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SECURITIES AND INSURANCE LAWS (AMENDMENT AND VALIDATION) ACT 2010

THE SECURITIES AND INSURANCE LAWS (AMENDMENT AND
VALIDATION) ACT, 2010
(NO. 26 OF 2010)
[20th August, 2010.]
An Act further to amend the Reserve Bank of India Act, 1934, the Insurance
Act, 1938, the Securities Contracts (Regulation) Act, 1956 and the
Securities and Exchange Board of India Act, 1992.
BE it enacted by Parliament in the Sixty-first Year of the Republic of India as follows:
--
CHAPTER I
PRELIMINARY
1. Short title
and commencement. - (1) This Act may be called the Securities and Insurance Laws
(Amendment and Validation) Act, 2010.
(2) It shall be deemed to have come into force on the 18th day of June, 2010.
CHAPTER II
AMENDMENT TO THE RESERVE BANK OF INDIA ACT, 1934
2. Insertion of new Chapter IIIE in Act 2 of 1934. - After Chapter IIID of the Reserve Bank of India Act, 1934, the
following Chapter shall be inserted, namely:--
"CHAPTER IIIE
JOINT MECHANISM
45Y. Joint Mechanism. - (1) Notwithstanding anything
contained in this Act or the
Securities and Exchange Board of India Act, 1992 or any other law for the time being
in force, if any difference of opinion arises as to whether--
(i) any instrument, being derivative
referred to in clause (a) or money
market instrument referred to in clause (b) or repo referred to in clause (c) or
reverse repo
referred to in clause (d) or securities referred to in clause (e) of
section 45U of this Act; or
(ii) any instrument, being policy
of life insurance under the Insurance Act,
1938, or the rules or regulations made thereunder, or, scrips or any other
securities referred to in sub-clauses (i), (ia), (ib), (ic),
(id), (ie), (ii), (iia) and
(iii) of clause (h) of section 2 of the Securities Contracts (Regulation) Act,
1956,
is hybrid or composite instrument, having a component of money market investment
or securities market instrument or a component
of insurance or any other instrument
referred to in clause (i) or clause (ii) and falls within the jurisdiction of the Reserve
Bank
of India or the Securities and Exchange Board of India established under
section 3 of the Securities and Exchange Board of India Act, 1992 or the Insurance
Regulatory and Development Authority established under section 3 of the Insurance
Regulatory and Development Authority
Act, 1999 or the Pension Fund Regulatory and Development Authority constituted by
the Resolution of the Government of India number F.No. 1(6)2007-PR,
dated the 14th
November, 2008, such difference of opinion shall be referred to a Joint Committee
consisting of the following, namely:--
(a) the Union Finance Minister -- ex officio Chairperson;
(b) the Governor, Reserve Bank of India -- ex officio Vice-Chairperson;
(c) the Secretary, Department of Economic Affairs in the Ministry of
Finance, Government of India -- ex officio Member;
(d) the Secretary,
Department of Financial Services in the Ministry of
Finance, Government of India -- ex officio Member;
(e) the Chairperson, Insurance
Regulatory and Development Authority --
ex officio Member;
(f) the Chairman, Securities and Exchange Board of India ­ ex officio
Member;
(g) the Chairperson, Pension Fund Regulatory and Development Authority
-- ex officio Member.
(2) The Secretary, Department
of Financial Services in the Ministry of Finance,
Government of India shall be the convener of the meetings of the Joint Committee
referred to in sub-section (1).
(3) In case of any difference of opinion referred to in sub-section (1), any
Member of the Joint
Committee referred to in clauses (b), (e), (f) or (g) of that sub-
section may make a reference to the Joint Committee.
(4) The Joint
Committee shall follow such procedure as it may consider
expedient and give, within a period of three months from the date of reference
made
under sub-section (3), its decisions thereon to the Central Government.
(5) The decision of the Joint Committee shall be binding
on the Reserve Bank of
India, the Securities and Exchange Board of India, the Insurance Regulatory and
Development Authority and
the Pension Fund Regulatory and Development
Authority.".
CHAPTER III
AMENDMENT TO THE INSURANCE ACT, 1938
3. Amendment of section 2 of Act 4 of 1938. - In the Insurance Act, 1938, in section 2,
after clause (11), the following Explanation shall be inserted and shall be deemed to have
been inserted with effect
from the 9th day of April, 2010, namely:--
`Explanation.-- For the removal of doubts, it is hereby declared that "life
insurance
business" shall include any unit linked insurance policy or scrips or any
such instrument or unit, by whatever name called, which
provides a component of
investment and a component of insurance issued by an insurer referred to in clause
(9) of this section.'.
CHAPTER IV
AMENDMENT TO THE SECURITIES CONTRACTS (REGULATION ) ACT, 1956
4. Amendment of section 2 of Act 42 of 1956. - In the Securities Contracts (Regulation)
Act, 1956, in section 2, in clause (h), after sub-clause (id), the following Explanation shall
be inserted and shall be deemed to have been
inserted with effect from the 9th day of
April, 2010, namely:--
`Explanation.-- For the removal of doubts, it is hereby declared
that "securities"
shall not include any unit linked insurance policy or scrips or any such instrument or
unit, by whatever name called,
which provides a combined benefit risk on the life of
the persons and investment by such persons and issued by an insurer referred
to in
clause (9) of section 2 of the Insurance Act, 1938.'.
CHAPTER V
AMENDMENT TO THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992
5. Amendment of section 12 of Act 15 of 1992. - In the Securities and Exchange Board of
India Act, 1992, in section 12, in sub-section (1B), the following Explanation shall be
inserted and shall be deemed to have been inserted with effect
from the 9th day of April,
2010, namely:--
"Explanation.-- For the removal of doubts, it is hereby declared that, for the
purposes
of this section, a collective investment scheme or mutual fund shall not
include any unit linked insurance policy or scrips or any
such instrument or unit, by
whatever name called, which provides a component of investment besides the
component of insurance issued
by an insurer.".
CHAPTER VI
MISCELLANEOUS
6. Validation. - Notwithstanding anything contained in any judgment, decree or order of
any court, tribunal or other authority, the provisions of section 2 of the Insurance Act,
1938 or section 2 of the Securities Contracts (Regulation) Act, 1956 or section 12 of the
Securities and Exchange Board of India Act, 1992, as amended by this Act, shall have and
shall be deemed to always have effect for all purposes as if the provisions of the said Acts,
as amended by this Act, had been in force at all material times and accordingly any unit
linked insurance policy or scrips or any
such instrument or unit, by whatever name called,
issued or purported to have been issued at any time before the 9th day ofApril,
2010, shall
be deemed and always deemed to have been validly issued and shall not be called in
question in any court of law or other
authority solely on the ground that it was issued
without a certificate of registration under any law for the time being in force
or without
following any procedure under any law for the time being in force, by an insurer or any
other person.
7. Repeal and savings.
- (1) The Securities and Insurance Laws (Amendment and
Validation) Ordinance, 2010 is hereby repealed.
(2) Notwithstanding such repeal,
anything done or any action taken under the Reserve
Bank of India Act, 1934 or the Insurance Act, 1938 or the Securities Contracts
(Regulation) Act, 1956 or the Securities and Exchange Board of India Act, 1992, as
amended by the said Ordinance, shall be deemed to have been done or taken under the
corresponding provisions of those Acts, as
amended by this Act.
V. K. BHASIN,
Secy. to the Govt. of India.