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

Green Yield Ltd. is registered with SEBI as a collective investment scheme. It fails to refund application monies to investors within the period specified in the regulations, and the failure continues for 40 days. Under Section 15D(e) as given, which statement about the penalty is correct?

The penalty is not less than Rs 1 lakh but may extend to Rs 1 lakh for each day the failure continues, with a maximum of Rs 1 crore. The older Rs 10,000 or Rs 5,000 per day figures were substituted and no longer apply.

  1. APenalty is fixed at Rs 10,000 per day or Rs 10 lakh, whichever is higher
  2. BPenalty applies only if the scheme was unregistered
  3. CPenalty is not less than Rs 1 lakh but may extend to Rs 1 lakh per day of failure, subject to a maximum of Rs 1 croreCorrect
  4. DPenalty is a flat Rs 5,000 per day with no ceiling

Explanation

Section 15D(e), as amended in 2014, sets a penalty of not less than Rs 1 lakh but extending to Rs 1 lakh per day during which the failure continues, capped at Rs 1 crore. The Rs 10,000 or Rs 10 lakh and Rs 5,000 per day figures are old pre-amendment amounts. It applies to registered schemes failing to refund.

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