3. Establishment and incorporation of Board.—(1) With effect from such date as the Central
Government may, by notification, appoint, there shall be established, for the purposes of this Act, a Board
by the name of the Securities and Exchange Board of India.
(2) The Board shall be a body corporate by the name aforesaid, having perpetual succession and a
common seal, with power subject to the provisions of this Act, to acquire, hold and dispose of property,
both movable and immovable, and to contract, and shall, by the said name, sue or be sued.
(3) The head office of the Board shall be at Bombay.
(4) The Board may establish offices at other places in India.
4. Management of the Board.—(1) The Board shall consist of the following members, namely:—
(a) a Chairman;
(b) two members from amongst the officials of the 3
[Ministry] of the Central Government dealing
with Finance 4
[and administration of the Companies Act, 1956 (1 of 1956)];
(c) one member from amongst the officials of 5
[the Reserve Bank];
6
[(d) five other members of whom at least three shall be the whole-time members,]
to be appointed by the Central Government.
(2) The general superintendence, direction and management of the affairs of the Board shall vest in a
Board of members, which may exercise all powers and do all acts and things which may be exercised or
done by the Board.
(3) Save as otherwise determined by regulations, the Chairmen shall also have powers of general
superintendence and direction of the affairs of the Board and may also exercise all powers and do all acts
and things which may be exercised or done by that Board.
(4) The Chairman and members referred to in clauses (a) and (d) of sub-section (1) shall be appointed
by the Central Government and the members referred to in clauses (b) and (c) of that sub-section shall be
nominated by the Central Government and the 7
[Reserve Bank] respectively.
(5) The Chairman and the other members referred to in clauses (a) and (d) of sub-section (1) shall be
persons of ability, integrity and standing who have shown capacity in dealing with problems relating to
securities market or have special knowledge or experience of law, finance, economics, accountancy,
administration or in any other discipline which, in the opinion of the Central Government, shall be useful
to the Board.
5. Term of office and conditions of service of Chairman and members of the Board.—(1) The
term of office and other conditions of service of the Chairman and the members referred to in clause (d)
of sub-section (1) of section 4 shall be such as may be prescribed.
(2) Notwithstanding anything contained in sub-section (1), the Central Government shall have the
right to terminate the services of the Chairman or a member appointed under clause (d) of sub-section (1)
1. Subs. by Act 9 of 1995, s. 2, for sub-section (2) (w.e.f. 25-1-1995).
2. Subs. by Act 22 of 1996, s. 30 and the Schedule, for “the Securities Contracts (Regulation) Act, 1956 (42 of 1956)”
(w.e.f. 20-9-1995).
3. Subs. by Act 59 of 2002, s. 3, for “Ministries” (w.e.f. 29-10-2002).
4. Subs. by s. 3, ibid., for “and Law” (w.e.f. 29-10-2002).
5. Subs. by s. 3, ibid., for “the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, 1934
(2 of 1934)” (w.e.f. 29-10-2002).
6. Subs. by s. 3, ibid., for clause (d) (w.e.f. 29-10-2002).
7. Subs. by s. 3, ibid., for “Reserve Bank of India” (w.e.f. 29-10-2002).
6
of section 4, at any time before the expiry of the period prescribed under sub-section (1), by giving him
notice of not less than three months in writing or three months’ salary and allowances in lieu thereof, and
the Chairman or a member, as the case may be, shall also have the right to relinquish his office, at any
time before the expiry of the period prescribed under sub-section (1), by giving to the Central
Government notice of not less than three months in writing.
6. Removal of member from office.—1*** The Central Government shall remove a member from
office if he—
(a) is, or at any time has been, adjudicated as insolvent;
(b) is of unsound mind and stands so declared by a competent court;
(c) has been convicted of an offence which, in the opinion of the Central Government, involves a
moral turpitude;
2* * * * *
(e) has, in the opinion of the Central Government, so abused his position as to render his
continuation in office detrimental to the public interest:
Provided that no member shall be removed under this clause unless he has been given a
reasonable opportunity of being heard in the matter.
7. Meetings.—(1) The Board shall meet at such times and places, and shall observe such rules of
procedure in regard to the transaction of business at its meetings (including quorum at such meetings) as
may be provided by regulation.
(2) The Chairman or, if for any reason, he is unable to attend a meeting of the Board, any other
member chosen by the members present from amongst themselves at the meeting shall preside at the
meeting.
(3) All questions which come up before any meeting of the Board shall be decided by a majority
votes of the members present and voting, and, in the event of an equality of votes, the Chairman, or in his
absence, the person presiding, shall have a second or casting vote.
3
[7A. Member not to participate in meetings in certain cases.—Any member, who is a director of
a company and who as such director has any direct or indirect pecuniary interest in any matter coming up
for consideration at a meeting of the Board, shall, as soon as possible after relevant circumstances have
come to his knowledge, disclose the nature of his interest at such meeting and such disclosure shall be
recorded in the proceedings of the Board, and the member shall not take any part in any deliberation or
decision of the Board with respect to that matter.]
8. Vacancies, etc., not to invalidate proceedings of Board.—No act or proceeding of the Board
shall be invalid merely by reason of—
(a) any vacancy in, or any defect in the constitution of, the Board; or
(b) any defect in the appointment of a person acting as a member of the Board; or
(c) any irregularity in the procedure of the Board not affecting the merits of the case.
9. Officers and employees of the Board.—(1) The Board may appoint such other officers and
employees as it considers necessary for the efficient discharge of its functions under this Act.
(2) The term and other conditions of service of officers and employees of the Board appointed under
sub-section (1) shall be such as may be determined by regulations.