SEBI Regularization Scheme, 2002 for non-compliance with regulations 6 and 8 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997

In terms of Chapter II of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as `the Takeover Regulations, 1997') certain categories of persons are required to disclose their shareholding and/or control in a listed company to that company. Such companies, in turn, are required to disclose such details to the stock exchanges where shares of the company are listed. It has been observed that many listed companies and/or their promoters/ shareholders have either not complied at all or have complied with the said requirements after the expiry of the time specified in the said regulations.

In terms of Section 15A of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as 'the SEBI Act'), such persons are liable to a penalty not exceeding five thousand rupees payable for every day during which such failure to furnish information, return, report, or document etc. continues. Besides, such persons are also liable for prosecution under section 24 of the SEBI Act.

It has also been brought to the notice of the Securities and Exchange Board of India (SEBI) that the disclosures were not made either on account of oversight or lack of knowledge. The monetary penalty under Section 15A of the SEBI Act may be imposed after adjudication and enquiry under Chapter VI A of the SEBI Act. Further, the prosecution proceedings involve considerable time and even if concluded in conviction, the penalty, monetary or otherwise, may be very nominal.

In view of the above, SEBI has decided to introduce a scheme, namely, "SEBI Regularization Scheme, 2002" (hereinafter referred to as `the Scheme') to enable such persons and companies to comply with these requirements. Under the Scheme, the persons and companies who have not made disclosures or who have made disclosures after expiry of the period as specified in the Takeover Regulations, 1997 are permitted to make disclosures to the company and the stock exchange as the case may be, and pay the lump-sum amount specified herein.

This is to provide one time opportunity to enable the companies and the specified persons to comply with the law of the land. By implementation of the Scheme, the listed companies as well as the stock exchanges shall have the required information. Besides, the public will also have access to the necessary information about the shareholding etc. of such persons in the company.

The Scheme will be in operation for a limited period as specified hereinafter. The persons and the companies may, therefore, take full advantage of this Scheme. It is also clarified that after the expiry of the Scheme, SEBI may have to initiate appropriate action against defaulting persons and the companies, which may result in heavy penalties against such persons and companies, as per the provisions of the SEBI Act.

Therefore, in exercise of the powers under Section 11 of the SEBI Act read with regulations 6 and 8 of the Takeover Regulations, 1997, SEBI hereby introduces the said Scheme. The salient features of the Scheme are as under:-

1. Regularization of the Defaults: - Under the Scheme, the eligible persons and companies may make disclosures and pay the lump-sum amount within the period specified under the Scheme.



2. Eligibility
   Following are eligible for availing benefit under this scheme -
   1. Persons who have failed to comply with or who have complied with the requirements of regulations 6(1), 6(3), 8(1) and 8(2) of the Takeover Regulations, 1997, after expiry of the period specified in the said regulations.
   2. The listed companies which had failed to comply with or complied with the requirements of regulations 6(2), 6(4) and 8(3) of the Takeover Regulations, 1997, after expiry of the period specified in the said regulations.
   3. c. In respect of the listed companies, where there was no change in the shareholding of persons specified under regulations 8(1) and 8(2) of the Takeover Regulations, 1997, in a particular year, the disclosure under regulation 8(3) for that year if not made earlier, can be made under this scheme specifying that there was no change in shareholding of the said persons. Such companies will not be required to pay any amount. This benefit will not be available to persons covered under regulations 8(1) and 8(2).



3. Scheme not to apply in certain cases
   The benefit of this Scheme will not be available in cases where penalty under the SEBI Act read with Takeover Regulations, 1997 has already been imposed.
   
   However, where such proceedings under the SEBI Act read with Takeover Regulations are in progress, persons/ companies may avail the benefit of the Scheme.



