The finance ministry on Sunday confirmed President Pranab Mukherjee had re-promulgated the Securities Laws (Amendment) Ordinance, 2014, that seeks to empower the Securities & Exchange Board of India (Sebi) to effectively check illegal deposit taking and Ponzi schemes.
“The promulgation of this ordinance would not only ensure the continuance of the actions already initiated by Sebi but also strengthen its enforcement powers, while bringing inbuilt checks and balances,” the ministry said.
The promulgation happened under clause (1) of the Article 123 of the Constitution on Friday after the Union Cabinet gave its nod on Thursday.
The ordinance, besides keeping in force the amendments that gave the legal backing to Sebi for powers to respond to the growing menace of illegal deposit taking and Ponzi schemes, introduced additional amendments based on the recommendations of Parliament’s Standing Committee on Finance and additional proposals received from Sebi. The additional amendments say the Sebi chairman shall record reasons in writing while issuing an order for search and seizure, and that the authorised officer may requisition the services of a police officer or any officer of the Central government to assist. It also empowers the Sebi board to recall and enhance a penalty imposed by the adjudicating officer. The Securities Laws (Amendment) Ordinance, 2013, was first promulgated on July 18, 2013. The Securities Laws (Amendment) Bill, 2013, was introduced in the Lok Sabha on August 12, 2013, to replace the ordinance.
Since the session concluded without consideration and passing of the Bill, a second ordinance was promulgated on September 16. It lapsed on January 16, 2014, after the expiry of six weeks from December 5, 2013, the date of commencement of the winter session.
Since Sebi lost the powers, the validity of cases where action had been taken could not be challenged. But in other cases, where a final decision was still pending, Sebi could not move forward. That is why it has been re-promulgated.