TaxTMI 
TaxTMI 
GUIDELINES FOR ARRIVING AT SETTLEMENT TERMS
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....ecord of the erstwhile entity shall be deemed to be the record of the new entity. Considerations such as change of name or management or ownership shall be irrelevant when determining the liability of the said entity. 5. Where an entity desires to obtain the benefit of a lower PCF, in relation to any alleged default it may, suo motto, before the receipt of any notice to show cause, intimate the Board of such default hereinafter referred to as 'intimation defaults' and co-operate with SEBI in the investigation, inquiry, inspection or audit. It may thereafter file a settlement application, upon completion of the investigation, inspection, etc. The application shall be deemed to have been made 'Pre- issue of notice to show cause' for the purpose of calculating the PCF. [6. 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 (PAC) under the Takeover Reg....
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....to investors in securities, or (iii) affect the rights of investors in securities, especially retail investors and small shareholders. (c) Thus, in order to fall in disqualification of clause (b), the default must be serious and it must fall in any or all of the categories mentioned in points (i), (ii) and (iii) above. Notwithstanding the same, where both these criteria are attracted, the application may be considered for settlement, if the applicant has made or intends to make good the losses to the investors in terms of the first proviso to clause (b), provided he undertakes in writing that,- 'for the limited purpose of settling the administrative and civil proceedings I/We admit the charge before the Securities and Exchange Board of India.' (d) While considering its 'seriousness', the default shall be seen in the context of its specific nature and the role played by the applicant. The charges against the applicant in the show cause notice or the investigation report or the report of the designated authority, as the case may be, may not be the only deciding factor in this regard. The weight and sufficiency of the eviden....
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....nchmark Amount, is the amount which is attributable to the alleged default for which a proceeding under securities laws may be or has been initiated by the Board; it is determined separately for each category of default and in case of multiple defaults, the total sum thereof, determined in terms of these guidelines; [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.]^ 7 2. The amount which is finally recommended by the HPAC after taking into account the IA, any mitigating or aggravating factors etc; and approved by the Panel of Whole Time Members is the SA. 3. After payment of the SA, the settlement order along with other directives, if any, shall be passed accordingly. CHAPTER III PROCEEDING CONVERSION FACTOR The va....
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....5 Order of AO, DM or WTM issued against intermediaries or listed companies 0.075 TABLE III- VALUE FOR ORDER OR DIRECTION PASSED OR ISSUED FOR WHICH THE APPLICATION IS FILED - Y PROCEEDING BEFORE DM PROCEEDING BEFORE WTM 'Y' PER ORDER Warning issued 0.05 Suspension upto 1 week Debarment upto 6 calendar months 0.1 Suspension for 1 week or more, but less than 1 month Debarment for 6 calendar months or more, but less than 1 year 0.15 Suspension for 1 month or more but less than 3 months Debarment for 1 year or more but less than 2 years 0.2 Suspension for 3 months or more but less than 1 year Debarment for 2 years or more but less than 3 years 0.25 Suspension for or more than 1 year Debarment for 3 years or more but less than 5 years 0.3 CHAPTER V BENCHMARK AMOUNT FOR FUTP DEFAULTS The Benchmark Amount for defaults related to FUTP i.e. B (FUTP), may be computed as detailed in this Chapter. However, the IC or HPAC or Panel of WTM's may, in cases of serious FUTP default, take the Benchmark Amount of the applicant as per the provisions of the securities laws if the amounts arri....
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.... #Where the volume traded, during any trading period falls within this class, the IC or HPAC or Panel of WTM's shall consider whether the default may be settled. 'P' = VALUE FOR HIGHEST % OF PRICE CHANGE IN ANY TRADING PERIOD DURING THE ENTIRE PERIOD OF DEFAULT In case of more than one scrip, the scrip with the highest price change is to be considered # % PRICE CHANGE (ILLIQUID SCRIP) 'P' % PRICE CHANGE (LIQUID SCRIP) Upto 50% 0.05 Upto 5% 50-100%# 0.07 5-10%# 100-200%# 0.1 10-20%# 200% or more# 0.15 20% or more# #Where the price change during any trading period falls within this class, the IC or HPAC or Panel of WTM's shall consider whether the default may be settled. 'Q' = VALUE FOR HIGHEST % OF PRICE CHANGE IN ANY TRADING PERIOD, DURING THE PERIOD OF DEFAULT FOR F&O & LEVERAGED PRODUCTS In case of more than one product, the contract with the highest price change is to be considered % PRICE CHANGE 'Q' Upto 0.5% 0.05 0.5-1% 0.07 1-5%# 0.1 5% or more# 0.15 #Where the price change during any trading period falls within this class, the IC or HPAC ....
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....e more than one parameter is applicable, the highest Base Amount, as may be appropriate in the facts and circumstances of the case, may be considered. CATEGORY OF APPLICANT BASE AMOUNT AND PARAMETER * a. Intermediaries (i) Where the entity is charged for FUTP or aiding and abetting FUTP Rs. 15 lakh Or 1.5% of the value of the gross fraudulent trades executed through the intermediary including proprietary trades, whichever is higher (ii) Where the intermediary is charged for violation of code of conduct Rs. 8 lakh Or 0.75% of the value of the gross fraudulent trades executed through the intermediary, whichever is higher (iii) In cases of proceedings before the DM or the WTM, the Base Amount may also be computed by taking into account a suitable fraction or multiple of the gross annual income during the period of default, as may be recommended or decided by the IC or HPAC or Panel of WTM's, after taking into account the facts and circumstances of the case. b Applicant charged for financing the FUTP activities (Listed companies not engaged in lending business, but charged with financing its Issue fall under point 'd') Rs. 15....
