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THE GAZETTE OF SECURITIES AND EXCHANGE BOARD OF MUMBAI, THE 27TH DAY OF SEPTEMBER, 2002 SECURITIES AND EXCHANGE BOARD OF (PROCEDURE FOR HOLDING ENQUIRY BY ENQUIRY OFFICER AND IMPOSING PENALTY) REGULATIONS, 2002 S.O.1045 (E) In
exercise of the powers conferred by section 30, read with sub-section (3) of
section 12 and section 19, of the Securities and Exchange Board of India Act,
1992 (15 of 1992), the Board hereby makes the following regulations, namely:- CHAPTER I PRELIMINARY Short title and
commencement 1. (1) These regulations may be called the
Securities and Exchange Board of India (Procedure for Holding Enquiry by
Enquiry Officer and Imposing Penalty) Regulations, 2002. (2) They shall
come into force on the date of their publication in the Official Gazette.
Definitions 2. (1) In these regulations, unless the context otherwise
requires,- (a) "Act" means the Securities and
Exchange Board of India Act, 1992 (15 of 1992); (b) "Board" means the Securities and Exchange Board of India
constituted under section 3 of the Act; (c) "certificate" means a certificate
of registration granted to an intermediary under the relevant Regulations; (d) "enquiry" means an enquiry held
under these regulations; *1 (e) "enquiry officer" means an officer
of the Board, not below the rank of Assistant General Manager or Assistant
Legal Advisor,
appointed by the Chairman or a member designated in this behalf
to conduct enquiry: (f) "intermediary" means a person referred
to in sub-section (1) or sub-section (1A) of section 12 of the Act and includes
an asset management company in relation to the Securities and Exchange Board of
India (Mutual Funds) Regulations, 1996 and a Collective Investment Management
Company in relation to the Securities and Exchange Board of India (Collective
Investment Schemes) Regulations, 1999; (g) "presenting officer" means a legal
practitioner or an officer of the Board appointed by the Chairman or a member
designated in this behalf to present a case on behalf of the Board before the
enquiry officer; (h) "relevant Regulations" means any
of the regulations referred to in regulation 4 made by the Board under section
30 of the Act for regulating the activities of intermediaries; (i) "self-regulating organisation"
means an organisation of intermediaries operating in
the securities market duly recognised by or
registered with the Board and includes a Stock Exchange; (2) Words and expressions
used and not defined in these regulations, but defined in the Act or in the
rules or regulations made thereunder, shall have the
meanings respectively assigned to them in the Act or rules or regulations made thereunder, as the case may be. CHAPTER II ENQUIRY PROCEEDINGS Procedure
for holding enquiry _________________________________ 1. Substituted by the
SEBI (Procedure for Holding Enquiry Officer and Imposing Penalty) Amendment
Regulations, 2004, w.e.f. 3. No order under these regulations shall be passed
except after holding an enquiry by the enquiry officer. Enquiry for contraventions of the
regulations 4. An enquiry for the purpose of passing an order under these regulations
may be held for contravention of any of the provisions of – *2 the
following regulation, as amended from time to time - (a) the Securities and Exchange Board of India (Stock-brokers
and Sub-brokers) Regulations, 1992; (b) the Securities and
Exchange Board of (c) the Securities and
Exchange Board of (d) the Securities and Exchange Board of (e) the Securities and
Exchange Board of (f) the Securities and
Exchange Board of (g) the Securities and
Exchange Board of (h) the Securities and
Exchange Board of (i) the
Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair
Trade Practices relating to Securities Market) Regulations, 1995; ___________________________________________________ *2. Inserted by the SEBI
(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty (Second
Amendment) Regulations, 2005, w.e.f. * As corrected vide SO 1333(E), dated 21.08.2006 (j) the Securities and
Exchange Board of (k) the Securities and
Exchange Board of (l) the Securities and
Exchange Board of (m) the Securities and
Exchange Board of (n) the Securities and
Exchange Board of (o) the Securities and
Exchange Board of (p) the Securities and
Exchange Board of (q) the Securities and
Exchange Board of India (Credit Rating Agencies) Regulations, 1999; (r) the Securities and
Exchange Board of India (Collective Investment Schemes) Regulations, 1999; (s) the Securities and
Exchange Board of Appointment
of enquiry officer 5. (1) Where it appears to
the Chairman or a member designated in this behalf that an intermediary has
contravened any of the provisions of a Regulation referred to in regulation 4,
the Chairman or the member, as the case may be, may appoint an enquiry officer
for the purpose of holding an enquiry into the matter: Provided that the Chairman or the member, as the case may be, may appoint
more than one enquiry officers if the subject matter of enquiry contains
technical or complicated questions of fact or law who will function as a bench
to be presided by the senior amongst them.
