TMI BlogGUIDELINES FOR ARRIVING AT SETTLEMENT TERMSX X X X Extracts X X X X X X X X Extracts X X X X ..... management, the existing record of the erstwhile entity shall be deemed to be the record of the new entity. Considerations including insolvency, change of name or management or ownership, etc., shall be considered in accordance with the guidelines issued by the Board, if any, from time to time. 5. PCF for Applications made voluntary or seeking settlement with confidentiality: Where an entity desires to obtain the benefit of a lower PCF, 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 the Board in the investigation, inquiry, inspection or audit. Such an 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 shall be calculated per count of default, jointly or separately as per the facts and circumstances of the case, in accordance with these guidelines. 7. While considering the application, the alleged default(s) detailed in the Inspection Report or the Investigation Report or the Report of the Designated Authority (DA) or the notice to show cause, including any supplementary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ETTLEMENT AMOUNT Indicative amount (IA) shall be calculated as follows: IA= A X B + Legal Costs # #Legal costs of the Board may be applicable to an application made at the stages mentioned in points b , d and e as provided in Table I. Where: A = PCF + RAF A: Multiplying Factor. PCF: Proceeding Conversion Factor. RAF: Regulatory Action Factor. B = BV x BA B: Applicable Benchmark Amount, is the amount attributable to every count of the alleged default in accordance with these guidelines; BV : Aggregate of the base values given to the relevant factors including the aggravating and mitigating factors in respect of a particular charge. BA : Base amount attributable to every count of the alleged default in accordance with these guidelines. 1. The IA shall not exceed the maximum penalty under securities laws that may be levied for each count of violation multiplied by the counts of alleged default in accordance with these guidelines. 2. (a) Where an order of penalty has been passed prior to making an application, then B shall not be less than the penalty so awarded; (b) In case m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NS The sum of all the values assigned to the order and regulatory direction(s) issued in the past, if any, shall be RAF . RAF = X + Y TABLE II -VALUE for ORDERS AND REGULATORY DIRECTIONS ISSUED X* * To also include those orders and directions which have been stayed by the Securities Appellate Tribunal or Court, as on the date of the application. In case multiple proceedings have been initiated for the same cause of action, the value shall be added for each final order passed. ORDERS AND REGULATORY DIRECTIONS ISSUED TO THE APPLICANT X PER ORDER Exonerated cases (i.e. cases where applicant was exonerated in an order or appeal or review) and any settlement order involving confidentiality 0 Any other Settlement Order 0.01 ALL OTHER ORDERS (EXCEPT FOR WHICH THE APPLICATION IS FILED) Cease and desist order 0.02 Final order issued against other persons associated with the securities markets 0.05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t; b. Early self-identification of contraventions followed by thorough internal reviews and sharing of discovered facts; c. Substantial assistance to an investigation or inquiry by obtaining and providing evidence. 