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CS Executive · Capital Market and Securities Laws · Mutual Funds

A registered mutual fund breaches a term of its certificate of registration, and the breach continues for 40 days. Under Section 15D(b), what is the correct statement of the penalty range?

The penalty is not less than one lakh rupees, and may extend to one lakh rupees for each day the failure continues, subject to a maximum of one crore rupees. Older figures such as ten thousand per day were substituted by amendments and no longer apply.

  1. ANot less than one lakh rupees, extending to one lakh rupees for each day of failure, subject to a maximum of one crore rupeesCorrect
  2. BUp to ten thousand rupees per day or ten lakh rupees, whichever is higher
  3. CUp to five thousand rupees per day with no overall maximum
  4. DA fixed penalty of one crore rupees irrespective of the days of failure

Explanation

Current Section 15D(b) sets a penalty of not less than one lakh rupees but extending to one lakh rupees for each day the failure continues, capped at one crore rupees. The ten thousand or ten lakh formula is the pre-2014 wording that was substituted. Five thousand per day was an older amount for other defaults, and the cap does exist.

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