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Abstract:
In the 21st century we are living in, the Indian Economy is been at it’s peak. The introduction of Securities Market due to Liberalization, Privatisation & Globalisation (LPG) in the Indian Economy has resulted in stabilizing the Inflow and outflow of monetary transactions. The major roles has been played by the Securities & the Venture Capital Funds in the Securities Market. In this short article we are going to analyse the Legislative Framework of Securities Market & Venture Capital Funds. The legislative framework will consist of history, Legislative Acts of Parliament, Securities Exchange Board India (SEBI) Regulations and Foreign Direct Investment (FDI) Policy.
Keywords: Securities Market, Venture Capital Funds, SEBI,
SECURITIES MARKET
HISTORY:
The American Civil War broke out in 1861 which cut off supply of cotton from the USA to Europe. This heightened the demand for cotton from India. Cotton prices increased. Exports of cotton grew; payments were received in bullion. There was first boom in Indian stocks during 1861 – 1865 when 125 new companies went public on the background of American Civil War as the war brought about an upsurge of Indian cotton exports to Europe in place of American cotton. Banks and financial institutions also attracted investors. India’s first bubble bursting was in 1865 when the Indian stock market crashed after the end of American Civil War. In India, the initial regulation of securities market are regulated by the legislative acts of parliament mentioned below.
The Indian Securities Act, 1920: It was an important legislation on securities but it was the law mainly relating to Government securities in India.
The Capital Issues (Control) Act, 1947: After the Independence, it was vital enactment to control capital issues of the country in the line of other laws to control foreign exchange and export & import. First time a comprehensive concept of corporate securities came into existence.
The Securities Contract (Regulation) Act, 1956: It was mainly followed the pattern of the Prevention of Fraud (Investment) Act, 1939 of United Kingdom.
SECURITIES CONTRACTS (REGULATION) ACT, 1956
First comprehensive law on securities in India is the Securities Contracts (Regulation) Act, 1956.
The term securities include shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate, derivative, units or any other instrument issued by any collective investment scheme to the investors in such schemes, “security receipt”, units or any other such instrument issued to the investors under any mutual fund scheme. Government securities or such other instruments declared by the Central Government to be securities and rights or interest in securities Any certificate or instrument issued to an investor by any issuer being a special purpose distinct entity which possesses any debt or inflow of monetary value, including mortgage debt, assigned to such entity, and acknowledging beneficial interest of such investor in such debt or receivable, including mortgage debt, as the case may be.
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