NISM SEBI, Securities Laws. Updated Jun 2026, 15-minute read.

SEBI Act, SCRA and Key Regulations — Complete Study Guide for SEBI Grade A

SEBI Grade A Phase II Paper 2 (Securities Laws & Regulations) is the most critical paper — it determines who clears Phase II. This guide covers all major SEBI Acts and Regulations from an exam perspective, with provisions that are most frequently tested.

Key takeaways

SEBI Act 1992: Sections 11 (SEBI powers), 12 (registration), 12A (prohibition of manipulative practices), 15 (penalties)
SC(R)A 1956: Definition of 'securities', Section 18A (OTC derivatives valid), Section 23 (offences)
Depositories Act 1996: NSDL/CDSL framework, DP obligations, nominee rights
SEBI Takeover Code (SAST 2011): 25% trigger, creeping acquisition 5% per year, open offer at 26%
SEBI Insider Trading Regulations 2015: UPSI definition, connected persons, trading plans
SEBI ICDR 2018: IPO eligibility (3 years profitability OR QIB route), price band, ASBA
SEBI Mutual Fund Regulations 1996: AMC structure, expense ratio caps, scheme categories

SEBI Act, 1992

The SEBI Act gives SEBI quasi-legislative, quasi-judicial, and executive powers to regulate India's securities market.

Key Sections for Exam

Section 11: SEBI's general powers — protecting investor interest, promoting orderly development, regulating markets
Section 11A: Power to regulate matters relating to issue of capital, transfer, and disclosure
Section 11B: SEBI can give directions to any person — stop trading, freeze assets
Section 12: No person can act as intermediary without SEBI certificate of registration
Section 12A: Prohibition on: fraudulent transactions, market manipulation, insider trading, front-running
Section 15: Penalties for non-compliance — up to ₹25 crore or 3× profits
Section 15Z: Securities Appellate Tribunal (SAT) — appeals against SEBI orders go to SAT, then Supreme Court

Securities Contracts (Regulation) Act, 1956 (SC(R)A)

Defines 'securities' (includes derivatives since 1999 amendment)
Section 2(h): Definition of 'securities' — shares, bonds, debentures, rights, derivatives, units of collective investment schemes
Section 18A: Derivatives contracts are legal and enforceable contracts (added 1999)
Section 23: Penalties for insider trading offences under SC(R)A
Stock exchanges are recognised under SC(R)A Section 4

SEBI Takeover Code (SAST Regulations, 2011)

Governs acquisition of shares and control in listed Indian companies.

25% trigger: Acquiring 25% or more of voting rights in a listed company triggers mandatory open offer
Creeping acquisition: Existing holders of 25–75% can buy up to 5% additional per financial year without triggering open offer
Open offer size: Acquirer must make an open offer for at least 26% of total shares from public shareholders
Open offer price: Higher of: (i) Volume-weighted average price in last 60 trading days, (ii) Highest price paid in last 26 weeks, (iii) NAV (for non-listed acquiree)
Indirect acquisition: Acquiring control of a company that holds >25% in a listed company also triggers open offer

SEBI (Prohibition of Insider Trading) Regulations, 2015

UPSI (Unpublished Price Sensitive Information): Financial results, dividends, mergers/acquisitions, board changes, major contracts, regulatory actions — before public announcement
Insider: Any person in possession of UPSI — not just management but also connected persons who receive UPSI
Trading Plan: An insider can pre-declare a trading plan 6 months in advance (not during closed window) — creates a safe harbour
Closed Window: 48 hours before and until 24 hours after announcement of financial results
Structured Digital Database (SDD): All companies must maintain a digital database of UPSI recipients

SEBI ICDR Regulations, 2018 (Issue of Capital)

IPO Eligibility (Main Board): 3 years net tangible assets ≥ ₹3 crore, OR QIB route (no profitability track record needed)
QIB Allocation: ≥75% of issue reserved for QIBs in book-build issues
Price Band: In book-build, cap price ≤ 120% of floor price
Allotment: If oversubscribed in retail category, lottery system; in QIB, pro-rata
Lock-in: Promoters' pre-issue shares locked in for 3 years (18 months from Apr 2022 for up to 20% stake)

Frequently asked questions

What is the Securities Appellate Tribunal (SAT)?

SAT is a quasi-judicial body that hears appeals against SEBI orders. Any person aggrieved by a SEBI order (penalty, revocation of registration, market ban) can appeal to SAT within 45 days. SAT's decisions can be further appealed to the Supreme Court of India.

How many questions come from SEBI regulations in Phase II Paper 2?

Phase II Paper 2 (Securities Laws) is 100 marks. Approximately 30–40% comes from SEBI Takeover Code, Insider Trading Regulations, and ICDR. 20–25% from SEBI Act itself. 15–20% from SC(R)A and Depositories Act. The rest covers Companies Act provisions related to securities and PMLA/FEMA.

Written by Arpan Das.

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