(2) No officer who has dealt with the matter or who
is directly or indirectly interested, or has an interest, in that intermediary
or who has conducted an investigation or inspection in respect of the alleged
violation shall be appointed as an enquiry officer. * 3 Transfer of Pending enquiry. 5A.
(1) An enquiry in respect of violation of any provisions of the Securities and
Exchange Board of India ( Stock Brokers and Sub-Brokers) Regulations, 1992
pending before any enquiry officer immediately before the date of commencement
of the SEBI(Stock Brokers and sub-Brokers)(Second Amendment) Regulations, 2003,
being an enquiry in respect of a violation which can be adjudicated under
Chapter VI A of the Act pursuant to the provisions of SEBI (Stock Brokers and sub-Brokers)(Second
Amendment) Regulations, 2003 may be transferred by the Chairman or the member
by an order in writing to an adjudicating officer appointment appointed under
Section 15-I of the Act. (2)
Where any matter has been transferred from an enquiry officer to an
adjudicating officer under sub-regulation (1) ----- (a)
the enquiry officer shall, as soon as may be , after such transfer forward the
records of such enquiry proceedings to the adjudicating officer; and (b)
the adjudicating officer may, on receipt of such records, proceed to deal with
the matter, so far as may be, in the same manner as in the case of adjudicating proceedings
under the Chapter VI A read with the Securities and Exchange Board of India (
Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer)
Rules, 1995.] * 4 Issuance of notice. ___________________________________________________ * 3. Inserted by the SEBI (Procedure for Holding Enquiry by Enquiry
Officer and Imposing Penalty)
(Second Amendment) Regulations, 2003, w.e.f..30.12.2003 * 4. Substituted
by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing
Penalty (Amendment) Regulations, 2003, w.e.f.
27.11.2003. 6. *5 (1)
Where an Enquiry Officer is appointed, he shall, if he finds reasonable grounds
to do so, issue show cause notice to the intermediary concerned calling up on
it to show cause as to why further action should not be taken against it under
these Regulations, specifying therein the nature of the contraventions alleged
to have been committed by him. (i) to submit within a period to be specified in the notice,
*6 [***] not exceeding twenty-one days, a written statement, if any, to the
enquiry officer appointed under sub-regulation (1) of regulation 5, and (ii) to specify
whether he desires to be heard in person before the enquiry officer:] *7 [ provided that
the enquiry officer may extend the time mentioned under clause (i) for sufficient reasons to be recorded in writing] (2) There shall be
annexed to the notice issued under sub-regulation (1) copies of documents
relied on by the Board and extracts of relevant portions of documents
containing the findings arrived at in any investigation or inspection held by
the Board in respect of the alleged contravention. (3) The notice
under sub-regulation (1) shall require the intermediary - Manner
of service of notice 7. The notice referred to in regulation 6 shall be
served in the manner specified in regulation 22. ________________________________________________ *5. Substituted
by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing
Penalty (Amendment) Regulations, 2006, w.e.f.
21.08.2006.prior to its substitution, sub-regulation (1) read as under:- (1) where it is proposed to hold an enquiry against an intermediary
under these regulations an officer of the Board specified by the Chairman or
the member in this behalf, shall issue to the intermediary a notice starting
therein the contravention of the relevant regulations alleged to have been
committed by the intermediary” *6 Word ordinarily omitted by the SEBI
(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty (Second
Amendment) Regulations, 2005, w.e.f. 7.6.2005. * * As corrected vide so 1333(E) dated
21.08.2006. *7. Inserted ibid Reply by
intermediary 8. The intermediary to whom the notice under regulation 6 has been
issued * 8 [may] submit *9 [ to the enquiry officer] his
written statement within the period specified in the notice along with
documentary evidence, if any, in support thereof and shall also state whether
he desires to be heard in person: Provided that the enquiry officer may, for sufficient reasons, *10 [ to be recorded in writing], extend the period to submit
written statement. Notice of hearing 9. The enquiry officer shall issue, or caused to be issued, notice in the
manner specified under regulation 22 stating the date and the place of hearing
to the intermediary who may appear before the enquiry officer for hearing on
the date so notified. Ex parte proceedings 10. If any intermediary fails or refuses to appear before the enquiry
officer, as required under regulation 9 or does not reply to the notice as
required under regulation 8, the enquiry officer may proceed ex parte with the enquiry after recording the reasons and
pass appropriate order on merits based on the material facts before him. Representation
before enquiry officer 11. The
intermediary may appear before the enquiry officer in person or through any
person duly authorised by him in this behalf: Provided that no
legal practitioner shall be permitted to represent the intermediary at the
enquiry except where a legal practitioner has been appointed by the Chairman or
a member designated in this behalf as a presenting officer under regulation 12.
