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CS Executive · Capital Market and Securities Laws · Mutual Funds

Sagar Mutual Fund launches a new scheme and collects application money, but does not refund the application monies to investors within the period specified in the regulations. Which provision of the SEBI Act, 1992 is directly attracted?

Section 15D(e) applies. A registered mutual fund that fails to refund investors' application monies within the period specified in the regulations is liable to the per-day penalty, subject to the maximum of one crore rupees. Registration status is not the trigger here; the refund failure is.

  1. ASection 15D, which penalises a registered mutual fund for failing to refund application monies within the specified periodCorrect
  2. BSection 11A, which allows SEBI to prohibit any company from issuing an advertisement
  3. CSection 15D, but only if the fund was operating without registration
  4. DNo penalty arises, because refund timelines are only contractual

Explanation

Section 15D(e) specifically penalises a registered collective investment scheme, including a mutual fund, that fails to refund application monies within the period in the regulations. The unregistered-operation limb is clause (a), which is a different default. Section 11A deals with regulating offer documents, not refunds.

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