Securities and Exchange Board of India (Settlement of Administrative and Civil Proceedings) (Amendment) Regulations, 2017

THE GAZETTE OF INDIA

EXTRAORDINARY

PART – III – SECTION 4

PUBLISHED BY AUTHORITY

NEW DELHI, FEBRUARY 27, 2017

SECURITIES AND EXCHANGE BOARD OF INDIA

NOTIFICATION

Mumbai, the 27th February, 2017

SECURITIES AND EXCHANGE BOARD OF INDIA

(SETTLEMENT OF ADMINISTRATIVE AND CIVIL PROCEEDINGS)
(AMENDMENT) REGULATIONS, 2017

No. SEBI/LAD/NRO/GN/2016-17/036. â”€ In exercise of the powers conferred under 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 of Administrative and Civil Proceedings) Regulations, 2014, namely,–

1. These regulations may be called the Securities and Exchange Board of India (Settlement of Administrative and Civil  Proceedings) (Amendment) Regulations,

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 of Administrative and Civil Proceedings) Regulations, 2014,-

(I) In regulation 4, for sub-regulation (2), the following shall be substituted, namely-

“(2) Notwithstanding anything contained in sub-regulation (1), the panel of whole time members may consider the application, if it is satisfied that there was sufficient cause for not filing it within the period specified in sub-regulation (1) and it is accompanied with an application for condonation of delay and non-refundable fees as specified in Part-B of the Schedule-I.

Provided that where the application is filed after sixty calendar days from the expiry of the period specified in sub-regulation (1), the settlement amount payable by the applicant shall be increased by a levy of simple interest at the rate of six per cent, per annum, from the expiry of the period specified in sub-regulation (1) till the date of filing.”

(II) In regulation 5, in sub-regulation (1), in clause (b) the following proviso shall be inserted, namely-

“Provided that such an application may be considered in exceptional circumstances, such as the lapse of time since the commission of the alleged default, the weight of evidence against the applicant, etc and subject to the payment of such additional fees and/or interest on the settlement amount from the date of rejection of the earlier application till the date of payment of the settlement amount, as may be recommended by the high powered advisory committee.”

(III) In regulation 6, in sub-regulation (2), the following proviso shall be inserted, namely-

“Provided that such an application may be considered at the next stage of proceedings, as indicated in Table I in Schedule-II, if the applicant makes out adequate grounds and subject to payment of such additional fees and/or interest on the settlement amount from the date of withdrawal of the earlier application till the date of payment of the settlement amount, as may be recommended by the high powered advisory committee.”

(IV) In regulation 8, for sub-regulation (4), the following shall be substituted, namely–

“(4) The application fee referred to in sub-regulation (2) of regulation 3, the additional processing fee accompanying the application for condonation of delay as referred to in sub-regulation (2) of regulation 4 and the legal costs, if any, forming part of the settlement amount shall be credited to the Securities and Exchange Board of India General Fund.”

(V) In regulation 14, for sub-regulation (3), the following shall be substituted, namely –

“(3) Where the panel has accepted the recommendation to pass a settlement order, the applicant shall,-

(a) remit the settlement amount forming part of the settlement terms, not later than fifteen calendar days from the date of receipt of the notice of demand, which may be extended by the panel of whole time members for reasons to be recorded, by a period(s) of fifteen calendar days.

Provided that in no case shall such remittance be accepted after the ninetieth calendar day from the date of the receipt of the notice of demand.

Provided further that where the settlement amount is remitted after thirty calendar days from the date of receipt of the notice of demand and on or before the ninetieth day from such receipt, the settlement amount payable by the applicant shall be increased by the levy of simple interest at the rate of six per cent per annum from the date of receipt of the notice of demand till the date of payment of the settlement amount; and/or

(b) fulfil/undertake in writing to abide by, the other settlement terms, if any, within the time provided to the applicant.”

(VI) In regulation 20, in sub-regulation (1), in clause (e) the words “or delays the payment of settlement amount” shall be substituted with the words, symbols and numbers, “the settlement amount within the period specified in clause (a) of sub-regulation (3) of regulation 14”

(VII) In Schedule- I, in Part-B, for the existing item the following shall be substituted, namely-

“Every applicant shall pay processing fees of ten thousand rupees and every application for condonation shall be accompanied with additional processing fees of two thousand rupees, by way of a demand draft in favour of ‘Securities and Exchange Board of India’ payable at Mumbai or by way of direct credit in the bank account through NEFT/RTGS/IMPS or any other mode allowed by RBI.”

(VIII) In Schedule- II, in Chapter I, –

(1) item 6 shall be substituted with the following, namely-

“The IA is to be calculated for each applicant. In a case where multiple applicants apply in respect of a default arising from the same cause of action, the IA will be calculated for each applicant, as per the applicable formula except in the following cases where the applicants may be considered to have joint and several liability,-

(a) the acquirer and persons acting in concert (PA C) under the Takeover Regulations;

(b) in case of directors, where by reason of commission or omission they have only acted collectively for an act of the company;

(c) any other group of persons, based on the facts and circumstances of each case, which the IC/H PAC may so recommend.”

(c) the existing item (12) shall be re-numbered as item (13);

(d) after item (11) and before item (13) the following item shall be inserted, namely,-

“(12) Settlement Notice: Except in cases which are excluded from settlement, a settlement notice indicating the substance of the charges and probable actions may be issued in advance of the notice to show cause so as to afford an opportunity to file a settlement application, within fifteen calendar days from receipt of the settlement notice.

Notwithstanding anything contained in the settlement notice, the Board shall have the power to modify the enforcement action to be brought against the noticee and the notice shall not confer any right to seek settlement or avoid any enforcement action.”

(IX) In Schedule- II, in Chapter II, item 1, shall be substituted with the following, namely-

“1. (a) Where the AO has already awarded penalty to the applicant, then ‘B’ shall be equal to the amount calculated by these guidelines or the penalty awarded by the AO, whichever is higher;

(b) In case more than one proceeding arising from the same cause of action has been initiated against the applicant, the IA shall be increased by 15%;

(c) In cases where the WTM or DM has issued directions debarring or suspending the applicant, the RAF shall take into account the value of Y as per Table III.”

(X) In Schedule- II, in Chapter III, Table I shall be substituted with the following, namely-

*Cases relating to fraudulent and unfair trade practices may be considered taking into account the evidence, information and assistance provided during the course of investigation, otherwise b. will apply.”

Sd/-
U.K. SINHA
CHAIRMAN
SECURITIES AND EXCHANGE BOARD OF INDIA

Footnote:

1. The SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014 were published in the Gazette of India on January 09, 2014 vide No. LAD-NRO/GN/2013- 14/37/50.

2. The SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014 were subsequently amended on:-

(1) 15th September, 2014 by Securities and Exchange Board of India (Settlement of Administrative and Civil Proceedings) (Amendment) Regulations, 2014 vide No. LAD-N RO/GN/201 4-15/08/1491.

(2) 29th August, 2016 by Securities and Exchange Board of India (Settlement of Administrative and Civil Proceedings) (Amendment) Regulations, 2016 vide No. LAD-N RO/GN/201 6-17/010.