__________________________________________ *8. Substituted for “shall”
ibid *9. Inserted by the SEBI
(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty (Second
Amendment) Regulations, 2003 w.e.f. 27.11.2003 *10. Inserted by the SEBI
(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty (Second
Amendment) Regulations, 2005 w.e.f. 07.06.2005. * * As corrected vide so 1333(E) dated
21.08.2006 Presenting officer 12. (1) The Chairman or a member designated in this behalf may appoint a
presenting officer in an enquiry. (2) The enquiry officer, if he considers it necessary, may advise the
Board to appoint a presenting officer for the purpose of the enquiry and the
Chairman or a member designated in this behalf on receipt of such advice shall
appoint a presenting officer. Imposition
of penalty 13. (1) The enquiry officer shall, after considering
the written statement and the oral submissions, if any, of the intermediary and
the provisions of the relevant Regulations, submit a report to the Chairman or
a member designated in this behalf and recommend for the imposition of any of
the following penalties by the Chairman or the member, as the case may be, with
the justification for the imposition thereof:- (a) Minor penalties - i) * 11 [***]
or censure; ii) prohibiting the intermediary to take up any
new assignment or mandate or launch a new scheme for a period upto six months; iii) debarring a partner or a whole time director of the intermediary
from carrying out the activities as intermediary in the intermediary firm or
company and other capital market related institutions for a period upto six months ; iv) suspension of certificate of registration
for a period upto three months; v) debarring a branch or an office of the
intermediary from carrying out the activities for a period upto
six months.
____________________________________________ *11 Words “warning or “ omitted by SEBI
(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty)
(Amendment) Regulations, 2004, w.e.f.
31.12.2004. * (b) Major penalties - i) cancellation
of certificate of registration; ii) suspension of certificate of registration
for period exceeding three months; iii) taking of action under sub-clause (ii),
(iii) or (v) of clause (a) for a period exceeding six months. (2) On receipt of the report from the enquiry
officer, the Chairman or the member, as the case may be, shall consider the
same and issue a show-cause notice to the intermediary *12 [ enclosing
therewith a copy of the report of the Enquiry Officer] as to why the action as
it considers appropriate should not be taken. (3) The intermediary *13[may]
within fifteen days of the date of the receipt of the show-cause notice
send a reply to the Chairman or the member, as the case may be. *14 [(4) The Chairman or the member, as the case may be, after
considering the reply to the show-cause notice, if received, shall as soon as
possible and endeavour shall be made by him to pass
such order within one hundred and twenty days from the date of receipt of reply
of the intermediary] *15 [ Explanation – For the purposes of this sub
regulation, “the date of receipt of reply of the intermediary” includes the
date on which the intermediary makes oral submissions in a hearing before the
Chairman or Member, if granted by him.] pass such order as it deems fit. ___________________________________________ *12. Inserted by the SEBI (Procedure for Holding Enquiry by Enquiry
Officer and Imposing Penalty) Second Amendment) Regulations, 2005, w.e.f. 7.6.2005*. * As corrected vide SO 1333(E), dated
21.08.2006. *13.
Substituted for “shall”, ibid. 14.
Substituted, ibid. Prior to its substitution, sub-regulation(4),
read as under: “ (4) The Chairman or the member, as
the case may be, after considering the reply to show-cause notice, if received,
shall as soon as possible pass such order as it deems fit.” 15.
