A Quick Overview of SEBI’s Settlement Scheme, 2022

The Securities Exchange Board of India recently issued the SEBI Settlement Scheme 2022 in a public notification dated August 19, 2022. SEBI’s Settlement Scheme 2022 begins on August 22, 2022, and runs through November 21, 2022. The current article provides an outline of the SEBI Settlement Scheme, 2022.

Brief Overview

Following the expiration of the SEBI Settlement Scheme in 2020, a large number of organizations have filed an appeal with the Securities Appellate Tribunal (“SAT”) in Mumbai. In one instance, Shubham Singhal v. SEBI (SAT Appeal No. 191/2022, dated 13.05.2022), the Tribunal recently stated that the settlement program failed for two key reasons:

• The settlement terms may have been difficult, stringent, and unprofitable, and
• The strategy was implemented during the height of the Covid epidemic. In the aforementioned judgment, SAT directed SEBI to reconsider publishing a fresh plan.

This gives rise to the need to bring a fresh Settlement Scheme which has come into existence in 2022, which is also known as SEBI’s Settlement Scheme, 2022.

The objective of SEBI’s Settlement Scheme, 2022

The primary purpose of the SEBI Settlement Scheme, 2022 is to provide a settlement option to entities that meet the following criteria:

• The firm should have entered reversal trades on the BSE’s illiquid stock options market between 1 April 2014 and 30 September 2015.
• A forum or higher authority is currently hearing the party against whom legal action has been launched.

SEBI’s Settlement Scheme, 2022 Eligibility Criteria

If an appeal has been filed and the case is still pending before the Securities Appellate Tribunal, the following entities are eligible to apply for the SEBI Settlement Scheme 2022:

• The company that executed reverse trades on the BSE’s illiquid stock options market between April 1st and September 30th, 2015 has been identified, processes have been initiated, and the matter is now being heard by one or more forums or authorities.
• Entity against which a penalty levying order was issued; however, the penalty was not paid, and hence recovery processes were initiated.

SEBI Settlement Scheme, 2022

The Settlement Scheme, 2022 was announced in a public notice released by the Securities and Exchange Board of India on August 19, 2022. (“the Scheme”). The Scheme’s goal is to offer a settlement opportunity to entities who executed reversal trades in the BSE’s illiquid stock options segment between April 1, 2014, and September 30, 2015, and against whom proceedings have been initiated and are pending before any forum or authority, including courts, the Securities Appellate Tribunal (“SAT”), adjudicating officers, and recovery officers (provided an appeal has been filed and the same is pending before the SAT).

An entity that wants to be settled under the Scheme must file a settlement application in the format required by the Scheme, which is available on the websites of SEBI and BSE. The application form must be submitted, and the supplied link must be used to pay the application fee and settlement sum online. There won’t be any tangible document that has to be produced.

Fees for the Settlement Application’s Registration

The following registration costs must be paid by the entity submitting an application for the SEBI Settlement Scheme, 2022:

• INR 25,000 for a body corporate, plus GST at 18%;
• For a single person, INR 15,000 + GST at 18%.
• These registration costs for settlement applications may only be paid online using the official website’s portal.

Note: The SEBI Settlement Scheme, 2022 would determine the appropriate settlement amount based on the number of contracts. The settlement sum may be seen on the official website.

Document Requirements for submitting a Settlement Application

An entity must have the following documentation on hand before submitting a settlement application under the Scheme:

• Online submission of the following scanned documents:
  • • A replica of any waivers and commitments that have been duly notarized and rubber-stamped.
    • A copy of the applicant’s PAN Card has also undergone self-attestation.
    • Additionally, a settlement application copy has been confirmed as genuine.
    • A certified true copy of each of the last three years Income Tax Returns.
• A functioning telephone number and email address
• If necessary, a certified copy of the order with the required documentation.
• The non-refundable registration cost for settlement applications is Rs. 15,000 for individuals and Rs. 25,000 for body corporations, plus GST at 18%.
• Lastly, the applicant must be paid the settlement amount specified.

Application procedures for the SEBI Settlement Scheme, 2022

In order to apply for the SEBI Settlement Scheme 2022, the entity must:

• Step 1: Click on https://siportal.sebi.gov.in/intermediary/AOPaymentGateway.html
• Step 2: Select “Settlement Scheme” using the drop-down arrow next to “Type of Category.”
• Step 3: Next, enter your PAN and captcha, then click “Go”
• Step 4: Scan and submit the required documentation-
  • • A settlement application prepared in accordance with Annexure 1’s format;
    • copies of the waivers and undertakings that have been duly paid, notarized and stamped in accordance with Annexure 2’s instructions.
    • A self-attested copy of the applicant’s PAN on non-judicial stamp paper is needed.
• Step 5:  Submit the settlement application registration Costs.
• Step 6: Reimbursing the settlement amount

Important Points for Consideration

A business does not have to resubmit an application fee if it had submitted a settlement application prior to the commencement of the SEBI Settlement Scheme 2022. The following steps should be taken by such an entity to resolve the conflict:

• Go to the official website.
• Additionally, choose “Settlement Scheme,” enter “PAN,” and
• Pay the compensation amount as agreed.
• If the designated entity does not utilize the SEBI Settlement Scheme, the securities legislation will still be implemented against it.
• After the settlement plan and record reconciliation are finished, the competent authority will finally issue a composite settlement order.

Takeaway

It is suggested to file a settlement application under the Scheme as soon as possible to avoid a last-minute rush. The Scheme would run from August 22, 2022, until November 21, 2022. After the Scheme expires in 2022, if the scheme is not implemented, provisions governing securities legislation will continue to apply to proceedings against the companies.

Connect to the experts of Legal Window if you want more information about SEBI’s Settlement Scheme, 2022. Further, you can also connect with us, If you want to get your Company Registered our Experts would be Happy to Help.