Section 16 of The Securities and Exchange Board of India Act, 1992
- (1)Without prejudice to the foregoing provisions of 2[this Act or the Depositories Act, 1996 (22 of 1996)], the Board shall, in exercise of its powers or the performance of its functions under 2[this Act or the Depositories Act, 1996 (22 of 1996)], be bound by such directions on questions of policy as the Central Government may give in writing to it from time to time: Provided that the Board shall, as far as practicable, be given an opportunity to express its views before any direction is given under this sub-section.
- (2)The decision of the Central Government whether a question is one of policy or not shall be final.
Summary
- The Central Government has the authority to issue written directions to the Board regarding questions of policy.
- The Board is legally bound to follow these policy directions while exercising its powers and performing its duties.
- Whenever it is practical, the Board will be given a chance to share its views and opinions before the government issues a policy direction.
- If there is ever a disagreement about whether a particular issue actually qualifies as a question of policy, the Central Government's decision on the matter is final.
Practical examples
FAQ
1. Can the Board ignore a direction from the Central Government if they disagree with it?
No, the Board is bound by the directions given by the Central Government on questions of policy.
2. Does the government have to consult the Board before issuing a direction?
The government must give the Board an opportunity to express its views before issuing a direction, as far as it is practicable to do so.
3. Who has the final word if there is an argument over what counts as a policy question?
The Central Government has the final decision on whether a question is one of policy or not.
Test yourself
Q1.Under Section 16 of The Securities and Exchange Board of India Act, 1992, what type of directions is the Board bound to follow when issued by the Central Government?
Q2.Under Section 16 of The Securities and Exchange Board of India Act, 1992, what right does the Board generally have before the Central Government issues a policy direction?
Q3.Under Section 16 of The Securities and Exchange Board of India Act, 1992, who resolves a dispute over whether a specific issue is truly a question of policy?
Q4.Under Section 16 of The Securities and Exchange Board of India Act, 1992, the Central Government can issue binding policy directions. This power applies to the Board's functions under this Act, but the text also explicitly cross-references one other Act that is subject to these same government directions. Which Act is it?