A bill was introduced in Lok Sabha on Monday to amend the securities market laws that would give more teeth to SEBI to crackdown on fraudulent investment schemes, seek information from any entity related to a probe and also provide for setting of special courts to ensure speedy trial.
The Securities Laws (Amendment) Bill, 2014, aims to empower capital market watchdog Securities and Exchange Board of India (SEBI) by giving powers such as authority to seek call data records.
An ordinance to empower SEBI to deal with ponzi schemes was promulgated thrice during the previous UPA regime but the same could not be passed by Parliament to make it an Act.
The bill was introduced by Minister of State for Finance Nirmala Sitharaman as, she said, Finance Minister Arun Jaitley was unwell and could not attend the House.
“To protect the interests of investors and to ensure orderly development of securities markets, it has become necessary to enhance the powers of the Board”, the government said, explaining the objects and reasons for the bill.
Once the bill becomes an Act, SEBI would have powers to call for information “not only from the people or entities associated with the securities market but also from persons who are not directly associated with the securities market”.
The bill aims to protect investors as well as curb fraudulent investment schemes thriving at the expense of gullible investors.
“Further, in view of large pendency of cases, it is necessary to constitute Special Courts for prosecution of offenses under the securities law to provide speedy trial”, the government said.
Sitharaman also introduced bills to amend Securities Contracts (Regulation) Act, 1956 and Depositories Act, 1996.
‘New norms for corporates’
On the other hand SEBI Chairman U. K. Sinha said on Monday that the capital market regulator will go ahead with implementation of the new corporate governance norms for listed companies from October 1.
“Listing agreement regulations will kickstart from October 1 onwards,” Sinha told reporters.
The Securities and Exchange Board of India (SEBI) had in April this year issued detailed corporate governance norms for listed companies providing for stricter disclosures and protection of investor rights, including equitable treatment for minority and foreign shareholders.
The new rules require companies to get shareholders’ approval for related party transactions, establish whistle blower mechanism, elaborate disclosures on pay packages and have at least one woman director on their boards.
The capital market regulator has amended clauses — 35B and 49 — of the listing agreement.
Now, under changed 35B norms, listed companies are required to provide the option of facility of e-voting to shareholders on all resolutions proposed to be passed at general meetings.
Under clause 49, pertaining to corporate governance, listed companies have to get shareholders’ nod for related party transactions. All these new stipulations will be effective from October 1.
“All existing material related party contracts or arrangements as on the date of this circular which are likely to continue beyond March 31, 2015 shall be placed for approval of shareholders in the first general meeting subsequent to October 1, 2014,” SEBI had said in a circular dated April 17, 2014.