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SEBI ACT- PENALTIES & APPEALS [Chapter VIA – Sec 15A to 15AJ]
ACT PENALTY (in Rs.)
Failure to 1 lakh per day
Furnish document / return / report to SEBI on OR 1 Crore
time; whichever is LESS
Redress Investor Grievances;
Enter into an agreement by Registered
Intermediary.
Failure to issue Contract Notes by Broker UPTO 5 times, the
amount of Contract Note
Charging Excess Brokerage by Broker 1 lakh OR
5 times, the excess
Brokerage,
whichever is LESS
Insider Trading 25 crores OR
Deal based on Unpublished Price Sensitive 3 times, the Profits
Information (UPSI) made
Communicate / counsel based on UPSI whichever is HIGHER
Failure with respect to Takeover;
Fraudulent & Unfair Trade Practices
Contravention of Act / Order & Non-payment Imprison 1 month to 10
of Penalty imposed by Adjudicating officer years & / or
UPTO 25 crores
Refusal during Investigation, Imprison 1 year & / or
 to produce book / document / register; UPTO 1 crore
 furnish information; [+] UPTO 5 lakhs per
 personal appearance; day
 signing notes of examination on Oath
Penalties  Credited to Consolidated Fund of India

CONSENT ORDER COMPOUNDING

Sec 15T of SEBI Act
For administrative / civil
proceedings
BY SEBI
Application @ any stage where
probable cause of violation has
been found
To appropriate sanction, remedy
& deterrence WITHOUT resorting
to litigation, lengthy proceedings
& consequential delays
Sec 24A of SEBI Act
For criminal prosecutions; NOT
being an offence punishable with
imprisonment only OR imprisonment
& fine
BY SAT
Application before / after institution
of proceedings
To avoid lengthy process, which
would save cost, time, mental,
agony, etc…in return for payment of
compounding charges
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“Application Supported by Blocked amount” [ASBA]

an optional way of investing
ASBA is a mode of payment for Book-built public issues and rights
issue, whereby an application containing an authorization to block the
application money in the bank account, for subscribing to an issue is
signed by the investor.
If an investor is applying through ASBA, his application money shall
be debited from the bank account only if his / her application is
selected for allotment after the basis of allotment or instruction from
Registrars, is finalised.
Only “Resident Retail Individual Investor” bidding at Cut-off, and
has agreed NOT to revise his / her bid can apply through a bank
account maintained with SCSBs.
Self certified Syndicate Bank [SCSB] is a bank which is recognized as
a bank capable of providing ASBA services to investors. Names of
such banks would appear in SEBI website.
During the bidding period investors can approach the bank and
request for withdrawal through a duly signed letter.
After the bid closure period, investor may send withdrawal request to
the Registrars, to unblock the application money in the bank account
after the finalisation of basis of allotment.

GREEN SHOE OPTION

an option to buy & resell additional shares in IPO under Book

Building route for oversubscribed issues
“a post issue price stabilisation mechanism”

1) An option to allot an additional shares UPTO 15% of Issue

Size;
2) Stabilising Agent (SA) is appointed in a General Meeting,
who is the Merchant Banker (Lead Manager) to the issue, to
buy & resell additional shares; SA has to enter into an
Agreement with Issuer Company & Promoters and such
agreement to be given in Red Herring Prospectus (RHP); disclose
Name of SA, Maximum shares to be over allotted, et al.
3) This Stabilisng mechanism is valid ONLY for 30 days AFTER
commencement of trading; during the period SA to report on
daily basis to Stock Exchange;
4) The process of price stabilisation,
Step 1: The 'excess money' from the public UPTO 15% will be
collected by Stabilising Agent (SA) & kept in “GSO Bank Account”;
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QIP
Chapter XIIIA of DIP
Issue to QIB only; Mandatory allotment
of 10% or more to Mutual Fund
The company has to be listed for
atleast one year on NSE / BSE as on
date of issuance of notice to
shareholders
Warrants cannot be issued
No lock-in BUT off-market transactions
restricted for 1 year from allotment
No such requirement
Appointment of Merchant Banker & filing
of Mandatory ‘Placement Document’
with SEBI
The aggregate of the proposed
placement and all previous placements
made in the same FY shall not exceed 5
times the net worth of the issuer as per
the audited balance sheet of the
previous FY. Allottees to be,
2 or more, if issue size
UPTO 250 crores
5 or more, if issue size
ABOVE 250 crores
Single Allottee allotted UPTO 50%
Pricing - Average Weekly [High & Low]
closing prices of shares quoted on Stock
Exchange during the 2 weeks
preceeding 'relevant date' [=date of
meeting of Board / Committee when
decided to open the proposed issue]
Resolution to mention ‘Relevant Date’
CURRENCY = PERIOD;
Currency of Resolution = 1 year;
Currency of Convertibles = 5 years;
Atleast six month gap between two
placements made under the authority of
same resolution.
SECURITIES LAW  Only This Much!
Preferential Allotment
Chapter XIII of DIP
To select group of Investors,
including issue to QIB
No such requirement
Warrants can be issued
Lock-in prescribed as 1 or 3
years
Mandatory Auditors Certificate
of compliance of Guidelines
No such requirement
No such requirement /
condition
Pricing – as mentioned above;
For allot to QIB, only 2 week
to be considered, as said, but
from ‘relevant date’ [=30 days
prior to General Meeting u/s.
81(1A)]
Resolution to have prescribed
disclosures & identity of
allottees
Currency of Resolution = 15
days;
Currency of Convertibles = 18
months (i.e) WITHIN which, it
should take place.
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As per Section 21 of Securities Contract Regulation Act, 1956, the

