The term ‘Securities’ under Section 2(81) of the Companies Act, 2013 has been defined to mean ‘securities’ as defined in Section 2(h) of the Securities Contracts (Regulation) Act, 1956 (SCRA).
Under section 2(h) of SCRA, the term ‘securities’ include the following:
- Shares, scrips, stocks, bonds, debentures, debenture stocks etc. in or of any incorporated company or another body corporate.
- Units issued by any Collective Investment Scheme to the investors in such scheme.
- Security receipt as defined in Section 2(zg) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
- Units or any other such instruments issued to the investors under any Mutual fund scheme.
- Government Securities
- Such other instruments, rights or interest therein shall be declared by the government to be securities be declared by the government to be securities.
The SCRA recognises securities issued by a body corporate as well as the government. A company may also issue its securities at a higher price than their normal value if the market already exists. Stock exchanges are authorised under Section 9(m) of SCRA to make provisions in their bye-laws to list securities on the stock exchange.
Listing means including any security for the purpose of trading in a recognised stock exchange, i.e. admission of securities of any incorporated company, Central and State Governments, Quasi Governmental and other financial institutions/corporations, municipalities, electricity, housing boards, etc.
In Sahara India Real Estate v. Securities & Exchange Board Of India, one of the issues of the case was whether the hybrid Optionally Fully Convertible Debentures of the company fall within the definition of "securities" within the meaning of Companies Act, SEBI Act and SCRA so as to vest SEBI with the jurisdiction to investigate and adjudicate. It was held that although the OFCDs issued by the two companies are in the nature of ‘hybrid’ instruments, it does not cease to be a "Security" within the meaning of Companies Act, SEBI Act and SCRA. It says although the definition of "Securities" under section 2(h) of SCRA does not contain the term "hybrid instruments", the definition provided in the Act is an inclusive one and covers all "Marketable securities".
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