SEBI performs and exercises such powers as may be delegated to it by the Government of India. Under which Act are these powers delegated?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → The Securities Contracts (Regulation) Act
Option (1) The Companies Act — Incorrect. The Companies Act is the law under which companies are formed; the OTCEI, for example, is a company incorporated under the Companies Act 1956. It is not the Act for SEBI’s delegated powers.
Option (2) The Securities and Exchange Board of India Act — Incorrect. The SEBI Act, 1992 gave SEBI its statutory status, that is, its standing under law. The delegated powers in this function come under another Act.
Option (3) The Securities Contracts (Regulation) Act — Correct. One regulatory function of SEBI is to use the powers under the Securities Contracts (Regulation) Act 1956 that the Government of India delegates to it. The same Act also defines a stock exchange.
Option (4) The Reserve Bank of India Act — Incorrect. The Reserve Bank of India acts in the money market, for example by issuing treasury bills for the Government and changing the cash reserve ratio. SEBI’s delegated powers do not come from the RBI’s law.
NCERT (Pre-rationalised Edition): “Regulatory Functions … 4. Regulation of takeover bids by companies. |