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Lapse of Securities Laws (Amendment) Second Ordinance, 2013

Finsec Law Advisors

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The Securities Laws (Amendment) Second Ordinance, 2013 was promulgated in July 2013 and re-promulgated in September 2013, to give additional powers to SEBI. However, it lapsed on 15 January, 2014. Consequently, some of the provisions that had been newly framed under the Ordinance have become ineffective.

For instance, the Ordinance empowered the Chairman of SEBI to authorize an investigating authority or any other officer of the regulator to conduct search and seizure. Further, it provided for establishment of special courts for speedy trials, modes for recovery of amounts like attachment orders, arrest of person and appointment of receiver. These powers were not there with SEBI earlier and with the lapse of the Ordinance, SEBI has lost them. However, there are certain implied powers under the SEBI Act, 1992 and the Ordinance had merely inserted provisions clarifying or expanding the same.

Prior to the Ordinance SEBI had the implicit power to pass a direction of disgorgement which was explicitly provided for in the Ordinance. Similarly, SEBI had implied powers to pass consent orders. Therefore, despite the lapse of the Ordinance, SEBI is still empowered to pass a disgorgement order or a consent order.