TaxTMI 
TaxTMI 
GUIDELINES FOR ARRIVING AT SETTLEMENT TERMS
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.... 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 Regulations; (b) in case of directors, where by reason of commi....
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....stors 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 evidence and the basis of the charge levelled against the applicant or the extent of his co-operation during the investigation /inquiry / inspection....
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....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 values assigned on the basis of the stage of the proceedings, as on the date of the application, shall be the PCF as per Table I [TABLE I-PCF STAGE OF THE PROCEEDING(S) WHEN THE APPLICATION IS MADE VALUE OF ....
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....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 arrived at on the basis of the calculations are found to be low and not commensurate to the seriousness of the alleged default. Notwithstanding the above, SEBI shall not settle serious fraudulent and unfair trade practices which, in its opinion, cause substantial losses to investors especially retail investors and small shareholders or have or may have market wide impact, except those defaults where the applicant has made or intends to make good the losses....
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....l 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 or Panel of WTM's shall consider whether the default may be settled. II - APPLICABLE AMOUNT THE APPLICABLE AMOUNT FOR AN APPLICANT =The profit made and/or loss avoided* of each applicant Or The Base Amount as per Table V, whichever is higher. *IN CHAPTER V TO VII, PROFIT MADE AND/OR LOSS AVOIDED, MAY BE CALCULATED AFTER TAKING INTO ACCOUNT THE FOLLOWING: 1. In cases, where the profit made and losses avoided both co-exist, the sum thereof shall be taken into consideration for arriving at the total ill-gotten profit made by the applicant. 2. In cases of issue of fraudulent securities, fraudulent purchase of securities, including where funding is though circuitous route, etc., the profit made and/or loss avoided, shall be calculated after tak....
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....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') ₹ 15 lakh Or 15% per annum × into funds provided × period for which the funds was provided, whichever is higher c. Promoters Whole Time Directors or Chairman Other directors or Key Managerial Personnel (KMP) ₹ 1 crore Or 0.5% of the (highest) market value of its/his holdings in the company (including any convertible warrant or options) whichever is higher ₹ 25 lakh Or 0.5 % of the (highest) market value of its/his holdings in the company (including any convertible warrants or options) whichever is higher; ₹ 10 lakh Note: I. In case of pre-IPO related matters, the market value will be computed on the basis of the listing price. II. In the case of already listed companies, the value of holdings during the period of default shall be taken. d. Listed companies (to be borne by the p....
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.... 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 is part of any index maintained by BSE Ltd or National Stock Exchange of India Ltd, the Base Amount shall be increased by 15%. In these guidelines the following persons shall be treated as 'name-lender': An applicant who allows his name to be used or whose name is used for opening a demat account or client account by another, who operates the same as his own account. It includes an account-lender whose demat account or client account is allowed to be used or used for market transactions by anyone other than himself, for the purpose of any activity by such other, including manipulation or other fraudulent activities. A key operator referred to in these guidelines, includes the main manipulator and any other applicant who in the opinion of the IC or HPAC or Panel of WTM's may be so categorised. Chapter VI BENCHMARK AMOUNT IN DISCLOSURE RELATED DEFAULTS UNDER SEBI (SAST) REGULATIONS , SEBI (PIT) REGULATIONS AND OTHER DISCLOSURES AND REPORTING REQUIREMENTS, et....
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....elay 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 made on time but filed in the wrong format, the Base Amount shall be reduced by 75%. TABLE VII- BASE AMOUNT - TRANSACTION SPECIFIC DISCLOSURES UNDER REGULATIONS 13(3), 13(4), 13(4A) AND CORRESPONDING 13 (6) OF SEBI (PIT) REGULATIONS 1992, PERCENTAGE OF SHAREHOLDING OR VOTING ACQUIRED BUT NOT DISCLOSED, etc. BASE AMOUNT* Upto 2% ₹ 1.5 lakh + ₹ 7,500/- For every three months delay or part thereof 2% to less than 5% ₹ 2.5 lakh + ₹ 12,500/- For every three months delay or part thereof 5% to less than 10% ₹ 6 lakh + ₹ 17,500/- For every three months delay or part thereof 10 % to less than 15% ₹ 12 lakh + 0.1 % of the value of the holding not disclosed, etc. + ₹ 22,500/- For every three months delay or part thereof 15% and above ₹ 20 lakh + 0.1 % of the value of the holding not disclosed, etc. + ₹ 25,000/- For every three months delay or part thereof *In cases of disclosures not made by the connected persons and by the KMPs, the Base Amount may be in....
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....ISITION (CONSENTABLE CASES ONLY) The Benchmark amount for open offer defaults ie. B (OO) may be computed on the basis provided below. However the IC or HPAC or Panel of WTM's, may, in cases of serious open offer default, take the Benchmark Amount of the applicant as per the provisions of 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. The non-compliance of a condition precedent for availing exemption would result in the triggering of an open offer obligation and would be considered as per under Table X and XI. B(OO) = SUM OF BASE VALUES AS PER TABLE XI ×BASE AMOUNT AS PER TABLE X TABLE X-BASE AMOUNT NATURE OF DEFAULT BASE AMOUNT FOR ACQUIRER AND PACS Delayed open offer Cases of open offer defaults referred for adjudication ₹ 25 lakh or 0.25% of the open offer size, i.e. max number of shares for which open offer must be given x applicable open offer price, which ever is higher Delayed open offer (after direction from the Board) ₹ 50 lakh or 0.5% of the open offer size, whichever is higher . Where the making of the open offer is infructuous ....
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....s and the past track record of the entity in redressing investor grievances, arrive at a lump sum Base Amount of ₹ 5 lakh or a lesser amount. # The Base amount may also take into account any ill-gotten profit and/or loss avoided in major cases. In case of violations under Securities Contract (Regulations) Act, 1956 and the rules, regulations made thereunder the IC or HPAC or Panel of WTMs may recommend or decide a higher base amount. Further, in case of proceedings before DM or 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. CLARIFICATIONS: a. In case of CIS, mutual fund, AIF, etc., related defaults, the settlement amount shall be recovered from the promoter or CIMC; and from trustees or sponsors or AMC or manager in case of defaults by AMCs or Mutual Fund, etc., as may be deemed appropriate. b. In case the CIMC or AMC, etc., investment decisions have caused wrongful loss to the investors, the CIMC or AMC, etc., shall be required to ....