Inserted, ibid. *As
corrected vide SO 1333(E), dated (5) *16 [***] (6) The Board or the member shall impose major penalties only in the
following circumstances, namely:- (a) the intermediary or any
of its whole-time directors or partners or its proprietor has been found guilty
of price or market manipulation of any scrip or index or assisting in such
manipulation or of insider trading; (b) the intermediary is guilty of violation of
conditions of registration; (c) the intermediary or any of its whole time
directors or partners or its proprietor is found to be not a fit or proper
person; (d) failure to obey directions of the Board passed under section 11 or
section 11B of the Act or failure to obey order of an adjudicating officer
imposing monetary penalty passed under section 15I of the Act by the
intermediary; or (e) repeated defaults by the intermediary for
which action can be taken against him under clause (a) of sub-regulation (1). (7) Every order passed under sub-regulation (4)
shall be dated and signed by the Chairman or the member, as the case may be. Intimation
of the order 14. (1) A
copy of the order passed under sub-regulation (4) of regulation 13 shall be
sent to the intermediary. (2)
If the intermediary is a member of any self-regulating organisation,
a copy of the order shall also be sent to such organisation. ______________________________________________________ *16. Omitted
by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing
Penalty) (Second Amendment) Regulations,2005, w.e.f. *
As corrected vide SO 1333(E), dated 21.08.2006. CHAPTER III SUMMARY PROCEDURE Situations when
summary procedure to be followed 15. It shall not be necessary to hold an enquiry
under Chapter II in relation to an intermediary where - (a) such intermediary has
been declared insolvent or is wound up; (b) such intermediary fails to pay the
registration, renewal or annual fees to the Board as per the provisions of the
relevant Regulations; (c) such intermediary, being a Stock-broker,
ceases to be a member of a recognised stock exchange
or has been declared a defaulter in relation to the transactions at such
exchange; *17 [(ca) such
intermediary, being a sub-broker ceases to be a sub-broker consequent upon the
stock broker with whom it is affiliated ceasing to be a stock broker due to
declaration as defaulter or suspension or cancellation of certificate of
registration of the stock broker;] (d) such intermediary fails to obey an order of
any adjudication officer imposing a penalty under section 15I of the Act; (e) such intermediary fails to submit documents
or records to the Board within the time stipulated by the Board; (f) such intermediary fails to issue contract
notes or to enter into agreement as required under the provisions of the
relevant Regulations; (g) such intermediary does not satisfy the
capital adequacy norms as specified in the relevant Regulations; (h) its proprietor or any of its partners or
whole-time directors is convicted by a court of competent jurisdiction of an
offence involving moral turpitude;
_______________________________________________________ *17.
Inserted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer
and Imposing Penalty) (Second Amendment) Regulations, 2004, w.e.f.
02.09.2004. (i) *18
[***] (j) such intermediary
admits to have violated the provisions of the relevant Regulations; (k) in any other situation
where the facts leading to the violation of the provisions of the relevant
Regulations are undisputed: Provided that no action shall be taken against an
intermediary without giving an opportunity of making representation to such
intermediary. Procedure to be followed under this chapter
19* 16. (1) The Chairman and member may appoint an
officer of the Board, not below the rank of Assistant General Manager or
Assistant Legal Adviser for giving his recommendation after following the
summary procedure in respect of any matter specified in regulation 15: provided
that in respect of any matter specified under regulation 15, if a
representation is received from an intermediary to dispense with the procedure
laid down in regulation 16, the Chairman or the member may not appoint an
officer of the Board under this sub-regulation and pass an appropriate order
after considering the representation of the intermediary. *20
[ ***] __________________________________________________ *18.
Omitted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and
Imposing Penalty) (Amendment) Regulations, 2006 w.e.f.
21.08.2006. Prior to its omission clause
(i), read as under:- (i) such intermediary surrenders its certificate of registration
to the Board; 19* Substituted by SEBI (Procedure for Holding enquiry by
Enquiry officer and imposing penalty (second amendment). Regulations, 2004
w.e.f. 2.09.2004. *20. Omitted by the SEBI(Procedure
for Holding Enquiry by Enquiry Officer and Imposing Penalty) (Amendment)
Regulations, 2006, w.e.f. 21.08.2006. Prior to its omission, Proviso read as
under: “provided further
that where the Board has reasonable grounds not to accept the surrender of
certificate of registration, it shall follow the procedure as laid down in
regulation 16 before passing the order.” (2) The officer shall issue to the intermediary,
against whom the proceedings are being held, a notice requiring the
intermediary to make a written submission in reply to the notice within such
time, *21[***] not exceeding fifteen
days after the receipt of the notice, as may be specified in the notice *22[provided that the Enquiry Officer may extend the
time mentioned under sub-regulation (2) for sufficient reason to be recorded in
writing] (3) If the intermediary fails to make a written
submission to the notice within the period specified in the notice, the officer
shall pass such orders as he considers appropriate in the circumstances on the
merits and in the light of the material on record and shall submit a report to
the Chairman or the member, as the case may be, and may recommend taking of any
action under sub-regulation (1) of regulation 13 as he considers appropriate in
the circumstance of the case and shall give reasons for taking such action. (4) If the intermediary makes submission within the
said period, the officer shall, after considering the submission so made,
submit a report to the Chairman or the member, as the case may be, and may
recommend taking of any action under sub-regulation (1) of regulation 13 as he
considers appropriate in the circumstances of the case and shall give reasons
for taking such action. (5) The Chairman or the member, as the case may be,
after receipt of recommendations from the officer under sub-regulation *23[(3)
or] (4), shall pass such orders as he may deem appropriate. *24[(6)
The Chairman or the member may pass a common order in respect of a number of
intermediaries where the subject matter in question is substantially the same
or similar in nature.]
