SEBI Settlement Scheme 2022

The Securities Exchange Board of India recently issued the SEBI Settlement Scheme 2022 in a public notification dated August 19, 2022. SEBI’s Settlement Scheme 2022 begins on August 22, 2022, and runs through November 21, 2022.

Overview

Following the expiration of the SEBI Settlement Scheme in 2020, a large number of organizations have filed an appeal with the Securities Appellate Tribunal (“SAT”) in Mumbai. In one instance, Shubham Singhal v. SEBI (SAT Appeal No. 191/2022, dated 13.05.2022), the Tribunal recently stated that the settlement program failed for two key reasons:

The settlement terms may have been difficult, stringent, and unprofitable, and
The strategy was implemented during the height of the Covid epidemic. In the aforementioned judgment, SAT directed SEBI to reconsider publishing a fresh plan.

This gives rise to the need to bring a fresh Settlement Scheme which has come into existence in 2022, which is also known as SEBI’s Settlement Scheme, 2022.

Purpose of SEBI Settlement Scheme 2022

he primary purpose of SEBI Settlement Scheme 2022 is to provide a settlement opportunity to the entity satisfying the following:

The entity should have executed reversal trades in the illiquid stock options segment of BSE between the period 1^st April 2014 to 30^th September 2015
The entity against whom the proceedings have been initiated is pending before any forum or higher authority.

Eligibility criteria under SEBI Settlement Scheme 2022

If an appeal has been filed and the case is still pending before the Securities Appellate Tribunal, the following entities are eligible to apply for the SEBI Settlement Scheme 2022:

The company that executed reverse trades on the BSE’s illiquid stock options market between April 1st and September 30th, 2015 has been identified, processes have been initiated, and the matter is now being heard by one or more forums or authorities.
Entity against which a penalty levying order was issued; however, the penalty was not paid, and hence recovery processes were initiated.

SEBI Settlement Scheme, 2022

The Settlement Scheme, 2022 was announced in a public notice released by the Securities and Exchange Board of India on August 19, 2022. (“the Scheme”). The Scheme’s goal is to offer a settlement opportunity to entities who executed reversal trades in the BSE’s illiquid stock options segment between April 1, 2014, and September 30, 2015, and against whom proceedings have been initiated and are pending before any forum or authority, including courts, the Securities Appellate Tribunal (“SAT”), adjudicating officers, and recovery officers (provided an appeal has been filed and the same is pending before the SAT).

An entity that wants to be settled under the Scheme must file a settlement application in the format required by the Scheme, which is available on the websites of SEBI and BSE. The application form must be submitted, and the supplied link must be used to pay the application fee and settlement sum online. There won’t be any tangible document that has to be produced.

Applying under SEBI Settlement Scheme 2022

By following the below steps, the entity can apply under SEBI Settlement Scheme 2022 –

STEP 1 – Go to https://siportal.sebi.gov.in/intermediary/AOPaymentGateway.html;

STEP 2 – Under ‘Type of Category,’ select ‘Settlement Scheme’ by using the drop-down arrow;

STEP 3 – Enter PAN and Captcha. Click ‘Go’;

STEP 4 – Submit the following documents [scanned copy] –

An application for settlement as per the format prescribed under Annexure-1;
Copy of duly paid, notarized and stamped undertaking and waivers per the format specified under Annexure-2. It should be in non-judicial stamp paper;
Self-attested copy of the PAN of the applicant.

STEP 5 – Payment of settlement application registration fees.

STEP 6 – Payment of settlement amount.

Settlement application registration fees are payable under SEBI Settlement Scheme 2022

The entity applying under SEBI Settlement Scheme 2022 needs to pay applicable registration fees as under –

INR 25,000 + GST @ 18% in case of body corporate; and
INR 15,000 + GST @18% in case of individuals.

The payment of such settlement application registration fees is to be paid using only payment mode as made available by the link https://siportal.sebi.gov.in/intermediary/AOPaymentGateway.html.

Document Requirements for submitting a Settlement Application

An entity must have the following documentation on hand before submitting a settlement application under the Scheme:

Online submission of the following scanned documents:
- - A replica of any waivers and commitments that have been duly notarized and rubber-stamped.
  - A copy of the applicant’s PAN Card has also undergone self-attestation.
  - Additionally, a settlement application copy has been confirmed as genuine.
  - A certified true copy of each of the last three years Income Tax Returns.
A functioning telephone number and email address
If necessary, a certified copy of the order with the required documentation.
The non-refundable registration cost for settlement applications is Rs. 15,000 for individuals and Rs. 25,000 for body corporations, plus GST at 18%.
Lastly, the applicant must be paid the settlement amount specified.

Important Points for Consideration

A business does not have to resubmit an application fee if it had submitted a settlement application prior to the commencement of the SEBI Settlement Scheme 2022. The following steps should be taken by such an entity to resolve the conflict:

Go to the official website.
Additionally, choose “Settlement Scheme,” enter “PAN,” and
Pay the compensation amount as agreed.
If the designated entity does not utilize the SEBI Settlement Scheme, the securities legislation will still be implemented against it.
After the settlement plan and record reconciliation are finished, the competent authority will finally issue a composite settlement order.

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