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CS Executive · Capital Market and Securities Laws · Mutual Funds

Vistara Infra Trust, an infrastructure investment trust, fails to comply with SEBI regulations and earns gains of Rs 5 crore from the failure. Under Section 15EA of the SEBI Act, what is the penalty it can be liable to?

The penalty can be up to one lakh rupees per day, subject to a maximum of one crore rupees or three times the gains, whichever is higher. Here three times Rs 5 crore, that is Rs 15 crore, is higher, so it sets the ceiling.

  1. AUp to one crore rupees only, as the overall cap
  2. BUp to one lakh rupees per day, subject to one crore rupees or three times the gains, whichever is higherCorrect
  3. CUp to one lakh rupees per day, subject to one crore rupees or three times the gains, whichever is lower
  4. DUp to ten lakh rupees or ten thousand rupees per day, whichever is higher

Explanation

Section 15EA sets a penalty of not less than one lakh but up to one lakh rupees per day of continuing failure, subject to a maximum of one crore rupees or three times the gains, whichever is higher. Three times Rs 5 crore is Rs 15 crore, which exceeds one crore, so the higher figure applies. The 'lower' wording reverses the rule, and the ten lakh formula is a repealed older provision.

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