____________________________________________________ *21.
Word “ordinarily” omitted by the SEBI (Procedure for Holding of Enquiry
by Enquiry Officer and Imposing Penalty) (Second Amendment) Regulations, 205, w.e.f. 7.6.2005.* *22. Inserted, ibid * As corrected vide SO 1333(E), dated 21.08.2006 *23. Inserted by the SEBI
(Procedure for Holding Enquiry Officer and Imposing Penalty) (Amendment)
Regulations, 2003, w.e.f. 27.11.2003. *24. Inserted by the SEBI
(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) (Second
Amendment) Regulations, 2004, w.e.f. 02.09.2004. Publication
of order 17. The Board shall issue a press release in respect of an order under
these regulations in at least two newspapers of which at least one shall have
nationwide circulation and shall also put the order on the website of the
Board. CHAPTER
IV MISCELLANEOUS AND
CONSEQUENTIAL PROVISIONS Removal
of doubts 18.
For the removal of doubts, it is hereby declared that the provisions of these
regulations shall be without prejudice to any other action the Board may take
under the Act or the respective regulations. Effect of debarment, suspension and
cancellation order 19. (1) On and
from the date of debarment or suspension of the certificate, the intermediary
shall not undertake any new assignment or contract or launch any new scheme and
shall cease to carry on any activity as an intermediary during the period of
such debarment or suspension and shall be subject to such other directions of
the Board including directions relating to any records, documents or securities
or money of the investors that may be in the custody or the control of such
intermediary. (2) On and from the date of cancellation of the certificate, the
intermediary shall, with immediate effect, cease to carry on any activity as an
intermediary and shall be subject to the directions of the Board with regard to
the transfer of any records, documents or securities or money of the investors
that may be in the custody or control of such intermediary. Appeal
to Securities Appellate Tribunal 20. An
intermediary aggrieved by an order under these regulations may prefer an appeal
to the Securities Appellate Tribunal against such order in accordance with
section 15T of the Act. Amendment of relevant Regulations 21. The Regulations specified in clauses (a) to (s)
of regulation 4 shall stand amended in the manner specified in the Schedule. Service of notice 22. (1) A notice issued
under these regulations may be served on the intermediary by sending it to such
intermediary at his registered office address or at principal office address as
available on the records of the Board by registered post acknowledgement due or
by speed post or by such courier service as may be approved by the Board. (2) If a notice cannot be served in the manner
referred to in sub-regulation (1), the same shall be served by affixing on the
door or some other conspicuous part of the premises of the registered office or
the principal office of the intermediary.
(3) In case of a stock broker, the notice shall be
served through the concerned stock exchange. Saving
of actions 23. (1) Notwithstanding
amendment of the regulations as specified in regulation 21, anything done or
any action taken including any proceeding for inspections or investigation or
enquiry commenced or any notice issued under the said regulations before the
commencement of these regulations shall be deemed to have been done or taken
under the corresponding provisions of these regulations. (2) In particular and without prejudice to the generality of the
provisions of sub-regulation (1), - (i)
an enquiry proceeding initiated by the Board under the relevant Regulations and
pending before the Board before the commencement of these regulations shall be
conducted and completed under the Relevant regulations as if those are not
amended as specified in regulation 21; (ii) any order appointing
an enquiry officer under the relevant Regulations and pending before such
enquiry officer immediately before the commencement of these regulations shall
be deemed to have been ordered under the corresponding provisions of these
regulations. THE SCHEDULE [See regulation 21] PART – I AMENDMENT TO THE SECURITIES AND EXCHANGE BOARD OF 1. In regulation 2, clause (aaa) shall be omitted. 2. For regulation 23, the following regulation shall
be substituted, namely :-
Action on inspection or investigation report ‘‘23. The Board or the
Chairman shall after consideration of inspection or investigation report take
such action as the Board or Chairman may deem fit and appropriate including
action under the Securities and Exchange Board of India (Procedure for Holding
Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002." 3.
