any other manner as may be specified by the regulations made by the Securities and
Exchange Board of India, ensure that at least fifty-one per cent. of its equity share capital is held, within
twelve months from the date of publication of the order under sub-section (7), by the public other than
shareholders having trading rights:
Provided that the Securities and Exchange Board of India may, on sufficient cause being shown to it
and in the public interest, extend the said period by another twelve months.]
5. Withdrawal of recognition.—1
[(1)] If the Central Government is of opinion that the recognition
granted to a stock exchange under the provisions of this Act should, in the interest of the trade or in the
public interest, be withdrawn, the Central Government may serve on the governing body of the stock
exchange a written notice that the Central Government is considering the withdrawal of the recognition
for the reasons stated in the notice, and after giving an opportunity to the governing body to be heard in
the matter, the Central Government may withdraw, by notification in the Official Gazette, the recognition
granted to the stock exchange;
Provided that no such withdrawal shall affect the validity of any contract entered into or made before
the date of the notification, and the Central Government may, after consultation with the stock exchange,
make such provision as it deems fit in the notification of withdrawal or in any subsequent notification
similarly published for the due performance of any contracts outstanding on that date.
2
[(2) Where the recognised stock exchange has not been corporatised or demutualised or it fails to
submit the scheme referred to in sub-section (1) of section 4B within the specified time therefor or the
scheme has been rejected by the Securities and Exchange Board of India under sub-section (5) of section
4B, the recognition granted to such stock exchange under section 4, shall, notwithstanding anything to the
contrary contained in this Act, stand withdrawn and the Central Government shall publish, by notification
in the Official Gazette, such withdrawal of recognition:
1. Section 5 numbered as sub-section (1) thereof by Act 1 of 2005, s. 4 (w.e.f. 12-10-2004).
2. Ins. by s. 4, ibid. (w.e.f. 12-10-2004).
10
Provided that no such withdrawal shall affect the validity of any contract entered into or made before
the date of the notification, and the Securities and Exchange Board of India may, after consultation with
the stock exchange, make such provisions as it deems fit in the order rejecting the scheme published in
the Official Gazette under sub-section (5) of section 4B.]
6. Power of Central Government to call for periodical returns or direct inquiries to be made.—
(1) Every recognised stock exchange shall furnish to the 1
[Securities and Exchange Board of India] such
periodical returns relating to its affairs as may be prescribed.
(2) Every recognised stock exchange and every member thereof shall maintain and preserve for such
periods not exceeding five years such books of account, and other documents as the Central Government,
after consultation with the stock exchange concerned, may prescribe in the interest of the trade or in the
public interest, and such books of account, and other documents shall be subject to inspection at all
reasonable times 2
[by the Securities and Exchange Board of India].
(3) Without prejudice to the provisions contained in sub-sections (1) and (2), the 1
[Securities and
Exchange Board of India], if it is satisfied that it is in the interest of the trade or in the public interest so to
do, may order in writing,—
(a) call upon a recognised stock exchange or any member thereof to furnish in writing such
information or explanation relating to the affairs of the stock exchange or of the member in relation to
the stock exchange as the 1
[Securities and Exchange Board of India] may require; or
(b) appoint one or more persons to make an inquiry in the prescribed manner in relation to the
affairs of the governing body of a stock exchange or the affairs of any of the members of the stock
exchange in relation to the stock exchange and submit a report of the result if such inquiry to the
1
[Securities and Exchange Board of India] within such time as may be specified in the order or, in the
case of an inquiry in relation to the affairs of any of the members of a stock exchange, direct the
governing body to make the inquiry and submit its report to the Central Government
(4) Where an inquiry in relation to the affairs of a recognised stock exchange or the affairs of any of
its members in relation to the stock exchange has been undertaken under sub-section (3),—
(a) every director, manager, secretary or other officer of such stock exchange;
(b) every member of such stock exchange;
(c) if the member of the stock exchange is a firm, every partner, manager, secretary or other
officer of the firm; and
(d) every other person or body of persons who has had dealing in the course of business with any
of the persons mentioned in clauses (a), (b) and (c), whether directly or indirectly;
shall be bound to produce before the authority making the inquiry all such books of account, and other
documents in his custody or power relating to or having a bearing on the subject-matter of such inquiry
and also to furnish the authorities within such time as may be specified with any such statement or
information relating thereto as may be required of him.
