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CS Executive · Capital Market and Securities Laws · Acquisition of Shares and Takeovers - Concepts

An adjudicating authority is fixing the quantum of penalty on an acquirer liable under Section 15H. Gains from the default can be quantified, and the acquirer has defaulted repeatedly. Which statement is correct?

The authority must have due regard to the amount of disproportionate gain, the loss caused to investors and the repetitive nature of the default under Section 15J. The Explanation to that section makes it apply to penalties under Section 15H.

  1. AThe authority must impose exactly the minimum penalty because Section 15H sets the floor
  2. BThe authority must have due regard to disproportionate gain, loss caused to investors and repetitive nature of the default, as set out in Section 15JCorrect
  3. CSection 15J does not apply to Section 15H penalties
  4. DThe authority may consider only the loss caused to investors and ignore the gain

Explanation

Section 15J lists the factors: disproportionate gain or unfair advantage where quantifiable, loss caused to investors, and repetitive nature of default. Its Explanation states the power to adjudge quantum of penalty under section 15H is exercised under 15J. So options saying 15J is inapplicable or limiting factors are wrong.

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