For regulation 25, the following
regulation shall be substituted, namely:-
Liability for action in case of default "25. A stock-broker who – (a) fails to comply with
any conditions subject to which registration has been granted; (b) contravenes any of the provisions of the
Act, rules or regulations; (c) contravenes the provisions of the Securities
Contracts (Regulation) Act or the rules made thereunder; (d) contravenes the provisions of the
Depositories Act, 1996 or the rules made thereunder; (e) contravenes the rules, regulations or bye-laws of the
stock exchange, shall be dealt with in the manner provided under the
Securities and Exchange Board of India (Procedure for Holding Enquiry by
Enquiry Officer and Imposing Penalty) Regulations, 2002." 4.
Regulations 26 to 32 shall be omitted. PART III AMENDMENT TO THE SECURITIES AND EXCHANGE BOARD OF 1. In regulation
2, clause (a) shall be omitted. 2. For regulation
28, the following regulation shall be substituted, namely: - Action on inspection or investigation report "28. The Board or the Chairman shall after
consideration of inspection or investigation report take such action as the
Board or Chairman may deem fit and appropriate including action under the
Securities and Exchange Board of India (Procedure for Holding Enquiry by
Enquiry Officer and Imposing Penalty) Regulations, 2002." 3. For regulation
30, the following regulation shall be substituted, namely :- “30. Liability for action in case of
default
- A
portfolio manager who- (a) fails to comply with
any conditions subject to which certificate has been granted; (b) contravenes any of the provisions of the
Act, rules or regulations, shall be dealt with in the manner provided under the Securities and Exchange
Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing
Penalty) Regulations, 2002." 4.
Regulations 31 to 38 shall be omitted. PART IV AMENDMENT TO THE SECURITIES AND EXCHANGE BOARD OF 1. In regulation 2, clause
(b) shall be omitted. 2.
For regulation 20, the following regulation shall be substituted, namely:- Action on inspection or investigation report "20. The Board or the
Chairman shall after consideration of inspection or investigation report take
such action as the Board or Chairman may deem fit and appropriate including
action under the Securities and Exchange Board of India (Procedure for Holding
Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002." 3. For regulation
22, the following regulation shall be substituted, namely:- Liability for action in case of default "22. A registrar to an issue or share transfer agent who- (a) fails
to comply with any conditions subject to which registration has been granted; (b) contravenes any of the
provisions of the Act, rules or regulations; (c) contravens
the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956)
or the rules made thereunder; (d) contravenes the
provisions of the Depositories Act, 1996 or the rules made thereunder; (e) contravenes the rules,
regulations or bye-laws of the stock exchange, shall be dealt with in the manner provided
under the Securities and Exchange Board of India (Procedure for Holding Enquiry
by Enquiry Officer and Imposing Penalties) Regulations, 2002." 4. Regulations 23
to 29 shall be omitted.
PART V AMENDMENT TO THE SECURITIES AND EXCHANGE BOARD OF 1.
In regulation 2, clause (a) shall be omitted. 2. For regulation
23, the following regulation shall be substituted, namely;- “23. Action on inspection or
investigation report - The Board or the Chairman shall after consideration of inspection or
investigation report take such action as the Board or Chairman may deem fit and
appropriate including action under the Securities and Exchange Board of India
(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty)
Regulations, 2002". 3. For regulation
25, the following regulation shall be substituted, namely:- “25. Liability for action in case of
default
- An underwriter or a stock broker or a merchant banker entitled to carry
on business of underwriting who - (a) fails to comply with
any conditions subject to which certificate has been granted; (b) contravenes any of the provisions of the
Act, rules or regulations, shall be dealt with in the
manner provided under the Securities and Exchange Board of India (Procedure for
Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations,
2002." 4.
Regulations 26 to 32 shall be omitted.
AMENDMENT TO THE SECURITIES AND EXCHANGE BOARD OF 1. In regulation
2, clause (b) shall be omitted. 2. For regulation 23, the following
regulation shall be substituted, namely:- “23. Action on
inspection or investigation report The Board or the Chairman shall after consideration
of inspection or investigation report take such action as the Board or Chairman
may deem fit and appropriate including action under the Securities and Exchange
Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing
Penalty) Regulations, 2002."
“25. Liability for action in case of
default A debenture trustee who- (a) fails to comply with
any conditions subject to which certificate has been granted; (b) contravenes any of the provisions of the
Act, rules or regulations; (c) contravenes the provisions of the Companies
Act or the rules made thereunder, shall be dealt with in the manner provided under the Securities and Exchange
Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing
Penalty) Regulations, 2002." 4.