7. Annual reports to be furnished to the Central Government by stock exchanges.—Every
recognised stock exchange shall furnish the Central Government with a copy of the annual report, and
such annual report shall contain such particulars as may be prescribed.
3
[7A. Power of recognised stock exchange to make rules restricting voting rights, etc.—(1) A
recognised stock exchange may make rules or amend any rules made by it to provide for all or any of the
following matters, namely—
(a) the restriction of voting rights to members only in respect of any matter placed before the
stock exchange at any meeting;
1. Subs. by Act 15 of 1992, s. 33 and the Schedule, for “Central Government” (w.e.f. 30-1-1992).
2. Subs. by s. 33 and the Schedule, ibid., for “by the Central Government” (w.e.f. 30-1-1992).
3. Ins. by Act 49 of 1959, s. 2 (w.e.f. 8-12-1959).
11
(b) the regulation of voting rights in respect of any matter placed before the stock exchange at any
meeting so that such member may be entitled to have one vote only, irrespective of his share of the
paid-up equity capital of the stock exchange;
(c) the restriction on the right of a member to appoint another person as his proxy to attend and
vote at a meeting of the stock exchange;
(d) such incidental consequential and supplementary matters as may be necessary to give effect to
any of the matters specified in clauses (a),(b) and (c).
(2) No rules of a recognised stock exchange made or amended in relation to any matter referred to in
clauses (a) to (d)of sub-section (1) shall have effect until they have been approved by the Central
Government and published by that Government in the Official Gazette and, in approving the rules so
made or amended, the Central Government may make such modifications therein as it thinks fit, and on
such publication, the rules as approved by the Central Government shall be deemed to have been validly
made, notwithstanding anything to the contrary contained in the Companies Act, 1956 (1 of 1956).]
8. Power of Central Government to direct rules to be made or to make rules.—(1) Where, after
consultation with the governing bodies of stock exchanges generally or with the governing body of any
stock exchange in particular, the Central Government is of opinion that it is necessary or expedient so to
do, it may, by order in writing together with a statement of the reasons therefor, direct recognised stock
exchanges generally or any recognised stock exchange in particular, as the case may be, to make any rules
or to amend any rules already made in respect of all or any of the matters specified in sub-section (2) of
section 3 within a period of1
[two months] from the date of the order.
(2) If any recognised stock exchange fails or neglects to comply with any order made under
sub-section (1) within the period specified therein, the Central Government may make the rules for, or
amend the rules made by, the recognised stock exchange, either in the form proposed in the order or with
such modifications thereof as may be agreed to between the stock exchange and the Central Government.
(3) Where in pursuance of this section any rules have been made or amended, the rules so made or
amended shall be published in the Gazette of India and also in the Official Gazette or Gazettes of the
State or States in which the principal office or offices of the recognised stock exchange or exchanges is or
are situate, and, on the publication thereof in the Gazette of India, the rules so made or amended shall,
notwithstanding anything to the contrary contained in the Companies Act, 1956 (1 of 1956), or in any
other law for the time being in force, have effect, as if they had been made or amended by the recognised
stock exchange or stock exchanges, as the case may be.
2
[8A. Clearing corporation.—(1) A recognised stock exchange may, with the prior approval of the
Securities and Exchange Board of India, transfer the duties and functions of a clearing house to a clearing
corporation, being a company incorporated under the Companies Act, 1956 (1 of 1956), for the purpose
of—
(a) the periodical settlement of contracts and differences thereunder;
(b) the delivery of, and payment for, securities;
(c) any other matter incidental to, or connected with, such transfer.
