Securities and Exchange Board of India (Investor Protection and Education Fund) Second Amendment Regulations, 2023


Quick Summary
The Securities and Exchange Board of India (SEBI) has introduced the Investor Protection and Education Fund (Second Amendment) Regulations, 2023. These amendments clarify how certain funds transferred to the Investor Protection and Education Fund can be utilised. Specifically, disgorged amounts and related interest can be used for investor restitution or to reward informants. Additionally, funds transferred from specific regulations concerning listed entities, REITs, and InvITs can be refunded to the transferring entities after they compensate eligible investors.

SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION

Mumbai, the 20th October, 2023

SECURITIES AND EXCHANGE BOARD OF INDIA (INVESTOR PROTECTION AND EDUCATION FUND) (SECOND AMENDMENT) REGULATIONS, 2023

No. SEBI/LAD-NRO/GN/2023/157.—In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2009, namely: -

1. These regulations may be called the Securities and Exchange Board of India (Investor Protection and Education Fund) (Second Amendment) Regulations, 2023.

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 (Investor Protection and Education Fund) Regulations, 2009 –

I. in regulation 4, in sub-regulation (1),-

(a) the existing clause ―(j)‖ shall be renumbered as clause ―(m)‖;

(b) after the existing clause (i), the following clauses shall be inserted, namely, -

"(j) monies transferred in accordance with the proviso to sub-regulation (3) of regulation 61A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015;

(k) monies transferred in accordance with clause (f) of sub-regulation (16) of regulation 18 of the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014;

(l) monies transferred in accordance with clause (e) of sub-regulation (6) of regulation 18 of the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014;"

II. in regulation 5, sub-regulation (3) shall be substituted with the following, namely, -

"(3) Notwithstanding the provisions of sub-regulations (1) and (2),-

i. the amounts disgorged and credited to the Fund in accordance with clause (h) of sub-regulation (1) of regulation 4 of these regulations and the interest accrued thereon shall, in cases where the Board deems fit to make restitution to eligible and identifiable investors who have suffered losses resulting from violation of securities laws or for rewarding informants who provide original information to the Board to recover amounts directed to be disgorged, be utilised only for the purposes of such restitution or reward;

ii. the amounts credited to the Fund in accordance with clauses (j), (k) and (l) of sub-regulation (1) of regulation 4, shall be utilised for refund to the entities transferring the said amounts, pursuant to their making payment to eligible and identifiable investors and making a claim to the Fund in the manner specified by the Board:

Provided that monies remaining in the Fund after earmarking, -

i. the amount for the process of restitution to eligible and identifiable investors credited to the Fund in accordance with clause (h) of sub-regulation (1) of regulation 4; and

ii. the amount for refund to the entities transferring the said amounts credited to the Fund in accordance with clauses (j), (k) and (l) of sub-regulation (1) of regulation 4; may be utilised for the purposes of the Fund as specified in sub-regulations (1) and (2): Provided further that no claim for restitution from the disgorged amounts in a specific case shall be admissible after a period of seven years from the date of invitation of claims for disgorgement in the said case by the Board."

BABITHA RAYUDU, Executive Director
[ADVT.-III/4/Exty./504/2023-24]

FAQ :

These are amendments to the existing SEBI (Investor Protection and Education Fund) Regulations, 2009, which came into effect upon their publication in the Official Gazette.

Disgorged amounts and their accrued interest can be used for making restitution to eligible investors who have suffered losses due to securities law violations, or for rewarding informants who provide original information leading to the recovery of disgorged amounts.

Monies transferred in accordance with the Listing Obligations and Disclosure Requirements, Real Estate Investment Trusts, and Infrastructure Investment Trusts Regulations can be utilised for refund to the transferring entities, provided they have made payments to eligible investors and submitted a claim.

A claim for restitution from disgorged amounts in a specific case is not admissible after a period of seven years from the date SEBI invited claims for disgorgement in that case.

Yes, any monies remaining in the Fund after earmarking amounts for restitution and refunds can be utilised for the general purposes of the Fund as specified in the earlier sub-regulations.

 
Notification No : SEBI/LAD-NRO/GN/2023/157
Source : https://egazette.gov.in/WriteReadData/2023/249632.pdf



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