SEBI notifies Securities and Exchange Board of India (Settlement Proceedings) (Amendment) Regulations, 2022 vide Notification No SEBI/LAD-NRO/GN/2022/62 Dated: 14th January, 2022.
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 14th January, 2022
SECURITIES AND EXCHANGE BOARD OF INDIA (SETTLEMENT PROCEEDINGS) (AMENDMENT)
REGULATIONS, 2022
No SEBI/LAD-NRO/GN/2022/62.—In exercise of the powers conferred by Section 15JB of the Securities and Exchange Board of India Act, 1992, Section 23JA of the Securities Contracts (Regulation) Act, 1956 and Section 19-IA of the Depositories Act, 1996 read with Section 30 of the Securities and Exchange Board of India Act, 1992, Section 31 of the Securities Contracts (Regulation) Act, 1956 and Section 25 of the Depositories Act, 1996, the Securities and Exchange Board of India hereby makes the following regulations to further amend the Securities and Exchange Board of India (Settlement Proceedings) Regulations, 2018, namely:—
1. These regulations may be called the Securities and Exchange Board of India (Settlement Proceedings) (Amendment) Regulations, 2022.
2. They shall come into force on the date of their publication in the Official Gazette.
3. In the Securities and Exchange Board of India (Settlement Proceedings) Regulations, 2018-
(1) in regulation 4, sub-regulation (2) shall be omitted.
(2) in regulation 5, in sub-regulation (2), in clause (i), after the words and symbol “has market wide impact,”, the word “or”, shall be inserted.
(3) in regulation 6, in the sub-regulation (1), –
(a) after the words “An application may” and before the words “at any time be rejected”, the word “also”, shall be inserted;
(b) in the clause (b), after the words and symbols “delays the submission of information, document,” and before the words and symbols “etc., as called for by the Board”, the words and symbol “Revised Settlement Terms, “, shall be inserted;
(c) after the clause (e), following clause shall be inserted, namely, –
“(f) Where the applicant fails to comply with the condition precedent(s) for settlement within the time as required by the Internal Committee.”
(4) in regulation 9, –
(a) in sub-regulation (2),
(i) in clause (i), for the symbol ‘.‘, the symbol ‘;‘ shall be substituted;
(ii) after clause (i), following clause, shall be inserted, namely, –
“(j) Restraining from accessing the securities market and/or prohibiting from buying, selling or otherwise dealing in securities, directly or indirectly and associating with the securities market in any manner for a specific period.”;
(b) in sub-regulation (4), in the Explanation after the word and figure “regulation 24” the words “and include other expenses incurred by the Board in any other proceeding before any Court or Tribunal in respect of such application” shall be inserted.
(5) in regulation 13, in sub-regulation (2),
(a) after clause (b), a new clause shall be inserted, namely, –
“(ba) require the applicant to comply with certain condition precedent(s) within a specified time period for consideration of the application for settlement.”;
(b) in clause (c), –
(i) for the word “ten” the word “fifteen”, shall be substituted;
(ii) for the symbol ‘:‘, the symbol ‘.‘ shall be substituted;
(iii) the proviso to clause (c) shall be omitted.
(6) in regulation 15, in sub-regulation (2), in clause (a) –
(a) the words and symbols “, which may be extended by the Panel of Whole Time Members for reasons to be recorded, by sixty calendar days, only after receipt of an application seeking extension of time within thirty days from the date of receipt of notice of demand” shall be omitted;
(b) in the Explanation, for the words and symbols “direct credit in the specified bank account through NEFT/RTGS/IMPS or any other authorized electronic mode of payment”, the words “payment through the dedicated payment gateway provided for the purpose” shall be substituted;
(c) the first proviso shall be omitted;
(d) in the second proviso, –
(i) the word “further” shall be omitted;
(ii) for the word “ninetieth”, the word “thirtieth” shall be substituted.
(7) in regulation 26, the words “the procedure and terms of settlement of specified proceedings under” shall be omitted.
