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10. EXPANSION OF SECURITIES LAWS IN INDIA:

10.01: EARLY REGULATIONS

10.01 (a): To deal with the situation which arose due to "share mania" of 1860-65, the Government of Bombay passed Act XXVIII of 1865. This perhaps is the first and the earliest legislation, in a sense, relating to the Stock Market found in India. After the first world war a proposal to form a committee of Appeal to control and supervise the management of the BSE, consisting members of the BSE and other outside representatives was suggested by the then Governor of Bombay. The BSE refused such interference and it led to the appointment of "Atlay Stock Exchange Enquiry Committee" in the year 1923. The Atlay Committee codified the rules, bye-laws and regulations of the BSE and in persuasion of the recommendation of the Committee, the Government of Bombay offered a Charter to the BSE in 1925 whereby the Government sought to control the rule making power of exchange and in return sought to grant a monopoly of organizing trading in securities. Unfortunately the said Charter was rejected. The Government of Bombay was then compelled to initiate special legislation in the form of The Bombay Securities Contracts Control Act, 1925. It empowered the Government to grant and withdraw recognition to a stock exchange and provided that rules of a recognized stock exchange could be made or amended only after prior approval of the Government. The BSE applied for recognition under the Act and submitted a complete set of rules and regulations for the Government's approval. The recognition was duly granted and the rules were sanctioned by the Government on 14th May 1927. The Bombay Securities Contracts Control Act, 1925 remained in force till The Securities Contracts (Regulations) Act, 1956 enacted by the Central Government came into operation on 20th February 1957.

10.01 (b): During the second world war the Defence of India Rules were in existence. To counter speculative operations and by way of a central legislature the Government promulgated Rule 94-C to the Defence of India Rules in the year 1943. It prohibited the stock exchange from offering facilities for carry over transactions and other than ready delivery transactions. The Rules lapsed in September 1946.

10.01 (c): In May 1948 the Indian Government appointed a departmental committee which submitted its report in August 1948 expressing a view that the legislation for exchange should be finalized only after holding a conference of the representatives of the Central Government and the concerned representatives of the leading stock exchanges.

10.01 (d): On 26th January 1950 India received its Constitution. The Stock Exchanges and futures markets became exclusively a Central subject under Item No. 48 of the Union list of The Constitution of India. A draft bill for stock exchange regulations was prepared by the Government which was partly on the basis of the draft suggested by the departmental committee in 1948. It was referred to an expert committee represented by the Presidents of Bombay, Calcutta and Madras Stock Exchanges. Finally on 20th February 1957 the Securities Contracts (Regulation) Act, 1956 came into force through out India.

10.01 (e): Then, on April 12, 1988, the Securities & Exchange Board of India (SEBI) was constituted by the Government of India as a non-statutory body to promote the developments of the security markets and to provide adequate investor protection. By an ordinance promulgated in March 1992 SEBI was given statutory recognition. The ordinance was replaced by The Securities and Exchange Board of India Act, 1992.

10.01 (f): The Capital Issues (Control) Act, 1947 which controlled the issue of Capital, was repealed on May 29, 1992 and issue of Capital and pricing of issues by companies has been freed from the requirements of prior approval from the Controller of Capital Issues.

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