Legal UpdatesSecurity Laws

SEBI (Settlement Proceedings) Regulations,2018 will come in effect from 01.01.2019

SEBI Updates

On 30.11.2018 SEBI had notified SEBI (Settlement Proceedings) Regulations, 2018 (Regulations) with the objective to integrate and convergent quasi-judicial processes within SEBI with the alternate dispute resolution process. The respective Regulations will come into effect on 01.01.2019 and existing SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014 would stand repealed on the date of commencement of SEBI (Settlement Proceedings) Regulations, 2018.

The new Settlement process is an alternative enforcement process that is beneficial to the alleged defaulter, investors and the regulator. Settlement allows the enforcement proceedings to be finalized at the earliest without a long drawn litigation while ensuring that the investors’ rights are protected. The SEBI (Settlement Proceedings) Regulations, 2018 inter alia provide the following:-

  1. Disclosure related violations are settled after making the required disclosures;
  2.  Refund to investors is made wherever required in compliance with securities laws;
  3.  Investors are provided the required exit or purchase option in compliance with securities laws;

In addition, under SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014, SEBI has introduced a mathematical and transparent system of calculating the settlement amount. This action was taken after observing the changes in securities laws, new products and increase in settlement amounts. In order to introduce mathematical system of calculating the settlement amount SEBI had constituted a High Level Committee under the Chairmanship of Retd. Justice A. R. Dave (Supreme Court of India) to examine the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014 and comprehensively re-work the regulations after taking into account developments in domestic and foreign jurisdictions. The SEBI (Settlement Proceedings) Regulations, 2018 provide a more effective mechanism, the essential concomitants of a legal proceeding, without compromising on deterrence or providing equitable remedies to the affected investors.

Click the link below to view SEBI (Settlement Proceedings) Regulations, 2018 notified on 30.11.2018
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