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CS Executive · Capital Market and Securities Laws · Mutual Funds

Orion Mutual Fund, a SEBI-registered fund, fails to refund application monies to investors within the period specified in the regulations. Which statement correctly describes the liability under Section 15D of the SEBI Act, 1992?

A registered mutual fund that fails to refund application monies within the regulatory period is liable under Section 15D(e) to a penalty of at least one lakh rupees, up to one lakh rupees per day of continued failure, capped at one crore rupees.

  1. ANo penalty arises under Section 15D, as refund delays are dealt with only by the Companies Act
  2. BPenalty applies only if the fund was unregistered when it accepted the money
  3. CPenalty is not less than one lakh rupees, extending to one lakh rupees for each day the failure continues, subject to a maximum of one crore rupeesCorrect
  4. DPenalty is one thousand rupees for each day the failure continues, with no maximum

Explanation

Section 15D(e) specifically penalises a registered fund that fails to refund application monies within the regulatory period. The penalty runs per day of continued failure and is capped at one crore rupees. The one thousand rupee figure is an old superseded amount, and registration status is not a condition for clause (e).

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