(8) in regulation 31, –
(a) for the words “void on ground of any defect in procedure or calculation of the settlement amount”, the words “invalidated on ground of any defect in procedure or determination of the settlement terms” shall be substituted;
(b) in the first proviso, for the words “calculation of the settlement amount”, the words “arriving at the settlement terms” shall be substituted;
(c) after the second proviso, the following explanation shall be inserted, namely, –
“Explanation. – For the removal of doubts, it is clarified that the power to seek the difference under this regulation shall include and always be deemed to have included the profits gained or losses avoided out of the violations for which the specified proceedings also have been initiated.”
(9) in regulation 33 for the words “arriving at a proposal pursuant to”, the words “determining the terms while processing”, shall be substituted.
(10) in Schedule I,
(a) in Part A, in clause 13, after the word “pending”, the words and symbol “, including details of hearing opportunity given by the Board or AO, if any”, shall be inserted;
(b) in Part B, for the words and symbols “direct credit in the bank account through NEFT/RTGS/IMPS or any other electronic mode allowed by RBI:”, the words and symbol “payment through the dedicated payment gateway provided for the purpose:” shall be substituted.
(11) in Schedule II, –
(a) in Chapter I, in clause 2,
i. after the words “case may be”, for the symbol “:”, the symbol “.”, shall be substituted;
ii. the proviso shall be omitted;
(b) in Chapter II, clause 5 shall be omitted;
(c) in Chapter III, for the Table I, the following table shall be substituted:
“TABLE-I
PROCEEDING CONVERSION FACTOR
| STAGE OF THE PROCEEDING(S) WHEN THE SETTLEMENT APPLICATION IS FILED | VALUE OF PCF | |
| a. | Voluntary or for seeking settlement with confidentiality | 0.40 |
| b. | Pre- issue of the notice to show cause/Summary Settlement | 0.50 |
| a. | Post-issue of the first notice to show cause pertaining to any pending proceeding in the same cause of action | 0.65 |
| b. | Proceeding pending after the submission of the report by the Designated Authority |
0.80 |
| c. | Proceedings pending after passing of a final order imposing penalty or issuing civil and administrative directions, as the case may be | 1.20 |
| d. | Proceedings pending after the passing of the order by the Securities Appellate Tribunal or Court | 1.50” |
(d) in Chapter V, –
(i) in clause I, the words ―applied once for all or any of them” shall be substituted by words, symbol and figure ―for each of them wherever applicable, subject to a maximum limit of 3″;
(ii) in clause II, the words ―applied once for all or any of them” shall be substituted by words, symbol and figure ―for each of them wherever applicable, subject to a maximum limit of 3″;
(iii) in clause III, the words ―applied once for all or any of them” shall be substituted by words, symbol and figure ―for each of them wherever applicable, subject to a maximum limit of 3″;
(e) in Chapter VI, –
(i) for Table VII and notes to Table VII, the following shall be substituted:
“TABLE-VII
| BASE AMOUNT FOR ALLEGED DEFAULT RELATING TO DISCLOSURES UNDER SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS -1997/2011 | |||
| PERCENTAGE OF SHAREHOLDING OR VOTING RIGHTS ACQUIRED OR DISPOSED BUT NOT DISCLOSED OR PERCENTAGE OF ENCUMBERED SHARES BUT NOT DISCLOSED, ETC. |
BASE AMOUNT FOR VIOLATION OF | ||
| REGULATION 7 OF 1997 REGULATIONS OR REGULATION 29 OF 2011 REGULATIONS (I) | REGULATION 8 OF 1997 REGULATIONS OR REGULATION 30 OF 2011 REGULATIONS (II) | REGULATION 8A OF 1997 REGULATIONS OR REGULATION 31 OF 2011 REGULATIONS (III) | |
| Less than 2% | Rupees 2 lakh
+ Rupees 5,000/- For every three months delay# or part thereof |
||
| 2% to less than 5% | Rupees 4 lakh
+ Rupees 10,000/- For every three months delay or part thereof |
||
| 5% to less than 10% | Rupees 7 lakh
+ Rupees 15,000/- For every three months delay or part thereof |
||
| 10 % to less than 15% | Rupees 9 lakh
+ 0.1 % of the value of the holding not disclosed, etc. + Rupees 20,000/- For every three months delay or part thereof |
||
| 15% and above | Rupees 10 lakh
+ 0.1 % of the value of the holding not disclosed, etc. + Rupees 25,000/- For every three months delay or part thereof |
||
Notes to Table VII:
1. Table VII is not applicable in cases where the disclosure related violation is in combination with Fraudulent and Unfair Trade Practices or Insider Trading.
