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This article outlines the background leading up to the constitution of the Enquiry Committee in 1923 chaired by Sir Wilfrid Atlay to look into the affairs of the functioning of the Native Share and Stock Brokers’ Association in Bombay. The article goes on to describe some of the major observations made by the committee, the issues underlined by the Committee concerning the business of the Association and the important recommendations given by the Committee.
In 1936, forward trading was suspended. Consequently, the investing public faced huge losses and brought criticism to the exchange. This led to the Governor in Council appointing the Stock Exchange Enquiry Committee under the chairmanship of Walter B. Morison vide a resolution dated November, 24 1936 to examine the workings of the Native Share and Stock Brokers’ Association of Bombay (earlier known as Bombay Stock Exchange and now BSE) and to submit any suggestions for modifications or reorganization of the stock exchange in the interest of investors. The Morison Committee Report is a significant chapter in the history of Indian stock exchanges, shedding light on the initial attempts at reforming and structuring the market for enhanced transparency and investor protection.
The Capital Issue (Control) Act, 1947 was the pivotal act governing the issuance of capital by corporates from 1947 to 1992, until economic reforms and new economic policy in India replaced the remit this piece of legislation with that of the SEBI Act, 1992. This article explores the origin, evolution and role of the Capital Issues (Control) Act, 1947.
The Government of Bombay constituted a committee in 1948 to examine the regulation of stock exchanges in India under the chairmanship of Mr. P J Thomas. During World War II, India's stock market activity surged. The scope of commodity market speculation was limited by the Defense of India Rules, but it led to increase in stock market speculation. The government was required to decide on peacetime stock market regulation, and the Committee was aimed to assist in this decision. This report deals with the principal aspects of this problem and suggests measures like Central legislation and setting up of a competent public authority to administer the laws.
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The Government of India set up a departmental enquiry headed by Dr. P J Thomas, Economic Adviser to the Ministry of Finance. The Committee was constituted to submit a report on a suitable law to regulate the stock exchanges in India as speculative activities during and after World War II were increasing in spite of the promulgation of the Defence of India Rules, which was also about to lapse. Dr. Thomas’s report of 1948 aimed to bring about comprehensive reorganization, establishing a regulatory environment to safeguard against unhealthy speculation and manipulative practices. To accomplish these, the Committee recommended the promulgation of central legislation and the setting up of a competent public authority to administer the law. Based on the recommendation of this committee, a draft bill on stock exchange regulation was prepared by the government in 1951, which was then referred to an expert committee under the chairmanship of Mr. A.D. Gorwala. Subsequently, on the recommendations of the Gorwala committee, the Securities Contracts (Regulation) Bill, 1954, was formulated, which led to the promulgation of the Securities Contract Regulation Act (SCRA) of 1956.
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Post world war II, a boom in share prices put stock exchanges in the spotlight of attention. As India adopted its Constitution in 1950, stock exchanges became the subject of the Central Government. Simultaneously, a bill for the regulation of forward contracts was introduced in Parliament but the same did not cover trading in securities. In this background, in order to assist the government in formulating legislation for the regulation of stock exchanges and of contracts in securities, the Government of India appointed a committee headed by Mr. A D. Gorwala in 1951. The committee was mandated to submit a revised draft bill with proposals to regulate stock exchanges. The Committee submitted its report and draft bill in July 1951. The summary and recommendations of the committee were presented in Parliament on October 6, 1951. Acting on these recommendations, the Securities Contracts (Regulation) Bill was introduced in Parliament on December 24, 1954. Thereafter, the Securities Contracts (Regulation) Act was passed in 1956, with the accompanying Securities Contracts (Regulation) Rules enforced in 1957, for the regulation of stock exchanges. The report devoted one chapter to the constitution of the Stock Exchange Commission for exercising functions and discharge duties assigned under the proposed Act, namely, SCRA. This suggestion was upheld by many subsequent committees in their reports until the formation of Securities and Exchange Board of India (SEBI) in 1988.
