Securities Contracts (Regulation) Act : Right of appeal against refusal by stock exchanges to list

Securities Contracts (Regulation) Act,1956

Act No : 42

Section : Right of appeal against refusal by stock exchanges to list securitiesof public companies.

1[22.Right of appeal against refusal by stock exchanges to list securities of public companies. Where a recognised stock exchange acting in pursuance of power given to it by its bye-laws, refuses to list the securities of public company, the company shall be entitled to be furnished with reasons for such, refusal, and may,- (a) within fifteen days from the date on which the reasons for such refusal are furnished to it, or (b) where the stock exchange has omitted or failed to dispose within the time specified in sub-section (1) of section 73 of the Co panies Act, 1956 (1 of 1956.) (hereafter in this section referred to as the "specified time"), the application for permission for the shares or debentures be dealt with on the stock exchange, within fifteen days from the date of expiry of the specified time or within such further period not exceeding one month, as the Central Government may, on sufficient cause being shown, allow, appeal to the Central Government against such refusal, omission, failure, as the case may be, and thereupon the Central Government may, after giving the stock exchange an opportunity of being heard,- (i) vary or set aside the decision of the stock exchange, or (ii) where the stock exchange has omitted or failed to dispose of the application within the specified time, grant or refuse the permission on, and where the Central Government sets aside the decision of the recog- nised stock exchange or grants the permission, the stock exchange shall act & conformity with the orders of the Central Government.] shall be accompanied by the instrument of transfer of the ,to which it relates, the'-documentary evidence, if any, fur the company along With the instrument of transfer, and such other nature and such fees as may be prescribed. (6) On receipt of 'a reference under sub-section (4), the Law Board shall, after causing-reasonable notice to be given to the company and also to the transferor and the transferee concerned and giving them a reasonable opportunity to make their representations, if any, in writing by order direct either that the transfer shall, be registered by the.-company or that it need not be registered by it. (7) Where on a reference under, subsection (4) the Company Law Board directs that the transfer of the securities to which it relates- (a) shall be registered by the company, the company shall give effect to the direction within ten days of the receipt of the order as if it were an order Made on appeal by the Company Law Board. in exercise of the powers under section 111 of the Companies Act 1956; (1 of 1956.) (b) need not be registered by 'the company,. the company shall,, within ten days from the date of such direction, intimate the transferor and the transferee accordingly. (8) If default is made in complying with the provisions of ,this section, the company and every officer of the company who is in default shall be punishable with fine which may, extend to five thousand rupees. (9)If in any reference made under clause (c) of subsection (4) it of this section, any person, makes any statement- (a) which is false. in any material particular, knowing it to be false; or (b) which omits any material fact knowing it to be material, he shall be punishable with imprisonment for a term which a may extend to three years and shall also be liable to fine. (10) For the removal of doubts, it is hereby provided that nothing is this section shall apply in relation to any securities the instrument of transfer in respect whereof has been lodged with the company before the commencement of the Securities Contracts(Regulation) Amendment Act 1985."] 2[22A.Free transferability and registration of transfers of listed securities of companies. (1) In this section, unless the context otherwise requires,- (a) "company" means a company. whose securities. are listed on a recognised stock exchange; (b) "security" means'security of a company being a security, listed on a, recognised stock exchange but no security which is not fully paid up or on which the has a lien; (c) all other words and, expressions used in the section and not defined in this Act but defined in the Companies Act,1956 shall have the e meanings as are assigned to them in that Act. (2) Subject to the:provisions of this section, securities of companies shall be freely transferable. (3) Notwithstanding, anything contained in its articles or in section 82 or section Ill of the Companies Act, 1956, but subject to the other provisions of this section, a company may refuse to register the transfer of any of its securities in the name of the transferee on any one or more of the following grounds and on no other ground, namely:- (a) that the instrument of transferees not proper or has not been duly, stamped and executed or that the certificate relating to the security has not been delivered to the company or that any other requirement to registration of such transfer has not been complied with; 3["(b) that the transfer of the securities is in contravention of any law or rules made thereunder or any administrative instructions or conditions of listing agreement laid down in pursuance of such laws or rules; "] (c)that the transfer of the security is likely to result in such change in the composition of the Board of Directors as would be prejudicial to the interests of the company or to the public interest; (d) that the transfer of the security is prohibited by any order of any court, tribunal or other authority under any law for the time being in force. (4) A company shall, before the expiry of two months from the date on which the instrument of transfer of any of its securities is lodged with if for the purposes of registration of such transfer, not only form, in good faith, its opinion as to whether such registration ought not or ought to be refused on any of the grounds mentioned in sub-section (3) but also-- (a) if it has formed the opinion that such registration ought not to be s9 refused, effect such registration; (b) if it has formed the opinion that such registration ought to be refused on the ground mentioned in clause (a) of sub-section (3), intimate the transferor and the transferee by notice in the prescribed form about the requirements under the law which has or which have to be complied with for securing such registration; and (c) in any other case, make a reference to the Company Law Board and forward copies of such reference to the transferor and the transferee. (5) Every reference under clause (c) of sub-section (4), shall be in the prescribed form and contain the prescribed particulars and ----------------------------------------------------------------------- 1 Subs. by A 41.of 1974, s. 42 (w.e.f. 1-2-1975). 2 Ins. by Act 40 of 1985 S. 2 (w.e.f. 17.1.1986). 3 Subs. by Act 15 of 1992, s. 33 & Sch. (w.e.f.21.2.1992). 4. Subs by Act 90 of 1995, s. 23 (w.e.f. 25.1.1993). ----------------------------------------------------------------------- 140A PENALTIES AND PROCEDURE