Companies Act, 1956 — Sections 55-A & 60-B(9) –

June 22nd, 2013

Companies Act, 1956 — Sections 55-A & 60-B(9) — Transfer of securities (debentures) — Listed public companies — Jurisdiction of Securities Exchange Board of India (SEBI) — Power of administration of sections 56, 62, 63 & 73 with respect to Optionally Fully Convertible Debentures (OFCD) lies with SEBI and not with Central Government as they relate to issue of securities — Explanation to section 55A cannot be construed to mean that SEBI has no power in relation to the prospectus and the issue of securities by an unlisted public company if the securities are offered to more than 49 persons.

HELD: The mere fact that emphasis has been given to Sections 68A, 77A and 80A, does not mean the exclusion of Section 60B from Section 59 to 81. We, therefore, hold that, so far as the provisions enumerated in the opening portion of Section 55A of the Companies Act, so far as they relate to issue and transfer of securities and non-payment of dividend is concerned, SEBI has the power to administer in the case of listed public companies and in the case of those public companies which intend to get their securities listed on a recognized stock exchange in India. In any other case, i.e. rest of the matters, that is excluding matters relating to issue and transfer of securities and non-payment of dividend be administered by the Central Government in the case of listed public companies and those companies which intend to get their securities listed on any recognized stock exchange in India. Explanation to that section further clarifies the position so as to remove doubts, saying all powers relating to other matters including the matters relating to prospectus, statement in lieu of prospectus, return of allotment, issue of shares and redemption of irredeemable preference shares, should be exercised by the Central Government, Tribunal or the Registrar of Companies, as the case may be. Section 55A, therefore, makes it clear that SEBI has the power to administer the above mentioned select provisions of the Companies Act relating to matters specified therein. Contention raised by Saharas that without regulations being framed under Section 642(4) of the companies Act, SEBI cannot exercise powers of administration, is totally unfounded and is rejected.

Sahara India Real Estate Corporation Limited v. Securities and Exchange Board of India[Bench Strength 2], Civil Appeal No. 9813/2011(31/08/2012), 2012(8) JT 385: 2012(8) SCALE 101: 2012(6) Supreme 400: 2012(6) SLT 371: 2012(174) CompCas 154: 2013(1) SCC 1 [K.S. Radhakrishnan, J.: Jagdish Singh Khehar, J.]

Entry Filed under: Commercial Laws