Regulations 26 to 32 shall be omitted.
AMENDMENT TO THE SECURITIES AND EXCHANGE BOARD OF 1. In regulation
2, clause (a) shall be omitted. 2. For regulation
22, the following regulation shall be substituted, namely;- “22. Action on inspection or investigation
report
- The Board or the
Chairman shall after consideration of inspection or investigation report take
such action as the Board or Chairman may deem fit and appropriate including
action under the Securities and Exchange Board of India (Procedure for Holding
Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002." 3. For regulation
23, the following regulation shall be substituted, namely:- “23. Liability for action in case of default - A banker to an issue who- (a) fails to comply with
any conditions subject to which certificate has been granted; (b) contravenes any of the provisions of the
Act, rules or regulations, shall be dealt with in the manner provided under the
Securities and Exchange Board of India (Procedure for Holding Enquiry by
Enquiry Officer and Imposing Penalty) Regulations, 2002."
PART VIII AMENDMENT TO THE SECURITIES AND EXCHANGE BOARD OF 1. In regulation
2, clause (e) shall be omitted. 2. For regulation
21, the following regulation shall be substituted, namely:- “21. Liability for action in case of default - A Foreign Institutional Investor
who- (a) fails to comply with
any condition subject to which certificate has been granted; (b) contravenes any of the provisions of the
Act, rules or regulations, shall be dealt with in the manner provided under the
Securities and Exchange Board of India (Procedure for Holding Enquiry by
Enquiry Officer and Imposing Penalty) Regulations, 2002."
PART IX AMENDMENT TO THE SECURITIES AND EXCHANGE BOARD OF 1. In regulation
2, clause (g) shall be omitted. 2. For regulation
25, the following regulation shall be substituted, namely:- “25. Action on inspection or investigation
report
- The Board or the Chairman shall after consideration of inspection or
investigation report take such action as the Board or Chairman may deem fit and
appropriate including action under the Securities and Exchange Board of India
(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty)
Regulations, 2002." 3.
For regulation 26, the following regulation shall be substituted, namely:- “26. Liability for action in case of default - A custodian of securities who - (a) contravenes any of the
provisions of the Act, the rules framed thereunder or
these regulations; (b) fails to furnish any information relating to
his activity as custodian of securities as required by the Board; (c) furnishes to the Board information which is
false and 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; (f) fails to update its systems and procedures
as recommended by the Board; (g) fails to resolve the complaints of clients
or fails to give a satisfactory reply to the Board in this behalf; (h) is guilty of misconduct or makes a breach of
the Code of Conduct specified in the Third Schedule; (i) fails to pay
annual fees, shall be dealt with in the
manner provided under the Securities and Exchange Board of India (Procedure for
Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations,
2002." 4.
Regulations 27 to 32 shall be omitted. PART X AMENDMENT TO THE SECURITIES AND EXCHANGE BOARD OF 1. In regulation
2, clause (c) shall be omitted. 2. For regulation
63, the following regulation shall be substituted, namely:- “63. Action on inspection or investigation
report The Board or the Chairman shall after consideration
of inspection or investigation report take such action as the Board or Chairman
may deem fit and appropriate including action under the Securities and Exchange
Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing
Penalty) Regulations, 2002." 3.
For regulation 64, the following regulation shall be substituted, namely:- “64. Liability for action in case of
default
- A depository or a participant who –
shall be dealt with in the manner provided under the Securities and Exchange
Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing
Penalty) Regulations, 2002."
PART XI AMENDMENT TO THE SECURITIES AND EXCHANGE BOARD OF 1. In regulation
2, clause (e) shall be omitted. 2.
Sub regulations (1) and (2) of regulation 29 shall be omitted and sub-
regulation (3) of that regulation shall be re-numbered as regulation 29. 3. For regulation
30, the following regulation shall be substituted, namely:- “30. Liability for action in case of
default Without prejudice to the issue of directions or measure under regulation
29, a venture capital fund which- (a) contravenes any of the
provisions of the Act or these regulations; (b) fails to furnish any information relating to
its activity as a venture capital fund 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,
inspection or investigation conducted by the Board; (f) fails to resolve the complaints of investors
or fails to give a satisfactory reply to the Board in this behalf, shall be dealt with in the
manner provided in the Securities and Exchange Board of India (Procedure for
Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulation, 2002. 4.
