Regulatory Framework and Securities Law
What this domain tests
Regulatory Framework and Securities Law tests SEBI’s role and the listed-company regime: SEBI Act, SCRA, Depositories Act, LODR, insider trading, and takeover rules.
Core rules to know
- SEBI regulates securities markets under the SEBI Act, 1992; the SCRA, 1956 governs trading in securities and recognised exchanges; the Depositories Act, 1996 governs dematerialisation and depository participants.
- LODR, 2015 requires timely disclosure of material events, corporate governance compliance, and periodic filings by listed entities.
- PIT Regulations, 2015 prohibit insider trading and require trading-window closure and pre-clearance for designated persons.
- SAST Regulations, 2011 require disclosure when an acquirer together with persons acting in concert crosses 5% voting rights, and a mandatory open offer when acquiring 25% or more or control.
Worked example
An acquirer buys 6% of a listed company. Because it has crossed the 5% threshold, it must make the prescribed disclosure to the stock exchanges and the target company within two working days. If the same acquirer later seeks 25% or control, a mandatory open offer is triggered under SAST; a 6% stake alone does not trigger the open offer.
Traps that cost marks
Do not confuse LODR event disclosure with PIT trading restrictions. Do not apply the 25% open-offer threshold to a mere 5% disclosure. Do not ignore persons acting in concert when calculating shareholding. Do not assume SEBI approval is needed for every acquisition; the rules impose disclosure and offer obligations, not universal prior approval.