Page 64 - DMGT401Business Environment

Unit 2: Industrial Policy and Regulatory Structure

16. Saurashtra-Kutch Notes
17. Uttar Pradesh
18. Vadodara
19. Pune

2.3.3 Recognition of Stock Exchange

The Securities Contract Regulation Act, 1956 provides inter alia for recognition of stock exchanges
and regulation of their functioning, licensing dealers, recognition of contracts, controlling
speculation, restricting rights of equitable holders of shares and empowering the government
to compel any public limited company to get its shares listed. Under the Securities Contract
Regulation Act, the government has promulgated the Securities Contract (Rules) 1957 for carrying
into effect the objects of legislations. The rules are statutory and constitute a code of standardised
regulations applicable to all recognised exchanges.
2.3.4 Listing of Securities

Listing of Securities on a recognised stock exchange means that they are admitted on a recognised
stock exchange which provides a forum for purchase and sale of securities.

According to Section 73 of the Companies Act, 1956, every company intending to offer shares or
debentures to the public for subscription by issue of a prospectus has to first make an application
to one or more recognised stock exchanges for their listing.

2.3.5 Obligation on Listed Companies

Listed companies have to follow the following obligations:
1. Subject themselves to various regulatory measures of SEBI and stock exchanges;
2. Submit required books, documents and papers and disclose any other information which
the stock exchange asks for;
3. Send to all shareholders the notices of Annual General Meetings, Annual Reports etc., and
4. Place their securities with the public.

Notes 1. Stock Brokers: Stock Brokers are members of recognised stock
exchanges who buy, sell or otherwise deal in securities. For a broker
to deal in securities on a recognized stock exchange, it is obligatory
that he should be registered as stock broker with SEBI.
2. Sub-brokers: A sub-broker is not a member of a stock exchange. He
acts as an agent of a stock broker or otherwise assist the investor in
buying, selling or dealing in securities through such the stock broker.
For dealing in securities, a sub broker must obtain a certificate of
registration from SEBI.

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