The committee was formed by the Ministry of Finance, Department of Economic Affairs, Government of India, under the chairmanship of Shri A. D. Gorwala. The mandate of the committee was to review and report on government draft proposals and to submit a revised bill with a memorandum detailing each clause's reasons. The Committee agreed with two considerations of the government regarding the usefulness of stock exchanges and the systematic regulation of these exchanges. The report critically examined the proposal for abolishing or limiting blank transfers and suggests that the abolition or limitation of blank transfers will do more harm than good and is crucial for promoting progress and development.
The Report of the Company Law Committee of 1952 was a milestone in the evolution of company law reforms in India. It laid the foundation for a robust corporate governance structure in India by recommending comprehensive changes to the Companies Act. Emphasising transparency and accountability, it recommended reforms in the areas of disclosure norms, regulation of share capital and debentures, statutory audits, and roles and responsibilities of directors, which were crucial in fostering a conducive business environment in India.
Mr. M L Dantwala Committee was appointed by the Ministry of Commerce, Government of India, to review the workings of the Forward Market Commission, assess the role of the forward markets, and to examine and suggest what other functions can be entrusted to the Commission. The Committee recommended a fresh classification of contracts and regulatory simplification.
The J. J. Anjaria committee was established by Ministry of Finance, Department of Economic Affairs, Government of India, to assess the necessity of forward trading in securities, and suggesting measures for preventing market abuse. The committee concluded that forward trading is necessary for activating the capital market, especially given India's narrow market size. To curb abuse and manipulation, they recommended new margin regulations and minimum brokerage to prevent excessive business volume and prevent manipulators from profiting from price movements.
The term “delisting” of securities means removal of securities of a listed company from a stock exchange. Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2021 deals with the provisions of delisting of equity shares. The regulations on delisting started with a SEBI circular dated 1998 and guidelines on delisting in 2003, which were latter, converted to regulations in 2009. The regulations were reviewed and notified in 2021.
M Narasimhan Committee was formed by the Reserve Bank of India to examine the principles of a possible shift from physical to financial controls, industrial licensing and MRTP aspects. The Committee proposed reforms in industrial licensing and MRTP aspects, focusing on a shift from physical controls to financial controls to improve efficiency and achieve socially desirable results. The Committee explored three potential reforms: simplifying licensing procedures, limiting licensing areas, and replacing licensing controls with financial instruments like fiscal and credit measures.
The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations were first enacted in 1994, which made the substantial acquisition of shares and takeovers a regulated activity. The regulations was reviewed in 2011 to form SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations were notified on November 19, 1992, with the primary intent of curbing the practice of insider trading. The regulations outline the prohibited actions to establish fair market practices and were subsequently repealed with SEBI (Prohibition of Insider Trading) Regulations, 2015.
SEBI (RTA) Regulations, 1993 were notified on May 31, 1993. These regulations deal with registration, general obligations and responsibilities, procedures for inspection and procedures for action in case of default.
SEBI (Investor Protection and Education Fund) Regulations, 2009 were notified on May 19, 2009. These regulations deal with the establishment of the fund, the advisory committee for the fund, investment, accounts and audit, etc.
SEBI (Bankers to an Issue) Regulations, 1996 were notified on July 14, 1994. These regulations deal with registration, general obligations and responsibilities, inspection, procedures for action in case of default, etc.
Securities and Exchange Board of India (Settlement Proceedings) Regulations, 2018 provide an efficient dispute resolution mechanism for violations of securities laws. Given the dynamic nature of securities market, the regulations were amended from time to time to rationalize the Settlement regulations.
 Regulations, 1996.PNG)
SEBI (Mutual Funds) Regulations, 1996 were notified on May 31, 1993. These regulation deals with the registration, constitution and management of mutual funds and operation of trustees, the constitution and management of asset management company and custodian, schemes of mutual funds, investment objectives and valuation policies, general obligations, inspection and audit, procedures for action in case of default etc.
 Regulations.PNG)
SEBI (Custodian) Regulations, 1996 were notified on May 16, 1996. These regulations deal with registration, general obligations and responsibilities, inspection and audit, procedures for action in case of default, etc.