Securities Contracts Regulation Act Quiz

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Questions and Answers

What is the penalty for a stock broker failing to redress investor grievances within the stipulated time?

One crore rupees for each day of failure or one lakh rupees, whichever is less

One lakh rupees for each day of failure or one crore rupees, whichever is less (correct)

One lakh rupees for each day of failure or one crore rupees, whichever is more

Five lakh rupees for each day of failure or ten crore rupees, whichever is more

What is the consequence if a registered stock broker fails to segregate a client's securities or moneys?

A penalty not exceeding two crore rupees

A penalty that is subject to negotiation

A penalty not exceeding fifty crore rupees

A penalty not exceeding one crore rupees (correct)

What penalty does a company face for failing to comply with listing or delisting conditions?

Ten crore rupees

Fifty lakh rupees

Twenty-five crore rupees (correct)

Five crore rupees

When was the penalty structure related to the failure of redressing investor grievances amended?

2004 Signup and view all the answers

Which of the following is NOT a penalty outlined for a broker or sub-broker?

Penalty for engaging in insider trading Signup and view all the answers

What does 'government security' refer to?

A security issued by the Central or State Government to raise public loan Signup and view all the answers

Which of the following is included in the definition of 'option in securities'?

A contract for the right to buy or sell securities in the future Signup and view all the answers

How is a 'recognised stock exchange' defined?

A stock exchange recognized by the Central Government Signup and view all the answers

What is encompassed in the term 'scheme' concerning a recognised stock exchange?

A corporatisation or demutualisation scheme involving share issues and trading rights Signup and view all the answers

According to the content, which of the following is considered part of 'securities'?

Marketable securities such as stocks and bonds Signup and view all the answers

Which of the following best explains the meaning of 'prescribed' in this context?

Established through regulatory rules under this Act Signup and view all the answers

What does 'derivative' refer to in the context provided?

An investment based on other securities Signup and view all the answers

What must every application under sub-section (1) be accompanied by?

A copy of the bye-laws of the stock exchange Signup and view all the answers

Which aspect relates to the powers and duties of the office bearers of the stock exchange?

The rules relating to the governance and management Signup and view all the answers

What is one of the criteria for the stock exchange to receive recognition from the Central Government?

It must show compliance with fair dealing conditions Signup and view all the answers

The process for nominating authorized representatives and clerks is covered under the regulations for what?

Partnership registration as members Signup and view all the answers

Which of the following is NOT a duty outlined for the governing body of a stock exchange?

Managing the financial investments of the exchange Signup and view all the answers

What might be a condition imposed by the Central Government concerning the stock exchange's membership?

Defining the qualifications for membership Signup and view all the answers

What must the Securities and Exchange Board of India do before rejecting a scheme under sub-section (2)?

Provide a reasonable opportunity of being heard Signup and view all the answers

What is a primary purpose of ensuring conformity of rules and bye-laws for stock exchanges applying for registration?

To ensure fair dealing and protect investors Signup and view all the answers

Which statement illustrates the importance of recognition granted to the stock exchange by the Central Government?

It is in the interest of trade and public welfare Signup and view all the answers

How is the rejection order of a scheme communicated by the Securities and Exchange Board of India?

Published in the Official Gazette Signup and view all the answers

What aspect governs the exclusion, suspension, and expulsion of members from the stock exchange?

The bye-laws of the stock exchange Signup and view all the answers

What is one restriction the Securities and Exchange Board of India may impose on shareholders who are also stock brokers?

Restrict their voting rights Signup and view all the answers

What is the maximum number of stock broker representatives allowed on the governing board of the recognised stock exchange?

One-fourth of the total strength Signup and view all the answers

What must accompany the order made under sub-section (6) regarding shareholder restrictions?

Publication in the Official Gazette Signup and view all the answers

What may influence the Securities and Exchange Board of India's decision to approve or reject a scheme?

The interest of traders and the public Signup and view all the answers

Under what condition can the Securities and Exchange Board of India reject a scheme?

