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Budget 2021: Centre proposes folding three securities Acts into an umbrella legislation

Finance Minister Nirmala Sitharaman has proposed merging the Securities Contracts Regulation Act, Depositaries Act, and Securities Exchange Board of India Act into a new Securities Code Act. Market experts feel this will help in faster amendment as only one Act will have to be modified when required instead of amendments across these inter-related Acts, which can be cumbersome

February 01, 2021 / 14:56 IST
National Infrastructure Pipeline has been expanded to 7,400 projects. Futher, projects worth Rs 1.1 lakh crore have been completed under the National Infra Pipeline. A bill to set up DFI providing Rs 20,000 crore will also be introduced to launch the National Asset Monetisation Pipeline to fund new infra projects.

National Infrastructure Pipeline has been expanded to 7,400 projects. Futher, projects worth Rs 1.1 lakh crore have been completed under the National Infra Pipeline. A bill to set up DFI providing Rs 20,000 crore will also be introduced to launch the National Asset Monetisation Pipeline to fund new infra projects.

Finance Minister Nirmala Sitharaman has proposed merging three securities-related Acts under one umbrella legislation in her Budget proposals presented on February 1 in Parliament. Sitharaman said the government proposed to merge the Securities Contracts Regulation Act, Depositaries Act, and Securities Exchange Board of India Act into a new Securities Code Act.

Market experts feel these measures will help in faster amendments. Otherwise, the government has to amend these inter-related Acts separately. Currently, all three acts are regulated by SEBI.

Speaking to Moneycontrol, Arka Mookerjee, Partner, J Sagar Associates, said: “The securities market code is in line with previous discussions on the NFRA. It marks a step towards streamlining multiple laws, ordinances, guidelines and regulations. If drafted and executed in a proper manner, it will be helpful to market participants and remove any possible conflicts in the regulatory framework, and will provide clarity in policymaking to investors and stakeholders.”

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“The consolidation of securities laws, existing decriminalisation of offenses under the Companies Act, and the proposed decriminalisation under the LLP Act marks an important move towards making the Indian corporate legal framework, simpler, business-friendly, and ultimately (hopefully) reducing compliance costs,” Mookerjee added.
Divaspati Singh, Partner with Khaitan & Co, says this was a much-needed reform for securities regulation. “The proposed consolidation of the Sebi Act, Depositories Act, Government Securities act and the SCRA would be a welcome change, since this may reduce the ambiguities and gaps in these different legislations, which are interconnected and interdependent,” he explained.

Ajay Shaw, Partner, DSK Legal, added: “The Securities Market Code is intended to consolidate the primary legislation governing the securities market, i.e., the Securities Contract Regulation Act, 1956; SEBI Act, 1992; Depositories Act, 1996 and Government Securities Act, 2007 under one umbrella legislation. This is line with the Government’s endeavour to simplify prevalent legislative frameworks and unify multiple legislations for better interpretation, understanding, and implementation.”

Tarun Sharma
first published: Feb 1, 2021 02:27 pm

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