| CHAPTER VI PROCEDURE FOR ACTION IN CASE OF DEFAULT |
| Board's right to suspend or cancel certificate of registration | 20. Without prejudice to the appropriate directions or measures under regulation 19, it may after consideration of the investigation report, initiate action for suspension or cancellation of the registration of such Foreign Venture Capital Investor: Provided that no such certificate of registration shall be suspended or cancelled unless the procedure specified in regulation 23 is complied with. |
| Suspension of certificate | 21. The Board may suspend the certificate where the Foreign Venture Capital Investor: |
| (a) contravenes any of the provisions of the Act or these regulations; |
| (b) fails to furnish any information relating to its activity as a Foreign Venture Capital Investor as required by the Board; |
| (c) furnishes to the Board information which is false or misleading in any material particular; |
| (d) does not submit periodic returns or reports as required by the Board; |
| (e) does not co-operate in any enquiry or inspection conducted by the Board; |
| Cancellation of certificate | 22. The Board may cancel the certificate granted to a Foreign Venture Capital Investor:- |
| (a) when the Foreign Venture Capital Investor is guilty of fraud or has been convicted of an offence involving moral turpitude; |
| Explanation: The expression "fraud" has the same meaning as is assigned to it in section 17 of the Indian Contract Act, 1872. (9 of 1872) (b) the Foreign Venture Capital Investor has been guilty of repeated defaults of the nature mentioned in the regulation 21; or |
| (c) Foreign Venture Capital Investor does not continue to meet the eligibility criteria laid down in these regulations; |
| (d) contravenes any of the provisions of the Act or these regulations. |
| Manner of making order of cancellation or suspension | 23. No order of penalty or cancellation of certificate shall be imposed on the Foreign Venture Capital Investor except after holding an enquiry in accordance with the procedure specified in the regulation 24. |
| Manner of holding enquiry before suspension or cancellation | 24. (1) For the purpose of holding an enquiry under regulation 23, the Board may appoint one or more enquiry officers. |
| (2) The enquiry officer shall issue to the Foreign Venture Capital Investors, at its registered office or its principal place of business or its agent or representative in India, a notice setting out the grounds on which action is proposed to be taken against it and calling upon it to show cause against such action within a period of fourteen days from the date of receipt of the notice. |
| (3) The Foreign Venture Capital Investor may, within fourteen days from the date of receipt of such notice, furnish to the enquiry officer a written reply, together with copies of documentary or other evidence relied on by it or sought by the Board from the Foreign Venture Capital Investor. |
| (4) The enquiry officer shall give a reasonable opportunity of hearing to the Foreign Venture Capital Investor to enable him to make submissions in support of its reply made under sub-regulation (3). |
| (5) Before the enquiry officer, the Foreign Venture Capital Investor may appear through any person duly authorised by the Foreign Venture Capital Investor: |
| Provided that no lawyer or advocate shall be permitted to represent the Foreign Venture Capital Investors at the enquiry: Provided further that where a lawyer or an advocate has been appointed by the Board as a presenting officer under sub-regulation (6), it shall be lawful for the Foreign Venture Capital Investor to present its case through a lawyer or advocate. |
| (6) The enquiry officer may, if he considers it necessary, ask the Board to appoint a presenting officer to present its case |
| (7) The enquiry officer shall, after taking into account all relevant facts and submissions made by the Foreign Venture Capital Investor, submit a report to the Board and recommend the penal action, if any, to be taken against the Foreign Venture Capital Investor as also the grounds on which the proposed action is justified. |
| Show-cause notice and order | 25. (1) On receipt of the report from the enquiry officer, the Board shall consider the same and may issue to the Foreign Venture Capital Investor a show-cause notice as to why the penal action as proposed by the enquiry officer or such appropriate action should not be taken against it. |
| (2) The Foreign Venture Capital Investor shall, within fourteen days of the date of the receipt of the show-cause notice, send a reply to the Board. |
| (3) The Board, after considering the reply, if any, of the Foreign Venture Capital Investor, shall, as soon as possible pass such order as it deems fit. |
| Effect of suspension and cancellation of certificate | 26. (1) On and from the date of the suspension of the certificate, the Foreign Venture Capital Investor shall cease to carry on any activity as a Foreign Venture Capital Investor during the period of suspension, and shall be subject to such directions of the Board with regard to any records, documents or securities that may be in its custody or control, relating to its activities as Foreign Venture Capital Investor, as the Board may specify. |
| (2) On and from the date of cancellation of the certificate, the Foreign Venture Capital Investor shall, with immediate effect, cease to carry on any activity as a Foreign Venture Capital Investor, and shall be subject to such directions of the Board with regard to the transfer of records, documents or securities that may be in its custody or control, relating to its activities as Foreign Venture Capital Investor, as the Board may specify. |
| Publication of order of suspension or cancellation | 27. The order of suspension or cancellation of certificate passed under regulation 25 may be published by the Board in two newspapers. |
| Action against intermediary | 28. The Board may initiate action for suspension or cancellation of registration of an intermediary holding a certificate of registration under section 12 of the Act who fails to exercise due diligence in the performance of its functions or fails to comply with its obligations under these regulations. Provided that no such certificate of registration shall be suspended or cancelled unless the procedure specified in the regulations applicable to such intermediary is complied with. |
| [Appeal to Securities Appellate Tribunal]9 | 29. Any person aggrieved by an order of the Board under these regulations may prefer an appeal to the Securities Appellate Tribunal in accordance with section 15T of the Act. [F. No.SEBI/LE-19/14797/2000] D.R. MEHTA
CHAIRMAN
SECURITIES AND EXCHANGE BOARD OF INDIA |