4. Acceptance of responsibility and acknowledgement of misconduct to the Board prior to detection and intervention by truthfully admitting the conduct; 5. Voluntarily employing subsequent substantial corrective measures to avoid recurrence of misconduct; 6. Where the delay in complying with the reporting requirement was less than 7 days and non-reporting did not result in undue gain or loss to any person; 7. Voluntary acts of compensation, disgorgement of commission, profits and payment of restitution to investors; 8. Disclosure made in the incorrect format; 9. Applicant is a unit of governmental authority including a public-sector unit. II. While assessing the relevant factors, the IC or HPAC or Panel of WTMs may take into account the following general aggravating factors with a base value of 0.2 9 [ for each of them wherever applicable, subject to a maximum limit of 3 ] : 1. Efforts to frustrate or prolong an investigation, inquiry or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lic and requires professional education, training or licensing, e.g. chartered accountant, advocate, auditor, compliance officer, etc. Explanation 4. - This factor also applies where the applicant has represented himself to hold a position of trust when, in fact, he does not. 10. The applicant was the key-operator, whether or not he himself traded: Explanation 1. - A person is a key-operator if he was an organizer or leader of an illegal activity or the main beneficiary of the default: Provided that, if a person is merely a manager or supervisor (but not an organizer or leader or the main beneficiary) then he is not a key-operator. Explanation 2. - The IC or HPAC or Panel of WTMs may take into account factors such as share of profits, the recruitment of accomplices, the degree of control and authority exercised over others. 11. Exercising management control by use of fraudulent or forged securities or securities issued without appropriate approvals; 12. Reporting of false information. III. While assessing the relevant factors, the IC or HPAC or Panel of WTMs may take into account the following factors tending to show the alleged default was deliberate with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.50 0.75 [In case multiple are applicable, only the highest value shall be applied.] b. Factors for volume traded and/or price change for the default Sum of V , P and Q , wherever applicable, to be applied to each member of group or the applicant when he acts alone, only if the volume traded or price change, quantity traded in respect of the group, of which the applicant is a part of or the applicant when he acts alone, as the case may be, can be calculated from the findings brought out in the investigation report or inquiry or notice to show cause or order, as the case may be. In case multiple trading periods are involved, the highest change has to be considered. c. Time value of ill-gotten gains* 0.09 multiple of calendar years from the date of commission of the default d. Reputation risk applicable in all settlements without admitting violation of securities laws All applicants: 0.25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ALUES, IN ADDITION TO GENERAL BASE VALUES % PRICE CHANGE Q Upto 0.5% 0.1 0.5-1% 0.15 1-5% 0.2 5% or more 0.25 TABLE V- SPECIAL BASE VALUES, IN ADDITION TO GENERAL BASE VALUES FOR DISCLOSURE AND OPEN OFFER DEFAULTS NATURE OF VIOLATION BASE VALUE a. In Non-disclosure (including incorrect or incomplete disclosure) charge under any regulation relating to takeover, insider trading or issue or listing of securities in combination with any other charge 0.20 b. In Non-Disclosure (including incorrect or incomplete disclosure) matters: Applicant has made related disclosure under any other regulation or is a body corporate with paid-up equity share capital (including reserves) below Rupees Ten crores (not applicable to companies which are exclusively holding companies) - 0.5 c. In open offer violations: acquirer not in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DED BY THE IC OR HPAC OR THE PANEL OF WTMS ] 11 [ TABLE-VII BASE AMOUNT FOR ALLEGED DEFAULT RELATING TO DISCLOSURES UNDER SECURITIES AND EXCHANGE BOARD OF INDIA ( SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS ) REGULATIONS - 1997 / 2011 PERCENTAGE OF SHAREHOLDING OR VOTING RIGHTS ACQUIRED OR DISPOSED BUT NOT DISCLOSED OR PERCENTAGE OF ENCUMBERED SHARES BUT NOT DISCLOSED, ETC. BASE AMOUNT FOR VIOLATION OF REGULATION 7 OF 1997 REGULATIONS OR REGULATION 29 OF 2011 REGULATIONS (I) REGULATION 8 OF 1997 REGULATIONS