SEBI (Informal Guidance) Scheme 2003: Key Provisions

Summary: The SEBI (Informal Guidance) Scheme 2003, effective from June 24, 2003, helps intermediaries, listed companies, and other eligible entities seek clarifications on regulatory compliance. It provides two types of guidance—No-Action Letters, where SEBI does not recommend action, and Interpretative Letters, offering regulatory interpretations. However, these are not binding orders and cannot be appealed. Applications, carrying a ₹25,000 fee (₹5,000 refundable processing charge), must disclose material facts and cite relevant laws. SEBI aims to respond within 60 days but does not disclose reasons for rejection. Requests involving hypothetical situations, indirect interest, or ongoing legal matters are not entertained. Confidentiality can be requested for up to 90 days. Notable cases include clarifications sought under SEBI AIF, Insider Trading, and ICDR Regulations.

For any compliance, corporate action, event or transaction in corporates, there are many regulations/circulars etc. applicable to it which makes the task of compliance manager difficult to interpret various provisions of the laws applicable or to cover the regulatory framework.

Under section 11 (1) of SEBI Act, 1992, it is the duty of the SEBI to protect the interest of investors, promote the development and to regulate the securities market by exercising the necessary measures.

While doing so, for better regulation and orderly development of the securities market, SEBI (Informal Guidance) Scheme 2003 was issued and it is effective/operational since 24^th June, 2003.

Under this scheme, the applicant/requestors were provided the necessary guidance to making their compliances uncertainty resolves.

The guidance/letter issued by the department/division concerned should not be understood as conclusive decision, determination of any question of law/fact by SEBI. Therefore, this shall be considered as order of SEBI and it is not appealable.

Who can be applicant for informal guidance?

• any intermediary registered with SEBI under section 12 of SEBI ACT
• any listed company :
• any company, Intends to get its any securities listed & has filed either a listing application with any stock exchange or a draft offer document with SEBI
• any mutual fund trustee company or AMC
• any acquirer or prospective acquirer under SEBI (SAST) Regulations, 2011

How application can be made;

• Fee of Rs. 25,000/- (Rs.5000 is processing fee and it is refundable)
• Addressed to the concerned Department of SEBI
• Describe the request, disclose and analyse all material facts and circumstances involved
• Mention all applicable legal provisions.

How SEBI consider the application/requests;

• Dispose request earliest possible, max 60 days
• Concerned department/division may call for interview, if necessary
• Not liable to disclose the reason(s) of request rejection

The views/internal records of SEBI shall be confidential. The applicant is entitled for reply only.

How Guidance is given;

No-Action Letter; department/division would not recommend any action

Interpretative Letters; department/division provides an interpretation of a specific provisions of any Act/Rules/Regulations/Guidelines/ Circulars/Other legal provisions.

In case where department/division finds that a letter was obtained by fraud or misrepresentation of facts, it may declare such letter to be non est/ it is not/ does not exist.

Requests for maintaining the confidentiality;

While submitting the application/request, the applicant may request the department/division for confidential treatment upto 90 days from date of response of their request/application.

• In case of grant of confidential treatment– letter/written communication not available in public till expiration of confidential period.
• In case of non-grant of confidential treatment– the applicant will be advised to withdraw confidential request within 30 days of receipt of the advice. (Here too, the letter/written communication would not be available in public)

Following Request/Applications are not entertained which ;

• Involves hypothetical situations
• Applicant has not direct/proximate interest
• Applicable provisions not mentioned
• In general nature and do not disclose complete/sufficient factual situation.
• Any equery/investigation/enforcement action alrady initiated
• Connected issues are subjuidice/pending before tribunal/court
• No-action/interpretive letter already issued on almost similar question and facts

And those cases where policy concerns of SEBI/its department or division requires not to respond.

Recent Examples of application/requests made under the scheme are;

References:

1. Securities and Exchange Board of India Act, 1992/www.sebi.gov.in

2. SEBI (Informal Guidance) Scheme 2003

Note: Readers are advised to go through the original content of the act/regulations/references.