CHAPTER V
 
SELF REGULATORY ORGANISATIONS

 

 Registration of Self Regulatory Organisations 18 (1) The provisions of this Chapter shall come into force within thirty days of the Board issuing notification requiring a self-regulatory organisation to make application to the Board for registration. In such an event all the provisions of this Chapter shall also become operative and enforceable with effect from thirty days of such notification.

(2) A self regulatory organisation covered by the above-referred notification shall apply to the Board for being registered, along with a copy of its proposed or existing bye-laws relating in general to the constitution of such organisation and in particular in relation to:-

(a) the eligibility criteria for enrolment of its members, who would be authorised to carry on the activities connected with the securities market;

(b) prescribing criteria for admission, suspension, expulsion including the disciplinary action against the members for imposition of penalties in the event of default; and

© making provisions for the protection of the interests of investors, code of conduct and professional standards as to etiquette to be observed by its members.

 3.The self regulatory organisation shall act and discharge its functions in the best interests of the investor and the healthy and orderly development of the securities market.
    1. The provisions of this Section shall be without prejudice to any special or other requirements in that behalf in relation to stock exchanges as may be prescribed in Chapter VI.
    2. The Board may delegate to a registered self-regulatory organisation its powers under sub section (1) of Section 17.
    3. Nothing contained in the aforesaid clause shall limit the power of the Board to pass directions to oversee and regulate the activities of the organisation or of its members or to revoke or modify the extent and terms of such delegation from time to time, or to oversee the compliance of the conditions on which such delegation has been made.

      4. Grant of certificate on issue of direction, etc.

      19. (1) The Board may grant registration to a self regulatory organisation, if it is satisfied that such organisation satisfies the relevant requirements and criteria and is committed to prevent fraudulent and manipulative acts and practices in the securities market, to promote just and equitable principles of trade, and would act in order to protect the interests of investors and public interest.

      Provided that the Board may while granting registration, approve the bye-laws with such modifications as are suggested and specify such conditions as are necessary to protect the interests of investors. The Board shall upon registration issue a certificate of registration.

      (2) The Board may reject the application for registration for sufficient cause, after granting opportunity to the applicant to make a representation to the Board within a period of thirty days.

      (3) The Board may authorise such registered organisations to grant or cancel certificate to its members in accordance with the norms, guidelines, superintendence and control of the Board for the purpose of facilitating the functions of the Board.

      (4) If such registered organisation denies membership to any applicant or initiates any disciplinary proceedings against any member or imposes any penalty on him or takes any disciplinary action against a person associated with it as a member, the organisation shall furnish all the information in this behalf to the Board.

      (5) The Board may, by an order cancel or revoke the registration of a self regulatory organisation if in the opinion of the Board, such action is necessary in public interest, or for the protection of investors, or in the interests of the securities market or if the Board, after giving such organisation reasonable opportunity of hearing, finds that it has failed to comply with any provision of the Act, Rules, Regulations, Bye-laws, directions or order or is unable to comply with the same, without reasonable justification.

      (6) The Board may issue directions to any self regulatory organisation, to expel any member or suspend such members for a period not exceeding twelve months, or take disciplinary action against them, if it is found that they have violated any provision of the Act, Rules, Regulations or directions issued or have effected any transaction in contravention thereof, if, in the opinion of the Board, such action is necessary, in public interest, or for the protection of investors or in the interests of the securities market.

      Provided that the organisation shall provide the member a reasonable opportunity of being heard before passing any such order.

    4. The Board may at any time whether prior to or after grant of registration to an organisation, require that an intermediary shall not carry out any activity in the securities market in its capacity as such, unless such intermediary is a member of a self regulatory organisation registered as such under this Act.
 
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