“Compression of four laws into one would result in multiple benefits for the markets,” said Sandeep Parekh, founder, Finsec Law Advisors. “One, consolidation of differing provisions would eliminate duplication, simplify the law and improve ease of doing business. Second, it would modernise the law, some of it as old as 1956.” Parekh said the country’s underdeveloped bond markets would be a key beneficiary of the unification of the laws.
A Supreme Court lawyer said interplay between Acts won’t cause hindrances once the new Act is codified. “Though Sebi as market regulator is the implementer for all these Acts, on many occasions in the past courts have had to interpret the effect of one or more of these Acts on each other, making it a very complex process,” said Pratap Venugopal, a Sebi-empanelled advocate of the Supreme Court.
Securities lawyers said the government’s intention could be to make the laws cohesive and forward-looking. “The consolidation of securities laws marks an important move towards making Indian corporate legal framework simpler, business-friendly and ultimately (hopefully) reducing compliance costs,” said Arka Mookerjee, partner, J Sagar Associates. “The code is in line with previous discussions on the NFRA (National Financial Reporting Authority). If drafted and executed in a proper manner, it will be helpful to market participants and remove any possible conflicts in the regulatory framework,” Mookerjee said.
A consolidated code would also help avoid multiple interpretations of different Acts.“It can provide ease of operations for businesses and enhance confidence of investors,” said Manoj Purohit, partner and leader – financial services tax, BDO India.