Application Securities Contract (Regulation) Act & its dependence on definition of
securities
The formal definition of Securities is found in § 2(h) of the Securities Contracts (Regulation) which
lends an inclusive definition, comprising all shares, scrips, stocks, bonds, debentures, debenture
stock or other marketable securities of a like nature in or of any incorporated company or other
body corporate; Derivatives; Special Purpose Instruments; Government securities; and such
other instruments as may be declared by the Central Government to be securities; and rights or
interests in securities.
In Sudhir Shantilal Mehta v. CBI it was observed by Supreme Court that, the definition of
‘securities’ is an inclusive one. It is not exhaustive. It takes within its purview not only the matters
specified therein but also all other types of securities as commonly understood. The term
‘securities’, thus, should be given an expansive meaning.
§ 24 of the Companies Act, 2013 empower SEBI to regulate the issue and transfer of securities
by listed companies or those companies which intend to get their securities listed on any
recognised stock exchange in India. In this regard § 2(8l) of the Companies Act, 2013 defines
“securities” means the securities as defined in clause (h) of § 2 of the Securities Contracts
(Regulation) Act, 1956, further the power of SEBI to regulate ‘securities’ under SEBI Act, also
accord to same definition.
Thus, for the Application of SCRA Act or SEBI Act, what is important is to note whether the
instrument in question is ‘Securities’ as defined under this act.
