Security and Security Market Operations - THE SECURITIES CONTRACTS (REGULATION) ACT, 1956 - Notes - Financial Management, Study notes for Financial Management. Agra University

Financial Management

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This Act may be called the Securities Contracts (Regulation) Act, 1956. It extends to the
whole of India. It shall come into force on such date as the Central Government may, by
notification in the Official Gazette appoint.
In this Act, unless the context otherwise requires,-
(a) "contract" means a contract for or relating to the purchase or sale of securities;
(aa) "derivative" includes -
A. a security derived from a debt instrument, share, loan whether secured or unsecured, risk
instrument or contract for differences or any other form of security;
B. a contract which derives its value from the prices, or index or prices, of
underlying securities;
(b) "Government security" means a security created and issued, whether before or after the
commencement of this Act, by the Central Government or a State Government for the
purpose of raising a public loan and having one of the forms specified in clause (2) of
section 2 of the Public Debt Act, 1944 (18 of 1944);
(c) "member" means a member of a recognised stock exchange;
(d) "option in securities" means a contract for the purchase or sale of a right to buy or sell, or
a right to buy and sell, securities in future, and includes a teji, a mandi, a teji mandi, a galli,
a put, a call or a put and call in securities;
(e) "prescribed" means prescribed by rules made under this Act;
(f) "recognised stock exchange" means a stock exchange which is for the time being
recognised by the Central Government under section 4;
(g) "rules", with reference to the rules relating in general to the constitution and
management of a stock exchange, includes, in the case of a stock exchange which is an
incorporated association, its memorandum and articles of association;
(ga) "Securities Appellate Tribunal" means a Securities Appellate Tribunal established under
sub-section (1) of section 15K of the Securities and Exchange Board of India Act,
(h) "Securities" include-
(i ) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities
of a like nature in or of any incorporated company or other body corporate;
(ib) units or any other instrument issued by any collective investment scheme to the
investors in such schemes
(ii) Government securities;
(iia) such other instruments as may be declared by the Central
Government to be securities; and
(iii) rights or interests in securities;
[(i) spot delivery contract means a contract which provides for,-
(a) actual delivery of securities and the payment of a price therefore either on the same day
as the date of the contract or on the next day, the actual period taken for the dispatch of the
securities or the remittance of money therefore through the post being excluded from the
computation of the period aforesaid if the parties to the contract do not reside in the same
town or locality;
(b) transfer of the securities by the depository from the account of a beneficial owner to
the account of another beneficial owner when such securities are dealt with by a depository;]
(j) "stock exchange" means any body of individuals, whether incorporated or not, constituted
for the purpose of assisting, regulating or controlling the business of buying, selling or
dealing in securities.
2A. Words and expressions used herein and not defined in this Act but defined in the
Companies Act, 1956 or the Securities and Exchange Board of India Act, 1992 or the
Depositories Act, 1996 shall have the same meanings respectively assigned to them in those
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