conditions of listing is to comply with the CONDITIONS of the listing
agreement with the recognized stock exchange, where listed.
Violation of listing agreement is an offence punishable with fine
UPTO Rs. 1,000/- and further Stock Exchange has right to suspend
or withdraw dealings in securities or delist the securities. The
Listing Agreement contains 51 clauses and Clause 49 deals with
Corporate Governance.

Every listed company to maintain Minimum Public Shareholding of

10% or 25%, as the case may be, EXCEPT a company registered
with Board for Industrial & Financial Reconstruction (BIFR).

CFDS - The term "Corporate Filing and Dissemination System

(CFDS)" shall mean the portal at the URL www.corpfiling.co.in which
is to enable the companies to file the information electronically like
filing Shareholding holding pattern under Clause 35, Quarterly
results under Clause 41, Corporate Governance Report under Clause
49, et al and to enable the investors to retrieve the information
electronically. It is introduced as pilot basis to top 100 companies of
high market capitalization; initially information is filed through
Electronic Data Information Filing And Retrieval (EDIFAR). Slowly
EDIFAR will be dispensed with.

As per Clause 47, to appoint the Company Secretary to act as

Compliance Officer of the Listed Company; The Compliance
Officer will directly liaise with the authorities such as SEBI, Stock
Exchanges, RoC, etc… and investors with respect to implementation
of various clauses, rules, regulations and other directives of such
authorities and investor service and complaints of related matter; to
insist that the Registrar & Share Transfer Agent (RTA) produces a
certificate from a Practicing Company Secretary that all transfers
have been completed within the stipulated time.
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SEBI (INTERMEDIARIES)
with effect from 27th May, 2008, in addition to 'relevant
regulations' of respective intermediaries

registration, obligation & disciplinary proceedings of

intermediaries

repealing SEBI (Procedure for holding enquiry by Enquiry Officer &

imposing penalty) Regulations, 2002 &
SEBI (Criteria for Fit & Proper Persons) Regulations, 2004

Intermediaries MEANS
PRIMARY
1) Merchant Banker /
Lead Manager
2) Registrar & Share
Transfer Agent (RTA)
3) Underwriters
4) Bankers to an issue
5) Bankers to an issue
6) Debenture Trustees
INCLUDES
DOES NOT INCLUDE
SECONDARY OTHERS
7) Stock Brokers 11)Depositories
8) Sub-Brokers 12)Depository
9) Portfolio Managers Participants (DP)
10)Investment Advisers 13)Custodian of
/ Investment Securities
Managers 14)Credit Rating
Agencies (CRA)
15)Asset Management Company (AMC) under
SEBI Mutual Fund regulations;
16)Clearing Member (CM) of Clearing
Corporation / House;
17)Trading Member (TM) of derivative
segment of Stock Exchange;
18)Foreign Institutional Investor (FII);
19)Foreign Venture Capital Investor (FVCI);
20)Venture Capital Fund (VCF);
Collective Investment Scheme (CIS) &
Mutual Fund (MF).

Mutual Fund, set up as TRUST, by SPONSOR

MF ORGANS
Sponsor
Trustees
Asset Management Company
Custodian.
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Sponsor, to
register
the MF wit
h SEBI & s hold
start launc Trustee
hing TY for
schemes, a PROPER
fter efit of
paying ‘Se the ben
rvice Fee’ lders
Unit Ho

SEBI reg
istered
d AMC,
or MF

Custodia
SEBI registere
s n
n, holds
ga

funds, as the SECU

MANAGES the RITIES
e Trustees
directed by th

WINDING UP OF MF SCHEMES
Publish in 2 Newspapers, all over India & 1 Vernacular newspaper
1) Open ended scheme, when Total Units outstanding after re-purchase
is LESS than Original Issue;
2) Close ended scheme, on expiry of period or happening of an even or
as per Board of Directors or 75% of unit holders pass a resolution to
wind up.