(2) Every clearing corporation shall, for the purpose of transfer of the duties and functions of a
clearing house to a clearing corporation referred to in sub-section (1), make bye-laws and submit the same
to the Securities and Exchange Board of India for its approval.
(3) The Securities and Exchange Board of India may, on being satisfied that it is in the interest of the
trade and also in the public interest to transfer the duties and functions of a clearing house to a clearing
corporation, grant approval to the bye-laws submitted to it under sub-section (2) and approve the transfer
of the duties and functions of a clearing house to a clearing corporation referred to in sub-section (1).
1. Subs. by Act 9 of 1995, s. 19, for “six months” (w.e.f. 25-1-1995).
2. Ins. by Act 1 of 2005, s. 5 (w.e.f. 12-10-2004).
12
(4) The provisions of sections 4, 5, 6, 7, 8, 9, 10, 11 and 12 shall, as far as may be, apply to a clearing
corporation referred to in sub-section (1) as they apply in relation to a recognised stock exchange.]
9. Power of recognised stock exchanges to make bye-laws.—(1) Any recognised stock exchange
may, subject to the previous approval of the 1
[Securities and Exchange Board of India], make bye-laws
for the regulation and control of contracts.
(2) In particular, and without prejudice to the generality of the foregoing power, such bye-laws may
provide for—
(a) the opening and closing of markets and the regulation of the hours of trade;
(b) a clearing house for the periodical settlement of contracts and differences here under, the
delivery of and payment for securities, the passing on of delivery orders and the regulation and
maintenance of such clearing house;
(c) the submission to the 1
[Securities and Exchange Board of India] by the clearing house as soon
as may be after each periodical settlement of all or any of the following particulars as the 1
[Securities
and Exchange Board of India] may, from time to time, require, namely:—
(i) the total number of each category of security carried over from one settlement period to
another;
(ii) the total number of each category of security, contracts in respect of which have been
squared up during the course of each settlement period;
(iii) the total number of each category of security actually delivered at each clearing;
(d) the publication by the clearing house of all or any of the particulars submitted to the
1
[Securities and Exchange Board of India] under clause (c) subject to the directions, if any, issued by
the 1
[Securities and Exchange Board of India] in this behalf;
(e) the regulation or prohibition of blank transfers;
(f) the number and classes of contracts in respect of which settlements shall be made or
differences paid through the clearing house;
(g) the regulation, or prohibition of budlas or carry-over facilities;
(h) the fixing, altering or postponing of days for settlements;
(i) the determination and declaration of market rates, including the opening, closing, highest and
lowest rates for securities;
(j) the terms, conditions and incidents of contracts, including the prescription of margin
requirements, if any, and conditions relating thereto, and the forms of contracts in writing;
(k) the regulation of the entering into, making, performance, rescission and termination, of
contracts, including contracts between members or between a member and his constituent or between
a member and a person who is not a member, and the consequences of default or insolvency on the
part of a seller or buyer or intermediary, the consequences of a breach or omission by a seller or
buyer, and the responsibility of members who are not parties to such contracts;
(l) the regulation of taravanibusiness including the placing of limitations thereon;
(m) the listing of securities on the stock exchange, the inclusion of any security for the purpose of
dealings and the suspension or withdrawal of any such securities, and the suspension or prohibition of
trading in any specified securities;
(n) the method and procedure for the settlement of claims or disputes, including settlement by
arbitration;
(o) the levy and recovery of fees, fines and penalties;
1. Subs. by Act 15 of 1992, s. 33 and the Schedule, for “Central Government” (w.e.f. 30-1-1992).
13
(p) the regulation of the course of business between parties to contracts in any capacity;
(q) the fixing of a scale of brokerage and other chargers;
(r) the making, comparing, settling and closing of bargains;
(s) the emergencies in trade which may arise, whether as a result of pool or syndicated operations
or cornering or otherwise, and the exercise of powers in such emergencies, including the power to fix
maximum and minimum prices for securities;
(t) the regulation of dealings by members for their own account;
(u) the separation of the functions of the jobbers and brokers;
(v) the limitations on the volume of trade done by any individual member in exceptional
circumstances;
(w) the obligation of members to supply such information or explanation and to produce such
documents relating to the business as the governing body may require.
