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Section 23F of The Securities Contracts (Regulation) Act, 1956 in hindi

If any issuer dematerialises securities more than the issued securities of a company or delivers in the stock exchanges the securities which are not listed in the recognised stock exchange or delivers securities where no trading permission has been given by the recognised stock exchange, he shall be 1[liable to a penalty which shall not be less than five lakh rupees but which may extend to twenty-five crore rupees].

Summary

It applies to any issuer of securities.
It penalizes excess dematerialisation, which means converting physical securities into electronic form in an amount greater than the company's issued securities.
It prohibits delivering securities on a stock exchange that are not listed on that recognised stock exchange.
It also prohibits delivering securities on an exchange where no trading permission has been granted by that recognised stock exchange.
The minimum penalty for these violations is five lakh rupees.
The maximum penalty can be as high as twenty-five crore rupees.

Practical examples

1In July 2026, a company named Maple Tech Solutions issued 1,000,000 equity shares. However, its system manager, Ramesh Rao, dematerialised 1,050,000 shares in the electronic depository system, creating 50,000 excess electronic shares. Under Section 23F, Maple Tech Solutions is liable to a penalty of between five lakh rupees and twenty-five crore rupees.

2An issuer named Apex Holdings delivered 200,000 debt securities to the National Stock Exchange on October 15, 2026, before receiving official listing approval or trading permission from the exchange. Under Section 23F, Apex Holdings can be penalized with a fine starting at five lakh rupees.

FAQ

1. Who is held responsible for violations under Section 23F?

The issuer of the securities is held responsible and liable for the penalty.

2. What is the penalty for delivering unlisted securities on a stock exchange?

The penalty cannot be less than five lakh rupees, and it can extend up to twenty-five crore rupees.

Test yourself

Q1.Under Section 23F of The Securities Contracts (Regulation) Act, 1956, which of the following is a specific violation related to the depository system?

Q2.Under Section 23F of The Securities Contracts (Regulation) Act, 1956, what is the minimum penalty that can be levied on an issuer for delivering unlisted securities?

Q3.Under Section 23F of The Securities Contracts (Regulation) Act, 1956, what is the maximum penalty for delivering securities on an exchange where no trading permission has been given?

Q4.Under Section 23F of The Securities Contracts (Regulation) Act, 1956, does listing alone make it legal to deliver securities on a stock exchange?

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