The Securities Exchange Board of India has introduced a Settlement Scheme, 2020 vide Public Notice dated July 27, 2020, in terms of Regulation 26 of the SEBI (Settlement Proceedings) Regulations 2018. The purpose of the Scheme is to provide a one-time opportunity for settlement to the entities that have executed reversal trades in the stock options segment of BSE during the period from April 1, 2014, to September 30, 2015, against whom any proceedings are pending.
As usual, I shall quote the source for detailed analysis. https://www.sebi.gov.in/sebi_data/faqfiles/sep-2020/1598948152819.pdf
Let us simplify its significance by a lay man’s questions and answers format.
Can you inform me of the scheme to know if it is applicable to me?
Under the Scheme, an entity desirous of making an application for a one-time settlement under the Scheme has been provided with an opportunity to submit a settlement application along with an application fee of Rs. 25,000/- in case of body corporates and Rs. 15,000/- in case of other than body corporates in the specified format, available on the SEBI website and also on the BSE website.
The settlement application should be sent in a physical copy to SEBI along with undertakings and waivers (duly notarized and stamped duty duly paid in Non-judicial stamp paper), a self-attested copy of the PAN Card and the ITRs for the last 3 years.
Q. 1 Can I list it asunder?
Q.2 If you have received a letter/email from SEBI wherein it is alleged that you had carried out the trade reversals in stock options segment of BSE during 1.4.2014 and 30.9.2015 for which certain proceedings were initiated against you are pending. You are unaware of the proceedings and any communications in this matter. What should you do?
Ans. Ignorance is not bliss. But to help you, I am reproducing some information from SEBI which should help you.
“Applicants are advised to open the link https://siportal.sebi.gov.in/intermediary/AOPaymentGateway.html, enter PAN to check their details, and their eligibility for the scheme. Applicants can pay the application fee and settlement amount online to settle the proceedings against them.” I hope the matter is very clear.
Q.3 If you have already filed a settlement application in respect of Show- Cause Notice issued by the Adjudicating Officer before the Scheme was introduced, do you need to submit your application again?
Ans. No. Such applicants may go to the link given below, enter their PAN and pay the settlement amount to settle the proceedings. They do not need to pay the registration fee. Such applicants would be required to upload the requisite documents.
Q.4 Where can the Scheme document be seen?
Ans. A valid question.SEBI notifications,
The answer is:
The Scheme document is available at the following link:
Q. 5 How to file a settlement application under the scheme?
Ans. Please undertake the following actions in toto.
Explained under a), b), c), d), the following remedy suggested is in simple English and any one can do it. But please do not use your judgement and do any thing unwarranted. With computerization and less human resource available, computers take care of your requirements seamlessly.
a) Online submission of scanned documents in the SEBI SI Portal
i) A scanned copy of the self-attested copy of the PAN Card of the applicant.
ii) A scanned copy of the undertakings and waivers in Non-judicial stamp paper, duly notarized and stamped duty duly paid.
iii) Scanned copies of the self-attested Income Tax Returns of the applicant for the last 3 financial years.
b) Payment of the non-refundable settlement application processing fees of Rs. 25,000/- in case of body corporates and Rs. 15,000/- in case of other than body corporates. The link is as under:
c) Payment of the settlement amounts as displayed in respect of each of the applicants. The link is as under:
d) Filing of the physical copy of the settlement application (to be received by SEBI on or before November 05, 2020) along with the following documents:
i) A settlement application in the specified format as per Annexure 1
ii) A copy of the self-attested copy of the PAN Card of the applicant.
iii) The undertakings and waivers in Non-judicial stamp paper, duly notarized and stamped duty duly paid.
iv) Self-attested copies of the Income Tax Returns of the applicant for the last 3 financial years.
v) A self-attested copy of the payment of the non-refundable settlement application processing fees.
vi) A self-attested copy of the payment of the settlement amounts as displayed in respect of each of the applicants.
An entity desirous of making an application for one-time settlement under the Scheme can do so in the specified format which is available on the SEBI website and also on the BSE website.
Yes, you may refer to the BSE web site and get guided in the same format. But the activity takes place only in the SEBI office for ultimate settlement.
Q. 6 What is the application fee applicable under the Scheme?
Ans. This article started with the same information only. However, to help you better:
A processing fee of Rs. 25,000/- in case of body corporates and Rs. 15,000/- in case of other than body corporates.
Apart from this, the applicant has to pay the settlement amount (as applicable to the applicant) as displayed in the SEBI website in the following link. https://siportal.sebi.gov.in/intermediary/AOPaymentGateway.html
SEBI may collect legal charges in addition to the aforesaid amount in respect of the cases which are before the Hon’ble Securities Appellate Tribunal or before any other Court.