(3) The bye-laws made under this section may—
(a) specify the bye-laws the contravention of which shall make a contract entered into otherwise
than in accordance with the bye-laws void under sub-section (1) of section14;
(b) provide that the contravention of any of the bye-laws shall render the member concerned
liable to one or more of the following punishments, namely:—
(i) fine;
(ii) expulsion from membership;
(iii) suspension from membership for a specified period;
(iv) any other penalty of a like nature not involving the payment of money.
(4) Any bye-laws made under this section shall be subject to such conditions in regard to previous
publication as may be prescribed, and when approved by the 1
[Securities and Exchange Board of India],
shall be published in the Gazette of India and also in the Official Gazette of the State in which the
principal office of the recognised stock exchange is situate, and shall have effect as from the date of its
publication in the Gazette of India;
Provided that if the 1
[Securities and Exchange Board of India] is satisfied in any case that in the
interest of the trade or in the public interest any bye-law should be made immediately, it may, by order in
writing specifying the reasons therefore, dispense with the condition of previous publication.
10. Power of 1
[Securities and Exchange Board of India] to make or amend byelaws of
recognised stockexchanges.—(1) The 1
[Securities and Exchange Board of India] may, either on a
request in writing received by it in this behalf from the governing body of a recognised stock exchange or
on its own motion, if it is satisfied after consultation with the governing body of the stock exchange that it
is necessary or expedient so to do and after recording its reasons for so doing, make bye-laws for all or
any of the matters specified in section 9 or amend any bye-laws made by such stock exchange under that
section.
(2) Where in pursuance of this section any bye-laws have been made or amended, the due-laws so
made or amended shall be published in the Gazette of India and also in the Official Gazette of the State in
which the principal office of the recognised stock exchange is situate, and on the publication thereof in
the Gazette of India, the bye-laws so made or amended shall have effect as if they had been made or
amended by the recognised stock exchange concerned.
(3) Notwithstanding anything contained in this section, where the governing body of a recognised
stock exchange objects to any bye-laws made or amended under this section by the 1
[Securities and
1. Subs. by Act 15 of 1992, s. 33 and the Schedule, for “Central Government” (w.e.f. 30-1-1992).
14
Exchange Board of India] on its own motion, it may, within 1
[two months] of the publication thereof in
the Gazette of India under sub-section (2) , apply to the 2
[Securities and Exchange Board of India] for
revision thereof, and the 2
[Securities and Exchange Board of India] may, after giving an opportunity to
the governing body of the stock exchange to be heard in the matter, revise the bye-laws so made or
amended, and where any bye-laws so made or amended are revised as a result of any action taken under
this sub-section, the bye-laws so revised shall be published and shall become effective as provided in subsection (2).
(4) The making or the amendment or revision of any bye-laws under this section shall in all cases be
subject to the condition of previous publication:
Provided that if the 2
[Securities and Exchange Board of India] is satisfied in any case that in the
interest of the trade or in the public interest any bye-laws should be made, amended or revised
immediately, it may, by order in writing specifying the reasons therefor, dispense with the condition of
previous publication.
11. Power of Central Government to supersede governing body of a recognised stock
exchange.—(1) Without prejudice to any other powers vested in the Central Government under this Act,
where the Central Government is of opinion that the governing body of any recognised stock exchange
should be superseded, then, notwithstanding anything contained in any other law for the time being in
force, the Central Government may serve on the governing body a written notice that the Central
Government is considering the supersession of the governing body for the reasons specified in the notice
and after giving an opportunity to the governing body to be heard in the matter it may, by notification in
the Official Gazette, declare the governing body of such stock exchange to be superseded, and may
appoint any person or persons to exercise and perform all the powers and duties of the governing body,
and, where more persons than one are appointed, may appoint one of such persons to be the chairman and
another to be the Vice-Chairman thereof.