OR REGULATION 30 OF 2011 REGULATIONS (II) REGULATION 8A OF 1997 REGULATIONS OR REGULATION 31 OF 2011 REGULATIONS (III) Less than 2% ₹ 2 lakh + ₹ 5,000/- For every three months delay # or part thereof 2% to less than 5% ₹ 4 lakh + ₹ 10,000/- For every three months delay or part thereof 5% to less than 10% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ASE AMOUNT Less than 2% ₹ 2 lakh + ₹ 7,500/- For every three months delay or part thereof 2% to less than 5% ₹ 4 lakh + ₹ 12,500/- For every three months delay or part thereof 5% to less than 10% ₹ 7 lakh + ₹ 17,500/- For every three months delay or part thereof 10 % to less than 15% ₹ 9 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 ₹ 10 lakh + 0.1 % of the value of the holding not disclosed, etc. + ₹ 25,000/- For every three months delay or part thereof Notes to Table VIII: 1. In cases of disclosure related violations by connected persons or by key managerial persons, the BA may be increased by 25%. 2. Table VIII is not applicable in cases where the disclosure related violation is in combination with Fraudulent and Unfair Trade Practices or Insider Trading. Explanation: Dealing wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lations by key managerial persons, the Benchmark Amount may be increased by 25%. 2. Table IX is not applicable in cases where the disclosure related violation is in combination with FUTP or IT. Explanation: Dealing while in possession of material financial or shareholding information may be treated as IT. 14 [ Table -X RESIDUARY BASE AMOUNT, FOR EACH UNIT OF ALLEGED DEFAULT FOR EACH APPLICANT OR ON JOINT LIABILITY BASIS ( AS PER THE SUM OF APPLICABLE AMOUNTS IN CASE OF JOINT APPLICANTS ) BASE AMOUNT WHERE : NAME LENDERS# ( I ) BODY CORPORATES INDIVIDUALS ( WHEN NOT IN I, III - V ) ( II ) INTERMEDIARY INCLUDING PRINCIPAL OFFICERS ( III ) MARKET INFRASTRUCTURE INSTITUTIONS INCLUDING PRINCIPAL OFFICERS ( IV ) FUND RELATED DEFAULTS I NCLUDING PRINCIPAL OFFICERS ( V ) DEFAULTS RELATE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual income of the applicant, the past and present trading pattern, including the frequency and quantum of trades. ##Serious violations may also result in additional terms such as disgorgement of management fee or any other terms as may be decided by the IC, HPAC or the Panel of WTMs. Note to Table X: 1. In case of applicability of more than one BA, the highest is to be considered. 2. In this Schedule, Principal Officer means a person that may be covered under Section 27 of the Act as amended by the Finance Act, 2018. 3. Fund means an Alternative Investment Fund (AIF), Mutual Fund (MF), Collective Investment Scheme (CIS) and any other pooling arrangement required to be registered with the Board. 4. Body Corporate in (II) in this Table includes, any applicant not covered in (I) and (III) to (V). ] CHAPTER VII REPETITIVE NATURE OF DEFAULT I. The counts of defaults may be selected using one or more or a combination of the methods indicated in this Chapter. Explanation. - Different methods may be used in respect of different persons in the same cause of action as may be required for arriving at a reasonable IA. II. In general, the unit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of time (daily, weekly, fortnightly, monthly, yearly) is required. The multiple counts of violation acts may be combined into one or more than one course of conduct. ***************** ************ NOTES:- 1. Inserted vide Notification No. SEBI/LAD-NRO/GN/2020/24 dated 22-07-2020 2. Substituted vide Notification No. SEBI/LAD-NRO/GN/2020/24 dated 22-07-2020 before it was read as WHERE THE MAKING OF THE OPEN OFFER IS INFRUCTUOUS I.E. WHEN COMPANY HAS BEEN DELISTED, WHEN OPEN OFFER IS NOT BENEFICIAL TO SHAREHOLDERS, ETC INFRUCTUOUS BY AN ACT OF THE COMPANY REQUIRED TO MAKE AN OPEN OFFER INFRUCTUOUS DUE TO OTHER REASON, INCLUDING WHEN OPEN OFFER IS NOT BENEFICIAL TO SHAREHOLDERS ₹ 1 CRORE OR OPEN OFFER SIZE, WHICHEVER IS HIGHER ANY AMOUNT BETWEEN THE MINIMUM