If it is deemed against the interest of the trade and public Signup and view all the answers

Which document must the Securities and Exchange Board of India refer to when making orders related to schemes?

The Companies Act, 1956 Signup and view all the answers

What options may be restricted regarding the governing board for shareholders of the recognised stock exchange?

Appointment of representatives on the governing board Signup and view all the answers

What is the consequence of the Securities and Exchange Board of India's order once it is published in the Official Gazette?

It becomes effective immediately Signup and view all the answers

What is required before a person can carry on the business of dealing in securities in a state where section 13 has not been declared to apply?

A licence granted by the Securities and Exchange Board of India Signup and view all the answers

Under what condition can the Central Government issue a notification to apply section 13 to a state or area?

If it is deemed expedient in the interest of trade or public interest Signup and view all the answers

Which of the following does not require a licence for securities dealing according to the content?

A member of a recognized stock exchange Signup and view all the answers

What is the status of spot delivery contracts in relation to sections 13, 14, 15, and 17?

They are excluded from these sections. Signup and view all the answers

What can the Central Government do regarding spot delivery contracts if deemed necessary?

Regulate them under section 17 through a notification Signup and view all the answers

What should the Central Government consider before regulating dealings in securities in a state?

How securities are currently being dealt with in that area Signup and view all the answers

Which of the following statements is true regarding the licensing process for dealing in securities?

The Securities and Exchange Board of India is responsible for licensing. Signup and view all the answers

What might prompt the Central Government to regulate spot delivery contracts?

To protect the interests of the trade or public Signup and view all the answers

What are the implications of sub-section (3) regarding restrictions on securities dealings?

It does not apply to recognized stock exchange members. Signup and view all the answers

If no notification is issued by the Central Government, what can be assumed about the state or area?

It is open to unrestricted securities trading. Signup and view all the answers

Signup and view all the answers

Study Notes

Securities Contracts (Regulation) Act, 1956

Purpose: To prevent undesirable transactions in securities by regulating the business of dealing in them.
Short Title: The Securities Contracts (Regulation) Act, 1956.
Extent: The Act extends to the whole of India.
Commencement: The Act comes into force on a date notified by the Central Government in the Official Gazette.

Definitions

Contract: A contract for or relating to the purchase or sale of securities.
Corporatisation: The succession of a recognized stock exchange by another stock exchange.
Demutualisation: The segregation of ownership and management from the trading rights of members of a recognized stock exchange.
Derivative: Includes securities derived from a debt instrument, share, loan (secured or unsecured), risk instrument, or contract for differences, or any other form of security; or a contract deriving value from the prices or index of underlying securities.
Government Security: A security created and issued by the Central or State Government for raising a public loan, with specified forms.
Member: A member of a recognized stock exchange.
Option in Securities: A contract for the purchase or sale of a right to buy or sell securities in the future (including teji, mandi, teji mandi, galli, put, call, or put and call in securities).
Prescribed: Defined by rules under the Act.
Recognized Stock Exchange: A stock exchange recognized by the Central Government.
Rules: Rules relating to the constitution and management of a stock exchange, including its memorandum and articles of association (if incorporated).
Securities Appellate Tribunal: A tribunal established as per the Securities and Exchange Board of India Act, 1992.
Securities: Includes shares, scrips, stocks, bonds, debentures, debenture stock, or other marketable securities of similar nature of any incorporated company, derivative, units of collective investment scheme, security receipts, mutual fund instruments, government securities, and rights or interest in securities.
Spot Delivery Contract: A contract requiring actual delivery of securities and payment on the same or next day.
Stock Exchange: A body (incorporated or not) constituted for dealing in securities.

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Description

Test your knowledge on the Securities Contracts (Regulation) Act of 1956, which aims to control undesirable transactions in securities in India. This quiz covers key definitions such as contract, corporatisation, demutualisation, and derivatives. See how well you understand this important legislation!