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CS Executive · Capital Market and Securities Laws · Mutual Funds

Sunrise Mutual Fund's asset management company, Sunrise AMC Ltd, breaches a SEBI regulation that places restrictions on the activities of asset management companies, and the breach continues for several days. Under the SEBI Act, 1992, what is the maximum penalty it can face for this default?

The maximum penalty is one lakh rupees for each day the failure continues, subject to an overall cap of one crore rupees. This is the current penalty under the SEBI Act for an asset management company breaching regulations that restrict its activities.

  1. AOne lakh rupees per day, subject to a maximum of one crore rupeesCorrect
  2. BTen thousand rupees per day, subject to a maximum of ten lakh rupees
  3. CFive lakh rupees for each such failure, with no overall ceiling
  4. DThree times the gains made from the failure, with no upper limit

Explanation

Section 15E provides that an AMC failing to comply with regulations restricting its activities is liable to a penalty of up to one lakh rupees per day of continuing failure, capped at one crore rupees. The ten thousand per day and ten lakh figures and the five lakh per failure figure are old pre-amendment amounts that were substituted. The 'three times gains' formula appears in Section 15EA for AIFs, InvITs and REITs, not for AMCs.

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