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CS Executive · Capital Market and Securities Laws · Collective Investment Schemes

A registered collective investment scheme, Kaveri Growth Scheme, fails to despatch unit certificates in the manner required by the regulations. Which statement about the penalty under Section 15D is correct?

Failure by a registered scheme to despatch unit certificates as the regulations require is covered by Section 15D(d). The penalty is at least one lakh rupees, extendable to one lakh rupees per day while the failure continues, with a ceiling of one crore rupees.

  1. AThe penalty falls under clause (d), at least one lakh rupees and up to one lakh rupees per day of failure, subject to a maximum of one crore rupeesCorrect
  2. BThe penalty falls under clause (a) because despatch is part of registration
  3. CThe penalty is a flat five thousand rupees per day with no maximum
  4. DThe penalty is only a warning, as despatch of certificates is not covered by Section 15D

Explanation

Clause (d) of Section 15D specifically covers failure to despatch unit certificates as provided in the regulations. The penalty is the standard band of one lakh rupees minimum, one lakh per day of continuing failure, capped at one crore. Five thousand per day was the pre-2002 amount.

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