Finance Minister Nirmala Sitharaman tabled the Securities Markets Code (SMC) Bill in Lok Sabha on Thursday. The bill has been referred to the Parliamentary Standing Committee on Finance for further evaluation. The Bill aims to consolidate, rationalise and replace the three Securities Act -- the SEBI Act, 1992, the Depositories Act, 1996, and the Securities Contracts (Regulation) Act, 1956 — into a single, consolidated code and provide a modern statutory framework for investor protection and capital mobilisation.
The proposed Bill aims to bring better governance, ensure better investor protection and inter-regulatory coordination and also decriminalize several provisions to promote ease of doing business.
The Bill seeks to strengthen governance and regulatory oversight at SEBI. The bill raises the maximum strength of the SEBI board to 15 members from the current nine and introduces stricter conflict-of-interest norms, including disclosure of direct or indirect interests, covering family members. A new ground for removal of board members has been added in cases where personal interests may prejudice official functions. The code also expands SEBI’s mandate to include periodic performance reviews, regulatory impact assessment, capacity building and research.
The bill has also proposed decriminalisation of Securities Laws. “SMC has bucketed the contraventions into two separate categories. The first category of contraventions is violations of prohibition of fraudulent and unfair practices, which shall not attract criminal liability. This category of contraventions has been effectively decriminalized and shall only attract civil penalties. The second category of contraventions called ‘market abuse’ are graver violations that affect market integrity and affect public interest adversely,” confirmed sources from the Ministry of Finance.
While presenting the Union Budget 2021-22 in Parliament, Sitharaman had announced the government's plan to merge multiple existing laws into a single, rationalised framework.