Section 5 of The Securities and Exchange Board of India Act, 1992
- (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) 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.
↩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 Sch., 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).
Summary
- The terms of office and service conditions for the Chairman and the five other members are set by prescribed rules.
- The Central Government can fire the Chairman or any of the five other members before their term ends.
- To fire them, the government must give three months of written notice or pay them three months of salary and allowances instead.
- The Chairman or any of those five members can also choose to quit before their term ends.
- To quit, they must give the Central Government at least three months of written notice.
Practical examples
FAQ
1. Can the Central Government remove the Chairman before their term is naturally over?
Yes, at any time before the expiry of the period, by giving notice or paying a salary in lieu of notice.
2. How much notice must the government give to terminate a member?
Not less than three months in writing, or three months of salary and allowances.
3. Can a member quit whenever they want?
They have the right to relinquish their office, but they must give the government three months of written notice.
Test yourself
Q1.Under Section 5 of The Securities and Exchange Board of India Act, 1992, if the Central Government wishes to terminate the Chairman immediately without a notice period, what must it provide?
Q2.Under Section 5 of The Securities and Exchange Board of India Act, 1992, how much written notice must the Chairman give the Central Government if they wish to relinquish their office early?
Q3.Under Section 5 of The Securities and Exchange Board of India Act, 1992, which members' terms of office and conditions are governed by this specific section, directly referencing Section 4?
Q4.By cross-referencing Section 3 and Section 5 of The Securities and Exchange Board of India Act, 1992, if the Central Government terminates the Chairman early, does the Board itself cease to exist?