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Securities and Exchange Board of India (Appointment of Administrator and Procedure for Refunding to the Investors) Regulations, 2018

SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION

Mumbai, the 3rd October, 2018

SECURITIES AND EXCHANGE BOARD OF INDIA (APPOINTMENT OF ADMINISTRATOR AND PROCEDURE FOR REFUNDING TO THE INVESTORS) REGULATIONS, 2018

No. SEBI/LAD-NRO/GN/2018/39. – In exercise of the powers conferred by section 30 read with sub-section (1) of section 11 and section 28A of the Securities and Exchange Board of India Act, 1992 (15 of 1992), section 23JB of the Securities Contracts (Regulations) Act, 1956 and section 19-IB of the Depositories Act, 1996, 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 (Appointment of Administrator and Procedure for Refunding to the Investors) Regulations, 2018.
(2) They shall come into force on the date of their notification 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) “Administrator” means a person registered with the Insolvency and Bankruptcy Board of India as an Insolvency Resolution Professional and who has been engaged by the Recovery Officer for the purposes of these regulations.
c) “advertisement” includes –
(i) notices, brochures, pamphlets, circulars, show-cards, catalogues, hoardings, placards, posters, insertions in newspapers, pictures, films and documentaries; and
(ii) any publicity through print medium, radio, television programmes or electronic media;
d) “auditor” means a person qualified to audit the accounts of companies under the Companies Act, 2013;
e) “Board” means the Securities and Exchange Board of India established under section 3 of the Act;
f) “certificate” means the statement drawn up by the Recovery Officer under section 28A of the Act or section 23JB of the Securities Contracts (Regulations) Act, 1956 or section 19-IB of the Depositories Act, 1996 and shall not include a sale certificate;
g) “defaulter” for the purposes of these regulations, means a person who has failed to comply with an order of the Board to refund monies to the investors or an order of the Board for disgorgement within the specified time period and who is mentioned as a defaulter in the certificate;
h) “e-auction” means the public auction conducted through electronic mode;
i) “e-auction agency” means a company providing an e-auction platform which is engaged by the Administrator for the purposes of auctioning and selling properties attached by the Recovery Officer;
j) “investor” means the person, whether identified or not, in whose favour the refund of monies had been directed by the Board;
k) “property” means and includes assets of any kind, whether movable or immovable, tangible or intangible, corporeal or incorporeal and includes securities, bank accounts, deposits, any right or interest or legal documents or instruments evidencing title to or interest in the property and where the property is capable of conversion into some other form, then the property in the converted form and also includes the proceeds from the property.
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m) “Recovery Officer” means an officer of the Board, who is authorised by a general or special order in writing, to exercise the powers of a recovery officer under section 28A of the Act or section 23JB of the Securities Contracts (Regulations) Act, 1956 or section 19-IB of the Depositories Act, 1996;
n) “refund order” means a direction of the Board, issued under the Act or the Securities Contracts (Regulation) Act, 1956 or the Depositories Act, 1996, to refund monies to the investors;
o) “recovery proceedings” means the proceedings for recovery of dues initiated by a recovery officer under section 28A of the Act or section 23JB of the Securities Contracts (Regulations) Act, 1956 or section 19-IB of the Depositories Act, 1996;
p) “registered valuer” shall have the meaning assigned to it under the Companies (Registered Valuers and Valuation) Rules, 2017 or any other statutory modification thereof;

(2) Words and expressions used and not defined in this regulations but defined in the Act, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996, the Second Schedule to the Income-tax Act, 1961 and the Income-tax (Certificate Proceeding), Rules, 1962, shall have the meanings respectively assigned to them in that Act and Rules respectively.

Applicability.
3. (1) These regulations shall be applicable for all or any of the following:
a. appointment of Administrator pursuant to failure to comply with disgorgement or refund orders passed by the Board;
b. sale of properties attached by the Recovery Officer of the Board under the Act;
c. collection of claim documents and verification of claims of investors for the purpose of effecting refunds;
d. refund of monies to the investors pursuant to disgorgement or refund orders passed by the Board;
e. recovery of disgorgement amounts directed by the Board;
f. any act incidental or connected thereto.
(2) Unless otherwise specifically ordered, these regulations shall not be applicable to cases where the Securities Appellate Tribunal or a Court has appointed an administrator or any other person for the purposes of recovery and/or repayment to investors.

(3) The provisions of these regulations shall apply mutatis mutandis in respect of the proceedings under the Securities Contracts (Regulation) Act, 1956 or the Depositories Act, 1996.

CHAPTER II
Part I – Administrator

Appointment of an Administrator.

4. For the purposes of these regulations, the Board shall, after attachment of the properties of the defaulter by the Recovery Officer, appoint an Administrator in the manner specified.

Eligibility norms for appointment as an Administrator.
5. (1) The Administrator shall be a person registered with the Insolvency and Bankruptcy Board of India as an Insolvency Resolution Professional and empanelled by the Board from time to time.
(2) No person shall be appointed as an Administrator where such an appointment may be objected to on the grounds that give rise to justifiable doubts as to the independence or impartiality of such a person:
Provided that any question involving issues of conflict of interest in the appointment of an Administrator shall be decided by the Recovery Officer.
(3) The Administrator shall provide an undertaking to the Board of absence of any conflict of interest with the defaulter, its directors, promoters, key managerial personnel and its group entities.
(4) The Administrator shall also forthwith disclose to the Board any conflict of interest which may come to his knowledge during his tenure:
(5) For the purposes of these regulations, the Administrator shall be deemed to be a public servant within the meaning of section 21 of the Indian Penal Code (45 of 1860) and sections 22 and 23 of the Act shall accordingly apply to him.

Terms of appointment.
6. The terms and conditions of appointment including remuneration shall be specified by the Board, on a case to case basis, after taking into consideration the quantum of work, the number of investors and the quantum of money involved.

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