4. Procedure for compliance
   1. The persons who have not made disclosures as required under regulations 6(1), 6(3), 8(1) and 8(2) of the Takeover Regulations, 1997 shall make the disclosure required under the said Regulations along with the amount payable as specified under clause 5 of the Scheme, to the company.
   2. The persons who have made disclosures as required under regulations 6(1), 6(3), 8(1) and 8(2) of the Takeover Regulations, 1997 after the period specified therein, shall submit a copy of such disclosures made earlier to the company along with the amount payable under the Scheme.
   3. The listed company which has not made disclosures as required under regulations 6(2), 6(4) and 8(3) of the Takeover Regulations, 1997 shall make the disclosures as required under provisions of the said regulations along with a copy of the disclosures received, if any, from the persons stated at (a) and (b) above, to all the Stock Exchanges where the shares of the company are listed.
   4. The listed company which has made disclosures as required under regulations 6(2), 6(4) and 8(3) of the Takeover Regulations, 1997 after expiry of the period specified therein, shall send a copy of such disclosures made earlier, along with a copy of the disclosures received, if any, from the persons stated at (a) and (b) above, to all the Stock Exchanges where the shares of the company are listed.
   5. The disclosures mentioned at (a) and (c) above shall be made as per the formats specified at Forms 1 - 4, as may be applicable.
   6. The Regional Stock Exchanges (RSE) shall verify the details submitted by the companies, compile and forward the details of the amounts received and the original Demand Drafts / Banker's Cheques as per the Form -5 to the Regional Office of SEBI under whose jurisdiction the RSE falls. The details shall be furnished by the RSE on a monthly basis.
   7. The specimen of the Forms 1-5 and the Regional Office of SEBI under whose jurisdiction the RSE falls is available at SEBI website at www.sebi.gov.in and also with the stock exchanges. The persons and the company may procure the forms either from the stock exchange or from SEBI website.



5. Amount payable -
   The amount payable by persons and/or companies who have not complied with the requirements of Chapter II of the Takeover Regulations, 1997 or who have complied with the requirements after expiry of the period specified in the said Regulations, is as follows :-
   
   
   

   Regulation/ Sub-Regulation	Non compliance by	Due date for compliance in terms of Regulations	Amount Payable (in Rupees)
   6(1)- transitional provision	Persons holding 5% or more	April 20, 1997	10,000
   6(2)- transitional provision	Company	May 20,1997	10,000
   6(3)- transitional provision	Promoters and persons in control	April 20,1997	10,000
   6(4)- transitional provision	Company	May 20, 1997	10,000
   8(1)– annual disclosures	Persons holding 15% or more	April 21 of each Financial Year	10,000/- for each year
   8(2)- annual disclosures	Promoters or persons in control	April 21 of each Financial Year	10,000/- for each year
   8(2)- annual disclosures	Promoters or persons in control	21 days from the record date for dividend declaration	10,000/- for each record date
   8(3)- annual disclosures	Company	April 30 of each Financial Year	10,000/- for each year
   8(3)- annual disclosures	Company	30 days from the record date for dividend declaration	10,000/- for each record date




6. Mode of Payment
   
   1. The amount payable under this Scheme shall be paid by way of a Banker's Cheque or Demand Draft drawn in favour of `the Securities and Exchange Board of India' payable at Mumbai.
   2. The Demand Draft / Banker's Cheque received from the persons by the listed company and the Demand Draft/ Banker's Cheque towards the amount payable by the listed company shall be forwarded by the listed company to the Regional Stock Exchange.



7. Duration of the Scheme
   
   1. The scheme shall remain in force for a period of 3 months, i.e. from October 1, 2002 to December 31, 2002, for persons referred in clause 2(a) of this Scheme.
   2. The scheme shall remain in force for a period of 4 months, i.e. from October 1, 2002 to January 31, 2003, for companies referred to in clause 2(b) and 2(c) above.



8. The details of this Scheme are also available on the web site of SEBI at www.sebi.gov.in , and with the stock exchanges.



9. For clarification, if any, the person or the company may contact at the e-mail address; sundaresanvs@sebi.gov.in or ruchic@sebi.gov.in or ashas@sebi.gov.in or write to :-
   Shri V S Sundaresan
   Deputy General Manager
   Securities and Exchange Board of India
   Mittal Court, B Wing, 1st Floor
   224, Nariman Point
   Mumbai 400 021
   
   Tel No. :     022-2845355     Fax No. :    022-2845776
   
   JURISDICTION OF HEAD OFFICE / REGIONAL OFFICES OF THE BOARD
   
   

   REGIONAL OFFICE HEAD OFFICE	STOCK EXCHANGES LOCATED IN	ADDRESS OF SEBI OFFICE
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