Additional Topics
Contracts in notified areas illegal in certain circumstances (Section 13)
It provides that if the Central Government is satisfied, having regard to the nature or the volume of
transactions in securities in any State or area, that it is necessary so to do, it may, by notification
in the Official Gazette,declare that section 13 to apply to such State or States or area, and there
upon every contract in such State or States or area which is entered into after date of the notifica-
tion shall be illegal.
However, any contract entered into between members of two or more recognised stock exchanges
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in such State or States or area, shall be allowed subject to such terms and conditions as may be stipu-
lated by the respective stock exchanges with prior approval of the SEBI;
Additional trading floor (Section 13A)
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It stipulates that a stock exchange may establish additional trading floor with the prior approval of
the SEBI in accordance with the terms and conditions stipulated by the SEBI.
Explanation : For the purposes of this section, “additional trading floor” means a trading ring or
trading facility offered by a recognised stock exchange outside its area of operation to enable the
investors to buy and sell securities through such trading floor under the regulatory framework of that
Members may not act as principals in certain circumstances (Section 15)
It provides that no member of a recognised stock exchange shall in respect of any securities enter
into any contract as a principal, unless he has secured the consent or authority of such person and
discloses in the note, memorandum or agreement of sale or purchase that he is acting as a princi-
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pal.
However where the member has secured the consent or authority of such person otherwise than
in writing he shall secure written confirmation by such person or such consent or authority within
three days from the date of the contract.
However no such written consent or authority of such person shall be necessary for closing out any
outstanding contract entered into by such person in accordance with the byelaws, if the member
discloses in the note, memorandum or agreement of sale or purchase in respect of such closing out
that he is acting as a principal.
RECOVERY OF AMOUNTS BY ADJUDICATING OFFICER
Explanation – For the purposes of recovery, the person’s movable or immovable property or monies
held in bank accounts shall include any property or monies held in bank accounts which has been
transferred, directly or indirectly on or after the date when the amount specified in certificate had
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become due, by the person to his spouse or minor child or son’s wife or son’s minor child, other-
wise than for adequate consideration, and which is held by, or stands in the name of, any of the
persons aforesaid; and so far as the movable or immovable property or monies held in bank ac-
counts so transferred to his minor child or his son’s minor child is concerned, it shall, even after
the date of attainment of majority by such minor child or son’s minor child, as the case may be,
continue to be included in the person’s movable or immovable property or monies held in bank ac-
counts for recovering any amount due from the person under this Act.
Further the Recovery Officer shall be empowered to seek the assistance of the local district admin-
istration while exercising his powers.