PENALTY TO PROBABLE COST OF OPEN OFFER AS RECOMMENDED BY THE CORPORATE FINANCE DEPARTMENT OF THE BOARD 3. Substituted vide Notification No. SEBI/LAD-NRO/GN/2020/24 dated 22-07-2020 before it was read as TABLE-X ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT TIME OF VIOLATION, WHICHEVER IS HIGHER RESIDUARY (O) ₹ 3 LAKHS ₹ 15 LAKHS ₹ 10 LAKHS ₹ 3 LAKHS ₹ 6 LAKHS ₹ 3 CRORES ₹ 15 LAKHS OR 0.001% OF THE AVERAGE ASSET UNDER MANAGEMENT, AT TIME OF VIOLATION OR 0.01% OF THE AVERAGE NET WORTH, AT TIME OF VIOLATION, WHICHEVER IS HIGHER 4. Substituted vide Notification No. SEBI/LAD-NRO/GN/2022/62 dated 14-01-2022 before it was read as : 5. Omitted vide Notification No. SEBI/LAD-NRO/GN/2022/62 dated 14-01-2022 before it was read as Provided that in case of individual applicants who submit to the satisfaction of the IC or HPAC or Panel of WTMs that, without knowledge of the illegal activity, they had lent the use of their securities account to the key operator or intermediary or securities market infrastructure institution involved in such activity, the SA may not exceed the minimum penalty for that violation under securities laws. 6. Omitted vide Notification No. SEBI/LAD-NRO/GN/2022/62 dated 14-01-2022 before it was read as 5. Notwith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. Proceedings pending after the passing of the order by the Securities Appellate Tribunal or Court 1.20 8. Substituted vide Notification No. SEBI/LAD-NRO/GN/2022/62 dated 14-01-2022 before it was read as applied once for all or any of them 9. Substituted vide Notification No. SEBI/LAD-NRO/GN/2022/62 dated 14-01-2022 before it was read as applied once for all or any of them 10. Substituted vide Notification No. SEBI/LAD-NRO/GN/2022/62 dated 14-01-2022 before it was read as applied once for all or any of them 11. Substituted vide Notification No. SEBI/LAD-NRO/GN/2022/62 dated 14-01-2022 before it was read as TABLE-VII BA FOR ALLEGED DEFAULT RELATING TO DISCLOSURES UNDER SECURITIES EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS -1997/2011 PERCENTAGE OF SHAREHOLDING OR VOTING RIGHTS ACQUIRED OR DISPOSED BUT NOT DISCLOSED OR PERCENTAGE OF ENCUMBERED SHARES BUT NOT DISCLOSED, ETC. BA FOR VIOLATION OF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SACTION SPECIFIC DISCLOSURES UNDER REGULATIONS 13(3), 13(4), 13(4A) AND CORRESPONDING 13 (6) OF 1992 PIT REGULATIONS [INCLUDES, CORRESPONDING TRANSACTION SPECIFIC DISCLOSURES UNDER REGULATIONS OF 2015 PIT REGULATIONS] PERCENTAGE OF SHAREHOLDING OR VOTING RIGHTS ACQUIRED OR DISPOSED BUT NOT DISCLOSED OR PERCENTAGE OF ENCUMBERED SHARES BUT NOT DISCLOSED, ETC. BA Less than 2% ₹ 2.5 lakh + ₹ 7,500/- For every three months delay or part thereof 2% to less than 5% ₹ 6 lakh + ₹ 12,500/- For every three months delay or part thereof 5% to less than 10% ₹ 12 lakh + ₹ 17,500/- For every three months delay or part thereof 10 % to less than 15% ₹ 18 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 ₹ 25 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ES 1 CRORES RUPEES 45 LAKHS RUPEES 15 LAKHS RUPEES 30 LAKHS RUPEES 5 CRORES RUPEES 33 LAKHS OR 0.01% OF THE AVERAGE ASSET UNDER MANAGEMENT, AT TIME OF VIOLATION OR 0.5% OF THE AVERAGE NET WORTH, AT TIME OF VIOLATION, WHICHEVER IS HIGHER BENCHMARK WHERE VIOLATION INVOLVED AT (M) AND, - SUCH VIOLATION DIRECTLY OR INDIRECTLY (I) RESULTED IN SUBSTANTIAL LOSSES TO OTHER PERSONS, (II) CREATED A SIGNIFICANT RISK OF SUBSTANTIAL LOSSES TO OTHER PERSONS, OR (III) AFFECTED THE INTEGRITY OF THE SECURITIES MARKETS (N) RUPEES 60 LAKHS RUPEES 3 CRORES RUPEES 2 CRORES RUPEES 60 LAKHS RUPEES 80 LAKHS RUPEES 10 CRORES RUPEES 60 LAKHS OR 0.05% OF THE AVERAGE ASSET UNDER MANAGEMENT, AT TIME OF VIOLATION OR 0.75% OF THE AVERAGE NET WORTH, AT TIME OF VIOLATION, WHICHEVER IS HIGHER RESIDUARY (O) RUPEES 3 LAKHS RUPEES 15 LAKHS RUPEES 10 LAKHS RUPEES 3 LAKHS RUPEES 6 LAKHS RUPEES 3 CRORES ..... X X X X Extracts X X X X X X X X Extracts X X X X
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