Regulations 31 to 38 shall be omitted. PART XII AMENDMENT TO THE SECURITIES AND EXCHANGE BOARD OF 1. In regulation
2, clause (k) shall be omitted. 2. For regulation
65, the following regulation shall be substituted, namely :- “65. Action on inspection or investigation
report The Board or the Chairman shall after consideration of inspection or
investigation report take such action as the Board or Chairman may deem fit and
appropriate including action under the Securities and Exchange Board of India
(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty)
Regulations, 2002." 3.
For regulation 68, the following regulation shall be substituted, namely:- “68. Liability for action in case of
default A mutual fund which - (a) contravenes any of the
provisions of the Act and these regulations; (b) fails to furnish any information or
furnishes wrong information relating to its activity as a mutual fund as
required under these regulations; (c) fails to submit periodical returns as
required under these regulations; (d) does not co-operate in any inquiry or
inspection conducted by the Board; (e) fails to comply with any directions of the
Board issued under the provisions of the Act or the regulations; (f) fails to resolve the complaints of the
investors or fails to give a satisfactory reply to the Board in this behalf; (g) indulges in unfair trade practices in securities: Explanation- For the purposes of this
clause "unfair trade practices" has the same meaning as in the
Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair
Trade Practices relating to Securities Market) Regulations, 1995; (h) is guilty of misconduct
or improper or unbusinesslike or unprofessional
conduct which is not in accordance with the Code of Conduct specified in the
Fifth Schedule; (i) asset management
company fails to maintain the net worth in accordance with the provisions
of regulation 21; (j) fails to pay any fees; (k) violates the conditions of registration; (l) mutual fund, asset management company or
trustees of that mutual fund does not carry out its obligations as specified in
these regulations, shall be dealt with in the
manner provided under the Securities and Exchange Board of India (Procedure for
Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations,
2002."
PART XIII AMENDMENT TO THE SECURITIES AND EXCHANGE BOARD OF 1. In regulation
2, clause (j) shall be omitted. 2. For regulation
33, the following regulation shall be substituted, namely :- “33. Action on inspection or investigation report - The Board or the Chairman shall after consideration
of inspection or investigation report take such action as the Board or Chairman
may deem fit and appropriate including action under the Securities and Exchange
Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing
Penalty) Regulations, 2002."
“34. Liability for action in case of default - A credit rating agency which- (a) fails to comply with
any condition subject to which a certificate has been granted; (b) contravenes any of the provisions of the Act
or these regulations or any other regulations made under the Act, shall be dealt with in the
manner provided under the Securities and Exchange Board of India (Procedure for
Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations,
2002." 4.
Regulations 35 to 42 shall be omitted. PART XIV AMENDMENT TO THE SECURITIES
AND EXCHANGE BOARDOF 1.
For regulation 56, the following regulation shall be substituted, namely:- “56. Action on inspection or investigation report - ‘The Board or the Chairman shall after consideration of inspection or
investigation report take such action as the Board or Chairman may deem fit and
appropriate including action under the Securities and Exchange Board of India
(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty)
Regulations, 2002." 2.
Regulation 58 shall be omitted. 3. For regulation 59, the following regulation shall
be substituted, namely:- “59. Liability
for action in case of default - In case a Collective Investment
Management Company - (a) contravenes any
provision of the Act or these regulations;
(b) for the purposes of these regulations
furnishes any information which is false or misleading or suppresses any
material information; (c) does not co-operate in any inspection,
investigation or inquiry conducted by the Board under the Act or these
regulations; (d) fails to comply with any directions issued
by the Board under the Act or the regulations; (e) fails to resolve the complaints of the
investors or fails to furnish to the Board a satisfactory reply in this behalf
when called upon to do so by the Board; (f) commits a breach of any provision of the
Code of Conduct specified in the Third Schedule; (g) fails to pay the fees specified in the
Second Schedule; (h) commits a breach of the conditions of
registration; or (i) fails to make an
application for listing or fails to list units of a scheme in a recognized
stock exchange, shall be dealt with in the
manner provided in the Securities and Exchange Board of India (Procedure for
Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations,
2002." 4. Regulations 60 to 64 shall be omitted. PART XV AMENDMENT TO THE SECURITIES AND EXCHANGE BOARD OF 1. In regulation
2, clause (e) shall be omitted. 2. In Regulation 23, for
the word "the regulation 24", the words, "the Securities and
Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and
Imposing Penalty) Regulations, 2002" shall be substituted.
Notification: No.SO
1045 (E), DATED
27.09.2002 [F.No.SEBI/LE/ 23
/2002/18623] G.N.BAJPAI |
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