Panel set up to amend Sebi Act

After the Companies Act, 1956, it is now the turn of the Securities and Exchange Board Of India Act, 1992 to be revamped. Sebi has set up a committee headed by former Chief Justice of India H J Kania for amending the Sebi Act, 1992, to suit the changing conditions in the capital market.

Provisions relating to penalties, prosecution of the defaulters, compensation to the investors are expected to be examined.

In addition, the panel would also look at the overlapping provisions of the Companies Act and the Sebi Act, a committee member said.

"The capital market has been in a state of continuous flux, with new developments and situations arising every day but the Sebi Act, which was last amended in 1992 seems outdated. In order to enable the Act to deal with emerging scenario effectively, the committee has been constituted," he added.

The member, however, added that the committee would restrict its recommendations to the provisions of the Act and various Sebi regulations and guidelines would not be touched.

The committee, comprise 20 members from various organisations and ministries including Sebi, ministry of company affairs, Institute of Company Secretaries of India and Institute of Chartered Accountants of India. The committee has been given time till February to submit its report.

It has sought views of various stake-holders like stock exchanges, market intermediaries and merchant bankers, and would firm up its recommendations, once it gets the feedback.

The panel, would also consider suggestions of the Joint Parliamentary Committee on the 2001 stock scam, and the Justice Dhanuka report on capital market regulations. The panel moots to examine various provisions including those relating to prosecution of the defaulters.

"The attempt would be to hasten the process of prosecution to clear the backlog of cases, along with prescribing higher penalties for various defaults in view of the various stock market scams that have surfaced in recent years," a source added.

He said that issues like compensating the investor for losses faced due to companies violating the law and asking the guilty party to contribute in compensating the investor, could be looked into.

"Even though we do have a mechanism for compensating investors, it is not effective enough, with many investors not being content with the relief offered to them," the source added.

Sources said that the overlapping provisions of the Companies Act and the Sebi Act were causing confusion.