ESTABLISHMENT OF THE SECURITIES AND EXCHANGE BOARD OF INDIACentral

Section 8 of The Securities and Exchange Board of India Act, 1992

No act or proceeding of the Board

shall be invalid merely by reason of—

(a)any vacancy in, or any defect in the constitution of, the Board; or
(b)any defect in the appointment of a person acting as a member of the Board; or
(c)any irregularity in the procedure of the Board not affecting the merits of the case.

Summary

Actions or proceedings of the Board cannot be considered invalid simply because there is an empty seat or a defect in how the Board was formed.
Decisions remain valid even if there is a defect in the appointment of someone acting as a Board member.
Procedural mistakes or irregularities by the Board will not invalidate its actions, provided those mistakes do not affect the actual merits of the case.

Practical examples

1The Board fines a broker for misconduct. The broker tries to appeal, arguing that one Board seat was vacant when the fine was issued. The appeal is dismissed because an empty seat does not make the Board's decision invalid.

2The Board uses the wrong colour paper for a meeting notice, breaking a minor internal rule. Since this procedural mistake has nothing to do with the facts of the cases discussed, the decisions made at that meeting remain totally valid.

FAQ

1. Can a decision be cancelled just because the Board was missing a member?

No, no act or proceeding is invalid merely by reason of any vacancy in the Board.

2. What if someone acting as a member was not appointed perfectly?

The proceedings are still valid, as a defect in the appointment of a person acting as a member does not invalidate the Board's actions.

3. Do procedural errors ruin a Board's decision?

Only if the error affects the actual merits of the case. Minor irregularities in procedure do not invalidate the proceedings.

Test yourself

Q1.Under Section 8 of The Securities and Exchange Board of India Act, 1992, which of the following would NOT invalidate an act of the Board?

Q2.Under Section 8 of The Securities and Exchange Board of India Act, 1992, what condition applies to procedural irregularities for them to NOT invalidate a proceeding?

Q3.Under Section 8 of The Securities and Exchange Board of India Act, 1992, what is the effect of a defect in the appointment of a person acting as a member?

Q4.Under Section 8 of The Securities and Exchange Board of India Act, 1992, what is the primary purpose of this specific provision?

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