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....ng into account the facts and circumstances of the case. g . FII Proprietary sub-account Rs. 35 lakh Or 0.005% of the total assets under custody (AUC), whichever is higher Non- proprietary sub-accounts Rs. 20 lakh Or 0.005% of the total AUC, whichever is higher h. Book running lead manager or lead manager and other intermediaries associated with an issue or takeover 1% of the issue or takeover size (or the estimated issue size) handled by the Book running lead manager or lead manager and 0.25% for other intermediaries i. AMC, trustee, sponsor, etc. ( In case of mutual fund, etc., to be borne by the AMC, CIMC, manager, etc., and not to be passed on to the schemes) Rs. 25 lakh Or 0.001% of the total assets under management (AUM) Or 0.1% of the net worth; whichever is higher j. Where none of the above are applicable to the applicant To be determined for each applicant as recommended or decided by the IC or HPAC or Panel of WTMs on the basis of the facts and circumstances of each case * TO be calculated per scrip or product manipulated. In case the scrip....
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....ay or part thereof 5 % to less than 10% Rs. 5 lakh + Rs. 15,000/- For every three months delay or part thereof 10 % to less than 15 % Rs. 10 lakh + 0.1 % of the value of the holding not disclosed, etc. + Rs. 20,000/- For every three months delay or part thereof 15% and above Rs. 15 lakh + 0.1 % of the value of the holding not disclosed, etc. + Rs. 25,000/- For every three months delay or part thereof * The Base Amount shall only be as per the lowest slab, irrespective of change in shareholding over the reporting period. In case of defaults related to disclosures that are required to be made annually, and application is filed for settlement of such defaults, the amount for delay for every three months or part thereof shall be computed only for the first non-disclosure. In case the applicant complies with the annual reporting requirements for a few years, such compliance will not result in a higher base amount than would have otherwise be calculated for continuous defaults. #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. In case a correct disclosure is....
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....t Rs. 5 lakh per default Others Code of conduct reporting requirements or Disclosures on appointment of director or Any other disclosure related defaults that are not detailed in these guidelines, if deemed appropriate Rs. 2 lakh + Rs. 10,000/- for every three months delay or part thereof TABLE IX - BASE VALUE NATURE OF DEFAULT BASE VALUE a) Per se SAST or PIT or ICDR regulation, etc. violation, not falling in any of the below mentioned categories 1 b) Non-disclosure charge in combination with any other charge 1.1 c) Charge of non-disclosure, although timely related disclosure made under any other Regulation(s) 0.6 d) Charge of non-disclosure, although timely related disclosure made under any other regulation of SEBI (SAST) Regulations or listing agreement, etc. 0.55 e) Companies with paid-up share capital below Rs. 10 crore (not applicable to companies which are exclusively holding companies) 0.5 All factors 'a' to 'e' in Table IX are mutually exclusive. In case of applicability of more than one factor, the lowest factor is to be considered. ....
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....nchmark Amount of the applicant as per the provisions securities laws if the amounts arrived at on the basis of the calculations are found to be low and not commensurate to the seriousness of the alleged default. B(I/RE) = SUM OF ALL BASE AMOUNTS AS PER TABLE XII + 25 % OF THE GROSS FEE EARNED* IN RESPECT OF THE MAJOR DEFAULTS, WHERE DETERMINABLE *A lower percentage may be taken in respect of Public Sector Undertakings. TABLE XII- BASE AMOUNT NATURE OF DEFAULT BASE AMOUNT MINOR CASES MAJOR CASES^# Code of conduct related defaults Rs. 1 lakh per default Rs. 8 lakh per default Section 15B of SEBI Act , etc Section 15F of SEBI Act & other stock-broker defaults vis-à-vis clients, etc. Delay in redressing investor grievances^* Section 15D &15E of SEBI Act- CIS, AMC, and other fund activity related defaults, etc., including conduct related defaults Rs. 2 lakh per default or 0.001% of the AUM or 0.1% of the net worth whichever is higher Rs. 20 lakh per default or 0.001% of the AUM or 0.1% of the net worth whichever is higher Other defaults not provided elsewhere in these guidelines, if deemed appropriate Rs. ....
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....nistrative and Civil Proceedings)(Amendment) Regulations, 2016, w.e.f. 26-8-2016. 3 Omitted vide the Securities and Exchange Board of India (Settlement of Administrative and Civil Proceedings) (Second Amendment) Regulations,2017 w.e.f. 27.12.2017. Inserted by the Securities and Exchange Board of India (Settlement of Administrative and Civil Proceedings) (Amendment) Regulations,2017 w.e.f. 27.02.2017. Prior to its deletion, item 12 read as follows,- "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." 4 Renumbered by the (Settlement of Administrative and Civil Proceedings) (Amendment) Regulations, 2017 w.e.f. 27.02.2017. 5 Renumbered ....