Regulation 49 - Power to issue directions and levy penalty - Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018

1 [Power to issue directions and levy penalty.] 49. 2 [ (1) ] Without prejudice to the exercise of its powers under the provisions of the Act or the Securities and Exchange Board of India Act, 1992 and rules and regulations made thereunder, the Board may, either suo motu or on receipt of any information or during pendency of any inspection, inquiry or investigation or on completion thereof, in the interest of public or trade or investors or the securities market, issue such directions as it deems fit, including but not limited to any or all of the following:- (a) directing a person holding equity shares or rights over equity shares in a recognised stock exchange or recognised clearing corporation in contravention of these regulations to divest his holding, in such manner as may be provided in the direction; (b) directing transfer of any proceeds or securities to the Investor Protection Fund of a recognised stock exchange or Settlement Guarantee Fund of a recognised clearing corporation; (c) debarring any recognised stock exchange or recognised clearing corporation, any shareholder of such recognised stock exchange or recognised clearing corporation, or any associate and agent of such shareholder, or any transferee of shares from such shareholder, directors and key management personnel of recognised stock exchange and recognised clearing corporation from accessing the securities market or dealing in securities for such period as may be determined by the Board. 3 [ (2) The Board may take action against a recognised stock exchange or recognised clearing corporation, director, committee member, key management personnel, employee or any other person associated with the recognised stock exchange or recognised clearing corporation, for any contravention or abetting the contravention of these regulations, including the Code of Conduct specified under these regulations, the provisions of the Act, the Securities and Exchange Board of India Act, 1992, any rules or regulations framed thereunder and any circulars or directions issued by the Board, either upon a reference or suo motu, as it deems fit, including but not limited to any or all of the following: (a) debarring a recognised stock exchange or recognised clearing corporation from introducing new products and services and restricting its existing activities, products and services. (b) imposing such monetary penalty as may be determined by the Board, on the recognised stock exchange or recognised clearing corporation, directors, committee members, key management personnel, employees or any other person associated with the recognised stock exchange or recognised clearing corporation. (c) restricting any such person to attend meetings or otherwise participate or involve themselves in the functioning of the recognised stock exchange and recognised clearing corporation. Explanation For the removal of any doubt, it is clarified that the power of the Board to take appropriate action under sub-regulation (2) is without prejudice to the exercise of its powers under the provisions of the Act, or the Securities and Exchange Board of India Act, 1992 and the rules and regulations made thereunder: Provided that the Board while taking action under clauses (a) and (b) above shall have due regard to the factors, including but not limited to any or all of the following: (i) a mala fide intent; or (ii) an act of commission or an act of omission; or (iii) negligence, or (iv) repeated instances of genuine decision making that went wrong. (3) While adjudging the quantum of monetary penalty under the Act, or the Securities and Exchange Board of India Act, 1992, the Board shall have due regard to the factors, including but not limited to any or all of the following: (a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; (b) the amount of loss caused to the recognised stock exchange or recognised clearing corporation or the securities market as a result of the default; and (c) the repetitive nature of the default. ] *************** NOTES:- 1. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/124 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette) before it was read as, Directions by the Board 2. Numbered vide Notification No. SEBI/LAD-NRO/GN/2023/124 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette) 3. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/124 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette)