Skip to content

CS Executive · Capital Market and Securities Laws · Mutual Funds

Himalaya Growth Fund, a mutual fund registered with SEBI, fails to dispatch unit certificates of one of its schemes in the manner provided in the regulations. Under the SEBI Act, 1992, what is the penal consequence for this failure?

Failure by a registered mutual fund to dispatch unit certificates as the regulations require attracts the Section 15D penalty. It is a per-day penalty for each day the failure continues, with a maximum of one crore rupees. The older rupee figures were replaced by amendments.

  1. AA penalty of not less than one lakh rupees, extendable to one lakh rupees for each day the failure continues, subject to a maximum of one crore rupeesCorrect
  2. BA penalty of ten thousand rupees for each day, or ten lakh rupees, whichever is higher
  3. CA penalty fixed at five thousand rupees for each day with no overall ceiling
  4. DOnly a warning, since dispatch of unit certificates is a procedural matter

Explanation

Section 15D(d) covers failure to dispatch unit certificates and prescribes a per-day penalty for each day the failure continues, capped at one crore rupees. The ten thousand rupees or ten lakh rupees formula and the five thousand rupees per day figure are older amounts that were substituted by amendments. A mere warning is not what the section provides.

Did you get it right without looking?

One question tells you little. A timed set on Mutual Funds shows your real accuracy, how long you take and where you lose marks.

Practise Mutual FundsFree diagnostic mock

More Mutual Funds questions