Section 24 of the Companies Act, 2013: Power of SEBI to Regulate Issue and Transfer of Securities
Section 24 of the Companies Act, 2013 divides regulatory administration of specified securities matters between the Securities and Exchange Board of India (SEBI) and the Central Government. For listed companies, and companies intending to list their securities on a recognised stock exchange in India, SEBI administers the provisions identified in Section 24 relating to issue and transfer of securities and non-payment of dividend, subject to the Act.
What does Section 24 cover?
Section 24 appears in Chapter III of the Companies Act, 2013. Sub-section (1) deals with administration of the provisions contained in that Chapter, Chapter IV and Section 127. In relation to listed companies and companies proposing to list their securities, the specified matters of issue and transfer of securities and non-payment of dividend are administered by SEBI through regulations, except where the Companies Act provides otherwise.
Section 24 - statutory provision
Section 24(1). The provisions contained in this Chapter, Chapter IV and in Section 127 shall:
(a) insofar as they relate to (i) issue and transfer of securities and (ii) non-payment of dividend by listed companies or companies intending to get their securities listed on a recognised stock exchange in India, except as provided under the Act, be administered by SEBI by making regulations in this behalf; and
(b) in any other case, be administered by the Central Government.
Explanation. Powers concerning other matters such as prospectus, return of allotment, redemption of preference shares and other matters specifically provided in the Act are exercisable by the Central Government, Tribunal or Registrar, as the case may be.
Section 24(2). For the matters specified in sub-section (1), and matters delegated under the proviso to Section 458(1), SEBI exercises the powers conferred by Sections 11(1), 11(2A), 11(3), 11(4), 11A, 11B and 11D of the Securities and Exchange Board of India Act, 1992.
Meaning and practical scope of Section 24
Issue of securities broadly concerns the process by which a company offers or allots securities. Transfer of securities concerns movement of ownership or interests in securities from one holder to another in accordance with applicable company and securities law. Non-payment of dividend refers, for Section 24 purposes, to the regulatory administration of the relevant provisions where the company is listed or intends to list.
The section therefore creates an allocation of regulatory responsibility. SEBI's role is linked to the securities-market matters expressly identified in Section 24, while corporate-law functions specifically assigned elsewhere in the Companies Act continue to be exercised by the authority named in the Act.
Powers available to SEBI under Section 24(2)
Section 24(2) connects the Companies Act framework with the SEBI Act, 1992. Depending on the statutory conditions applicable to a matter, the referenced SEBI Act provisions include SEBI's regulatory and protective functions under Section 11, powers concerning prospectus, offer documents and securities-related requirements under Section 11A, power to issue directions under Section 11B, and cease-and-desist powers under Section 11D.
Listed companies and companies intending to list
The distinction in Section 24 is important. For the specified securities and dividend matters, SEBI administration applies to a listed company as well as a company that intends to get its securities listed on a recognised stock exchange in India. Other cases are administered by the Central Government, subject to the particular provisions of the Companies Act.
Official legal resources
For the latest consolidated statutory text and securities-law materials, refer to the official Ministry of Corporate Affairs - Companies Act, 2013 and the SEBI Act, 1992. Regulatory requirements may also depend on SEBI regulations, circulars and other provisions applicable to the particular transaction.
Key takeaway
Section 24 is principally an administrative-jurisdiction provision. It places regulation of specified issue, transfer and dividend matters of listed or proposed-to-be-listed companies with SEBI, while preserving the authority of the Central Government, Tribunal and Registrar over other matters assigned to them under the Companies Act, 2013.
Note: This page is a general legal information resource. The applicable position may depend on amendments, rules, SEBI regulations, circulars and the facts of a particular transaction.