(2) On the publication of a notification in the Official Gazette under sub-section (1), the following
consequences shall ensue, namely:—
(a) the members of the governing body which has been superseded shall, as from the date of the
notification of supersession, cease to hold office as such members;
(b)the person or persons appointed under sub-section (1)may exercise and perform all the powers
and duties of the governing body which has been superseded;
(c) all such property of the recognised stock exchange as the person or persons appointed under
sub-section(1) may, by order in writing, specify in this behalf as being necessary for the purpose of
enabling him or them to carry on the business of the stock exchange, shall vest in such person or
persons.
(3) Notwithstanding anything to the contrary contained in any law or the rules or bye-laws of the
recognised stock exchange the governing body of which is superseded under sub-section (1), the person
or persons appointed under that sub-section shall hold office for such period as may be specified in the
notification published under that sub-section, and the Central Government may from time to time, by like
notification, vary such period.
(4) The Central Government may at any time before the determination of the period of office of any
person or persons appointed under this section call upon the recognised stock exchange to re-constitute
the governing body in accordance with its rules and on such re-constitution all the property of the stock
exchange which has vested in, or was in the possession of, the person or persons appointed under subsection(1) shall re-vest or vest, as the case may be, in the governing body so re-constituted:
Provided that until a governing body is so re-constituted, the person or persons appointed undersubsection(1), shall continue to exercise and perform their powers and duties.
1. Subs. by Act 9 of 1995, s. 20, for “six months” (w,e,f, 25-1-1995).
2. Subs. by Act 15 of 1992, s. 33 and the Schedule, for “Central Government” (w.e.f. 30-1-1992).
15
12. Power to suspend business of recognised stock exchanges.—If in the opinion of the Central
Government an emergency has risen and for the purpose of meeting the emergency the Central
Government considers it expedient so to do, it may, by notification in the Official Gazette, for reasons to
be set out therein, direct a recognised stock exchange to suspend such of its business for such period not
exceeding seven days and subject to such conditions as may be specified in the notification, and, if, in the
opinion of the Central Government, the interest of the trade or the public interest requires that the period
should be extended, may, by like notification extend the said period from time to time:
Provided that where the period of suspension is to be extended beyond the first period, no notification
extending the period of suspension shall be issued unless the governing body of the 1
[recognised
association stock exchange] has been given an opportunity of being heard in the matter.
2
[12A. Power to issue directions.—3
[1] If, after making or causing to be made an inquiry, the
Securities and Exchange Board of India is satisfied it is necessary—
(a) in the interest of investors, or orderly development of securities market;
(b) to prevent the affairs of any recognised stock exchange or clearing corporation, or such other
agency or person, providing trading or clearing or settlement facility in respect of securities, being
conducted in a manner detrimental to the interests of investors or securities market; or
(c) to secure the proper management of any such stock exchange or clearing corporation or
agency or person, referred to in clause (b),
it may issue such directions, —
(i) to any stock exchange or clearing corporation or agency or person referred to in clause (b)
or any person or class of persons associated with the securities market; or
(ii) to any company whose securities are listed or proposed to be listed in a recognised stock
exchange,
as may be appropriate in the interests of investors in securities and the securities market.]
4
[Explanation.—For the removal of doubts, it is hereby declared that power to issue directions under
this section shall include and always be deemed to have been included the power to direct any person,
who made profit or averted loss by indulging in any transaction or activity in contravention of the
provisions of this Act or regulations made thereunder, to disgorge an amount equivalent to the wrongful
gain made or loss averted by such contravention.]
5
[(2) Without prejudice to the provisions of sub-section (1) and section 23-I, the Securities and
Exchange Board of India may, by an order, for reasons to be recorded in writing, levy penalty under
section 23A, 23B, 23D, 23E, 23F, 23G, 23GA and 23H after holding an inquiry in the prescribed
manner.]