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The Securities Law Amendment Ordinance, which seeks to give the regulator additional powers to deal with investment frauds and seeks to strengthen its ability to recover penalties as well as gather evidence, may have to be promulgated for the third time. An ordinance is a temporary legislative measure that is put in place till a law is passed in Parliament.
The draft law is still stuck with a standing committee and may now require a third ordinance so that Sebi’s new powers are not suddenly taken away, according to Finance Minister P Chidambaram, speaking at the National Stock Exchange’s 20th anniversary celebrations in Mumbai.
“The standing committee’s report ought to have come on the opening day of Parliament. Today, we are on the 14th of December. This session of Parliament will end on the 20th of December and the standing committee has not yet given its report. If the report does not come in time and I am not able to pass the Bill to replace the Ordinance, then I am forced to do a nearly unprecedented thing of re-promulgating an Ordinance for the third time,” he said.
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There have been some previous cases of an ordinance being promulgated multiple times. The Depositories Ordinance of 1995 and the Industrial Disputes (Amendment) Ordinance of 1996 were promulgated four times each; according to Presidential Legislation in India, a book by Shubhankar Dam.
The Ordinance gives Sebi the powers to conduct search and seizure operations. It has also provided for more powers to tackle investment frauds, in addition to ordering attachment of properties. The ordinance has been promulgated twice so far.
The finance minister added the FSLRC (Financial Sector Legislative Reforms Commission), which seeks to review and restructure the financial regulatory framework is also seeing progress. Among other things, the commission also examined the appropriate means of oversight of the regulators and their autonomy from the government.
The non-legislative aspect of the recommendations are being implemented, he said. The government is adopting an approach which would make use of task forces in addition to consultations in a bid to tackle the legislative aspects of the bill as well.
The minister feared that the forthcoming elections would throw up a fractured mandate. “I’m not sure that the elections will throw up a government with a solid majority…,” he said.
