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      Question

      Under Section 12A of the Securities Contracts

      (Regulation) Act (SCRA), 1956, if the Board (SEBI) is satisfied that it is necessary in the interest of investors or the securities market, it has the power to:
      A Approve the bye-laws of a non-recognized stock exchange. Correct Answer Incorrect Answer
      B Issue directions to any person or class of persons associated with the securities market. Correct Answer Incorrect Answer
      C Increase the number of partners in a stockbroking firm to 100. Correct Answer Incorrect Answer
      D Summarily arrest any member of a stock exchange for technical defaults. Correct Answer Incorrect Answer
      E Compulsorily merge two private limited companies. Correct Answer Incorrect Answer

      Solution

      Section 12A of the SCRA, 1956, gives SEBI the "Power to issue directions." If SEBI finds, after an inquiry, that it is necessary in the interest of investors, the securities market, or to prevent the affairs of a stock exchange from being conducted in a detrimental manner, it can issue written directions to any stock exchange, clearing corporation, or person associated with the market. This is one of the most powerful "emergency" and "regulatory" provisions in the Act.

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