Explanation: Dealing while in possession of material financial or shareholding information may be treated as Insider Trading.
2. The BA for violation at (II) shall only be as per the lowest slab, irrespective of change in shareholding over the reporting period. In case of violations related to disclosures that are required to be made annually the amount for delay for every three months or part thereof shall be computed only for the first disclosure violation. In case the noticee complies with the annual reporting requirements for a few years, such compliance will not result in a higher amount than would have otherwise be calculated for continuous violations.
3. The period of delay is to be calculated from the last day, when the disclosure ought to have been made, as required by the regulations.
4. If the disclosure for any violation is made after a period of more than 4 Quarters, then the value for 4 Quarters would be taken as maximum value for that specific disclosure violation.
5. If there are multiple transaction attracting disclosure requirement in a Quarter, then the value of highest change and max. delay may be considered for arriving at the base amount irrespective of count of violations.‖;
(ii) for Table VIII and notes to Table VIII, the following shall be substituted:
“Table-VIII
| BASE AMOUNT – ALLEGED DEFAULT RELATING TO TRANSACTION SPECIFIC DISCLOSURES UNDER REGULATIONS 13(3), 13(4), 13(4A) AND 13 (6) OF 1992 PIT REGULATIONS [INCLUDES CORRESPONDING TRANSACTION SPECIFIC DISCLOSURES UNDER 2015 PIT REGULATIONS] | |
| PERCENTAGE OF SHAREHOLDING OR VOTING RIGHTS ACQUIRED OR DISPOSED BUT NOT DISCLOSED OR PERCENTAGE OF ENCUMBERED SHARES BUT NOT DISCLOSED, ETC. | BASE AMOUNT |
| Less than 2% | Rupees 2 lakh
+ Rupees 7,500/– For every three months delay or part thereof |
| 2% to less than 5% | Rupees 4 lakh
+ Rupees 12,500/– For every three months delay or part thereof |
| 5% to less than 10% | Rupees 7 lakh
+ Rupees 17,500/– For every three months delay or part thereof |
| 10 % to less than 15% | Rupees 9 lakh
+ 0.1 % of the value of the holding not disclosed, etc. + Rupees 22,500/– For every three months delay or part thereof |
| 15% and above | Rupees 10 lakh
+ 0.1 % of the value of the holding not disclosed, etc. + Rupees 25,000/– For every three months delay or part thereof |
Notes to Table VIII:
1. In cases of disclosure related violations by connected persons or by key managerial persons, the BA may be increased by 25%.
2. Table VIII is not applicable in cases where the disclosure related violation is in combination with Fraudulent and Unfair Trade Practices or Insider Trading.
Explanation: Dealing while in possession of material financial or shareholding information may be treated as Insider Trading.
3. If the disclosure for any violation is made after a period of 4 Quarters, then the value for 4 Quarters would be the maximum value for that specific disclosure violation.
4. If there are multiple transactions attracting disclosure requirements in a Quarter, then the value of highest change and maximum delay may be considered for arriving at the Base Amount irrespective of the count of violations.‖;
(iii) in Table IX, for the words ‘Foreign Institutional Investors‘, the words ‘Foreign Portfolio Investors‘ shall be substituted.
