Insider trading is prohibited and is considered an offence vide SEBI (Insider Trading) Regulations, 1992. The definitions of some of the important terms are given below : ‘Dealing in securities’ means an act of subscribing, buying, selling or agreeing to subscribe, buy, sell or deal in any securities by any person either as principal or agent. ‘Insider’ means any person who, is or was connected with the company or is deemed to have been connected with the company, and who is reasonably expected to have access to unpublished price sensitive information in respect of securities of a company, or who has received or has had access to such unpublished price sensitive information. A “connected person” means any person who- (i) is a director, as defined in clause (13) of section 2 of the Companies Act, 1956 of a company, or is deemed to be a director of that company by Continue reading
Legal Framework
Securites and Exchange Board of India Act, 1992
Major part of the liberalisation process was the repeal of the Capital Issues (Control) Act, 1947, in May 1992. With this, Government’s control over issues of capital, pricing of the issues, fixing of premia and rates of interest on debentures etc. ceased, and the office which administered the Act was abolished: the market was allowed to allocate resources to competing uses. However, to ensure effective regulation of the market, Securites and Exchange Board of India Act, 1992 was enacted to establish SEBI with statutory powers for: (a) protecting the interests of investors in securities, (b) promoting the development of the securities market, and (c) regulating the securities market. Its regulatory jurisdiction extends over companies listed on Stock Exchanges and companies intending to get their securities listed on any recognized stock exchange in the issuance of securities and transfer of securities, in addition to all intermediaries and persons associated with securities Continue reading
Prevention of Money laundering Act
Introduction:- Money laundering involves disguising financial assets so that they can be used without detection of the illegal activity that let to its production. Through the process of “money laundering” a person converts illegal money into a legal entity. Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be held guilty of the offence of money laundering. The Schedule to the Prevention of Money Laundering Act (henceforth, PMLA), 2002, lists some of the offences under the following Legislations: Offences under the India Penal Code (part A) – eg. Waging or attempting to wage war, or abetting waging of war against the Government of India, Conspiring to commit offences punishable by s.121 against the state 1. Offences under the Narcotic Drugs and Psychotropic Continue reading
The Payment of Wages Act, 1936
The Payment of Wages Act, 1936 is a central legislation which has been enacted to regulate the payment of wages to workers employed in certain specified industries and to ensure a speedy and effective remedy to them against illegal deductions and/or unjustified delay caused in paying wages to them. It applies to the persons employed in a factory, industrial or other establishment, whether directly or indirectly, through a sub-contractor. The Central Government is responsible for enforcement of the Act in railways, mines, oilfields and air transport services, while the State Governments are responsible for it in factories and other industrial establishments. The basic provisions of the Act are as follows: The person responsible for payment of wages shall fix the wage period up to which wage payment is to be made. No wage-period shall exceed one month. All wages shall be paid in current legal tender, that is, in current Continue reading
Securities Contracts (Regulation) Act, 1956
SECURITIES CONTRACTS (REGULATION) ACT, 1956 The Securities Contracts (Regulation) Act, 1956 [SC(R)A] was enacted to prevent undesirable transactions in securities by regulating the business of dealing therein and by providing for certain other matters connected therewith. This is the principal Act, which governs the trading of securities in India. The definitions of some of the important terms are given below: ‘Recognised Stock Exchange’ means a stock exchange, which is for the time being recognised by the Central Government under Section 4 of the SC(R)A. ‘Stock Exchange’ means — (a) any body of individuals, whether incorporated or not, constituted before corporatisation and demutualization under sections 4A and 4B, or (b) a body corporate incorporated under the Companies Act, 1956 (1 of 1956) whether under a scheme of corporatisation and demutualization or otherwise, for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. As per Continue reading
Functions of Life Insurance Corporation of India (LIC)
Life insurance business in India was being transacted by private companies until 1956. As a result of the long felt need and in the interest of insuring public, the life insurance business was nationalized in 1956. The nationalization resulted in the establishment of Life Insurance Corporation of India (LIC) by an act of the Parliament. The Corporation was formed and began to function on September 1, 1956 by taking over 170 companies and 75 provident societies. The entire initial capital of Rs.5 crore was contributed by the government of India. The objective of nationalization was described by the then finance minister, C. D. Deshmukh as “to see that the gospel of insurance is spread as far and wide as possible so that we reach beyond the more advanced urban areas well into the hither to neglected rural areas.” The Corporation is a body corporate having perpetual succession with a common Continue reading