Note, MF has to comply only with 'Fit & Proper' as per Schedule II &
'Action in case of default' as per Chapter V of SEBI (Intermediary)
Regulations, 2008. MF has to pay 'Service Fees' WITHIN 15th April of
every Financial Year.

COLLECTIVE INVESTMENT
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under SEBI (CIS) Regulations, 1999

It covers 'plantation schemes' OR 'live stock schemes' or similar
schemes, where by, money is pooled from investors for a particular
project, say for instance, growing of sandalwood trees, then over
the period, when profits started flowing in, it will be distributed
among unit holders, just like a mutual fund. In the last decade,
there were 'Anubhav Plantations' & many such schemes, but
because of the scandals, all such schemes were closed & these
regulations were brought in, which is so stringent that hardly any
scheme can be floated.

'Collective Investment Schemes'

 Conditions – a 'scheme / arrangement',
 Contribution / payment – pooled & utilised;
 Contribution / payment – with a view to receive profits / income
/ produce;
 Contribution / payment / property – managed on behalf of
Investors;
 Investors do not have day-to-day control over management &
operation.
 Exclusions –
Scheme / Arrangement by Co-operative Under Co-operative
Society Societies Act, 1912
Deposits accepted by Non Banking Under Reserve Bank of India
Financial Company (NBFC) Act, 1934
Contract of Insurance Under Insurance Act, 1952
» Sec 58A  Deposits Under Companies Act, 1956
» Deposits by Nidhi / Mutual Benefit
Society u/s. 620A
Chit Business Under Chit Fund Act, 1982
Subscription to Mutual Fund SEBI (Mutual Fund)
Regulations, 1996

INTERNATIONAL CAPITAL
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FCEB / FCCB / ADR / GDR

to raise capital from overseas investors

Under Issue of Foreign Currency Convertible Bonds and

Ordinary Shares (through Depository
Receipt mechanism), 1993 and FEMA Regulations

FOREIGN CURRENCY EXCHANGEABLE BOND

[FCEB]

 Bond expressed in freely convertible Foreign Currency

 Interest and Principal of which is payable in foreign Currency
 Issued by an Indian Company
 To overseas Investor who subscribes in foreign Currency
 Which on a later date can be CONVERTED into Equity shares of
Offered Company.
 To enable the companies to tap the value of the shareholding in
their group companies

Eligibility conditions:
1) Prior approval of RBI to be obtained.
2) Eligibility Conditions for the Offered Company
Shall be a Listed Co, engaged in sector eligible to receive FDI;
Offered Company is eligible to issue FCCB or ECB.
3) Eligibility Conditions for the Issuer Company
Shall form part of the Promoter Group of the Offered Co;
Issuer to hold Equity Shares at the time of Issuance of FCEB;
Not restrained by SEBI to access securities market.
4) Eligibility Conditions for the Subscriber
Entity not prohibited by SEBI from dealing in Securities;
Comply with FDI Policy & Sectoral Caps at the time of issue;
Prior approval of FIPB obtained, wherever required.

INDIAN DEPOSITORY
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to enable Foreign companies to tap Indian capital market and get

their DRs listed in Indian Stock Exchanges

Under The Companies (Issue of IDR) Rules, 2004 &

Chapter VIA of SEBI (DIP) Guidelines, 2000 &
Listing Agreement

Indian Depository Receipt - MEANS

 any instrument in the form of a Depository Receipt (DR)
 created by Domestic Depository in India
 against the underlying equity shares of foreign issuer.
• IDR is denominated in Indian Rupees and traded in Indian SEs
• while the underlying shares may be denominated in the currency
of the jurisdiction where the issuer is incorporated
• dividend till conversion into shares paid in Indian rupees;
• After, ONE YEAR of the issue, the IDRs may be converted into
underlying shares denominated in foreign currency at the option
of the investor subject to compliance with FEMA and the
dividend thereafter will be payable in foreign currency.

Eligibility criteria for IDR issuers:

As per the IDR rules, an IDR issuer should satisfy the following:
Pre-issue Capital & Free Of Issuer Co. Atleast USD 50 million
Reserves
Track Record of Distributable In 3 out of 5 Preceeding
Profits Previous Years (PPY)
Equity Shares offered In Financial Year UPTO 25% of post issue
no. of equity shares
Minimum Average Market In its Domestic Atleast USD 100 millions
Capitalisation Country during last 3 years
Continuous Trading In its Parent Atleast 3 Preceeding
Record or History on SE Country Previous Years [3 PPY]