(iv) for Table X, the following table shall be substituted:
Table-X
RESIDUARY BASE AMOUNT, FOR EACH UNIT OF ALLEGED DEFAULT FOR EACH APPLICANT OR ON JOINT LIABILITY BASIS (AS PER THE SUM OF APPLICABLE AMOUNTS IN CASE OF JOINT APPLICANTS) |
|||||
BASE AMOUNT WHERE: |
NAME LENDERS# (I) |
BODY CORPORATES & INDIVIDUALS (WHEN NOT IN I, III-V) (II) |
INTERMEDIARY INCLUDING PRINCIPAL OFFICERS (III) |
MARKET INFRASTRUCTURE INSTITUTIONS INCLUDING PRINCIPAL OFFICERS (IV) |
FUND RELATED DEFAULTS INCLUDING PRINCIPAL OFFICERS (I) |
DEFAULTS RELATE |
RUPEES 10 |
RUPEES 40 |
RUPEES 20 |
RUPEES 2 CRORE |
RUPEES 40 |
TO FUTP OR IT,
|
LAKHS |
LAKHS |
LAKHS |
LAKHS |
|
VIOLATION INVOLVED AT (M) IS APPLICABLE AND, – SUCH VIOLATION DIRECTLY OR INDIRECTLY – (I) RESULTED IN SUBSTANTIAL LOSSES TO OTHER PERSONS, OR (I) CREATED SUBSTANTIAL LOSSES OR A SIGNIFICANT RISK OF LOSSES TO OTHER PERSONS OR (II) AFFECTED THE INTEGRITY OF THE SECURITIES MARKETS (N)## |
RUPEES 20 LAKHS |
RUPEES 1 CRORE |
RUPEES 30 LAKHS |
RUPEES 4 CRORES |
RUPEES 75 LAKHS |
DELAY IN REDRESSING INVESTOR GRIEVANCES (O) |
– |
RUPEES 3 LAKHS |
RUPEES 5 LAKHS |
RUPEES 7 LAKHS |
RUPEES 10 LAKHS |
RESIDUARY (P) |
RUPEES 3 LAKHS |
RUPEES 10 LAKHS |
RUPEES 10 LAKHS |
RUPEES 1 CRORE |
RUPEES 15 LAKHS |
#Name Lenders include individual applicants who submit to the satisfaction of the IC or HPAC or Panel of WTMs that, without knowledge of the illegal activity, he/she was involved in the violation to the extent of permitting/lending the use of his/her securities account or name or facility to the key operator or core entities or intermediary or securities market infrastructure institution involved in such activity. In addition, name lenders will also include individuals who are identified as such either in the investigation report or in the show cause notice or in the order of the Adjudicating Officer/SEBI/Court/Tribunal. While arriving at the settlement terms, the IC or HPAC or Panel of WTMs may take into consideration any relevant factor as may be submitted by the applicant including the annual income of the applicant, the past and present trading pattern, including the frequency and quantum of trades.
##Serious violations may also result in additional terms such as disgorgement of management fee or any other terms as may be decided by the IC, HPAC or the Panel of WTMs.
Note to Table X:
1. In case of applicability of more than one BA, the highest is to be considered.
2. In this Schedule, ‘Principal Officer‘ means a person that may be covered under Section 27 of the Act as amended by the Finance Act, 2018.
3. ‘Fund‘ means an Alternative Investment Fund (AIF), Mutual Fund (MF), Collective Investment Scheme (CIS) and any other pooling arrangement required to be registered with the Board.
4. Body Corporate in (II) in this Table includes, any applicant not covered in (I) and (III) to (V).‖
AJAY TYAGI, Chairman
[ADVT.-III/4/Exty./578/2021-22]
Footnote:
1. The Securities and Exchange Board of India (Settlement Proceedings) Regulations, 2018 were published in the Gazette of India on November 30, 2018 vide No. SEBI/LAD-NRO/GN/ 2018/48, with effect from 1st day of January 2019.
2. The Securities and Exchange Board of India (Settlement Proceedings) Regulations, 2018 were subsequently amended on: –
(1) 22nd July 2020 by the Securities and Exchange Board of India (Settlement Proceedings) (Amendment) Regulations, 2020 vide No. SEBI/LAD-NRO/GN/2020/24.