Q. 7 What shall be the mode of payment of the fee mentioned above?
Ans. Applicants can make online payment of the fee.
The details of the same are available on the website of SEBI. The link for the payment has also been specified in the Public notice which is given below.
The applicant is required to choose the option of the Settlement Scheme and then follow the instructions as provided.
The instructions for receipt of the fee must be simple and easy to handle. But please follow the instructions meticulously.
Q. 8 What action will be taken, if the one-time settlement scheme is not availed?
Ans. The entities who do not avail the one-time opportunity for settlement within the prescribed period shall be liable for enforcement action.
In respect of the cases where adjudication proceedings are initiated, action would be taken in terms of Section 15-I of the SEBI Act, 1992.
(15HA.Penalty for fraudulent and unfair trade practices. – If any person indulges in fraudulent and unfair trade practices relating to securities, he shall be liable to a penalty of twenty-five crore rupees or three times the amount of profits made out of such practices, whichever is higher.). Only a lawyer or SEBI can confirm the penalty which I have quoted above.
Q. 9 When will the settlement order be passed under the Scheme?
Ans. Subsequent to the closure of the Scheme, a composite settlement order would be passed by the competent authority after the reconciliation of records.
Q. 10 Should I wait till the last day for filing the settlement application under the Scheme?
Ans. It is advisable to file a settlement application under the Scheme as soon as possible in order to avoid the last rush.
A sufficient time of three months has been provided under the Scheme.
In case of any query with respect to the above Scheme, you may reach SEBI at [email protected]
Let me give more information about the following annexure enclosed with the above scheme.
“SCHEDULE-I (See Regulation 3 of the Settlement Regulations)
Part-A – FORM
Application for settlement (To be filed only after the conclusion of investigation, inspection, inquiry, or audit, as the case may be)
This form consists of 22 columns and one verification.
I am enclosing below the list of enclosures given under column 22 which is an eye-opener.
If you are one of those affected by SEBI actions, it is time to read the matter thoroughly.
“List of other enclosures: (a) A copy of the notice to show cause/summons/communication/other notices indicating the probable cause of action if any, against which the settlement is sought;
(b) Complete Annual Reports / other relevant financial details for the last three financial years and the quarterly audited financial results of the current year;
(c) A statement showing the net worth of the applicant (only for those applicants who are required to comply with the net worth requirements as specified by the Board or by the stock exchanges), a gross annual income before tax, the amount of gross profit made/loss avoided, including the gross brokerage, fees, management/performance/transaction fee, carried interest, compensation, etc., in respect of the said default;
(d) Copy of PAN card and DIN/CIN details;
(e) Complete Income-tax Returns of the applicant for the last three financial years;
(f) In case of a foreign body corporate applicant, including details relating to incorporation, place of business, registration details with any non-Indian financial sector regulatory authority.
(g) In case of a non-resident applicant, include details relating to passport and national identity document, if any.
(h) Any other relevant document (s)/submissions.”
This is from page 8 out of 22 pages.
Part- B and Part – c also anoints the form.
Some interesting statements do enlighten us.
Item no 10) shows the great development made by our country under SEBI with the following statements, taken from page 11.
“(10) I/We for the limited purpose of settlement under these regulations ‘admit the findings of fact and conclusions of law’ or ‘neither admit nor deny the findings of fact and conclusions of law’ (strike off whichever is not applicable), and agree to abide by the settlement order as may be passed in accordance with the Securities and Exchange Board of India (Settlement Proceedings) Regulations, 2018 and guidelines and circulars issued by the Board in that regard: Provided that, in relation to defaults related to disclosures other than relating to a prospectus or a letter of offer or a similar such document required to be made in relation to an issue of securities, I/we do not deny the alleged default.”
For the first time in my life, I have seen any regulatory agency writing the words in bold which I have written in earlier para. I heard about this legal language in the U.S.A.
The purpose of this article is to show the tremendous progress made by our nation under the enlightening and easy procedure laid down by SEBI to complete even legal processes in a faster way. My humble request to delinquent entities is not to waste any more time and enter into the contract without any wastage of energy and fulfill the requirements of the law on a time-bound program.
I admire the enormous simplicity with which SEBI has undertaken its task to satisfy the law but in a business-like manner. Let all cooperate with the regulatory authorities to make our life commercially safe and remunerative in a legal way.
Disclaimer: The above views reflect my personal views. Neither taxguru.in nor SEBI is responsible for my views. Anyone is encouraged to visit the SEBI web site to know or clarify the matter.