Regulation 91A - Power to issue directions and levy penalty by the Board - Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018

1 [ CHAPTER IX-A ENFORCEMENT Power to issue directions and levy penalty by the Board 91A. (1) Without prejudice to exercise of its powers under the provisions of the Act, Depositories Act, 1996 and rules and regulations made thereunder, the Board may, either suo moto or on receipt of any information or during pendency of any inspection, inquiry or investigation or on completion thereof, in the interest of public or trade or investors or the securities market, issue such directions as it deems fit, including but not limited to any or all of the following:─ (a) directing a person holding equity shares or rights over equity shares in a depository in contravention of these regulations to divest his holding, in such manner as may be specified in the direction; (b) directing transfer of any proceeds or securities to the Investor Protection Fund of a depository; (c) debarring any depository, any shareholder of such depository, or any associate and agent of such shareholder, or any transferee of shares from such shareholder, or applicant(s), director(s) and key management personnel(s) of the depository from accessing the securities market and/or dealing in securities for such period as may be determined by the Board. (2) The Board may take action against a depository, director, committee member, key management personnel, employee or any other person associated with the depository, for any contravention or abetting the contravention of these regulations, including the Code of Conduct specified under these regulations, provision of the Act, the Depositories Act, 1996, or any rules or regulations framed thereunder and any circulars or directions issued by the Board, either upon a reference or suo motu, as it deems fit, including but not limited to any or all of the following: (a) debarring a depository from introducing new products and services and restricting its existing activities, products and services, etc (b) imposing such monetary penalty as may be determined by the Board on the depository, directors, committee members, key management personnel, employees or any other person associated with the depository. (c) restricting any such person to attend meetings or otherwise participate or involve themselves in the functioning of the depository. Explanation For the removal of any doubt, it is clarified that the power of the Board to take appropriate action under sub-regulation (2) is without prejudice to the exercise of its powers under the provisions of the Act, the Depositories Act, 1996 , and the rules and regulations made thereunder: Provided that the Board while taking action under clauses (a) and (b) above shall have due regard to the factors, including but not limited to any or all of the following:- (i) a mala fide intent; or (ii) an act of commission or an act of omission; or (iii) negligence, or (iv) repeated instances of genuine decision making that went wrong. (3) While adjudging the quantum of monetary penalty under the Act, the Board shall have due regard to the factors, including but not limited to any or all of the following: (a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; (b) the amount of loss caused to the depository or the securities market as a result of the default; and (c) the repetitive nature of the default. ] ************* NOTES:- 1. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/125 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette)