SECURITIES AND EXCHANGE BOARD OF INDIA (GRANT OF REWARD TO
INFORMANT UNDER RECOVERY PROCEEDINGS) GUIDELINES, 2023
In exercise of the powers conferred under Section 11 (1) of the Securities and Exchange
Board of India Act, 1992, the Securities and Exchange Board of India hereby makes the
following Guidelines to regulate the grant and payment of reward to an informant who
provides credible information about the assets of the defaulter under recovery
proceedings:
- Short Title and Commencement.
- i. These Guidelines shall be called as the Securities and Exchange Board of India (Grant of Reward to Informant under Recovery Proceedings) Guidelines, 2023.
- ii. These Guidelines shall come into force with immediate effect.
- Definition.
- i. In these Guidelines, unless the context otherwise requires, the words and expressions used shall have the meanings assigned to them as under:
- (a) “Board” means the Securities and Exchange Board of India;
- (b) “defaulter” means an entity against whom recovery proceedings are initiated under section 28A of the Securities and Exchange Board of India Act, 1992, section 23JB of the Securities Contracts (Regulation) Act, 1956 or section 19-IB of the Depositories Act, 1996;
- (c) “Informant” means an individual who voluntarily furnishes Original Information to the Board in accordance with these Guidelines and as per the specified Form A annexed hereto;
- (d) “Informant Reward Committee" means the Committee constituted as per paragraph 11 of these Guidelines;
- (e) “Investor Protection and Education Fund” means the Investor Protection and Education Fund established by the Board under sub-section (5) of section 11 of the Securities and Exchange Board of India Act, 1992;
- (f) “Original Information” means information about the asset of a defaulter whose name is published on the SEBI website where his liability is certified as ‘Difficult to Recover’ dues based on the parameters given in paragraph 3 of these Guidelines, that is:
- (i) not known to the Board from any other source, except where the Informant is the original source of the information;
- (ii) is sufficiently specific and credible to identify and attach the asset of such defaulter.
- (g) “reserve price” means the price fixed by a Recovery Officer below which the asset shall not be sold;
- (h) “securities laws” means the Securities and Exchange Board of India Act, 1992, the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Depositories Act, 1996 (22 of 1996), the relevant provisions of any other law to the extent it is administered by the Board and the relevant rules and regulations made thereunder.
- ii. Words and expressions used but not defined in these Guidelines but defined in securities laws, shall have the same meanings respectively assigned to them in those laws or any statutory modification or re-enactment thereto.
- Applicability and Scope.
These Guidelines shall regulate the grant and payment of reward to an informant who provides Original Information about the asset of a defaulter and such information results in the collection of outstanding dues which could not be recovered despite all possible efforts and such dues were certified as ‘Difficult to Recover’ on any one of the following parameters:
- (I) In case the defaulter is an individual -
- (a) defaulter is alive but has no attachable assets;
- (b) defaulter is not traceable;
- (c) defaulter has become insolvent; or
- (d) defaulter has died leaving behind no assets.
- (II) In case the defaulter is a company / body corporate / firm–
- i. An Indian entity- which is defunct and whose directors (if such directors are also defaulters along with company jointly or severally) have no attachable assets;
- ii. A foreign entity-
- (a) which has no presence/ place of business/ management in India;
- (b) who has no representative in India;
- (c) who has no attachable assets in India.
- Informant eligible for reward.
A person shall be considered to be an informant eligible for reward in accordance with these Guidelines if he furnishes Original Information in relation to the asset of a defaulter(s) concerning the dues which are certified as ‘Difficult to Recover’. The claim of reward shall be confined to cases where recovery of dues could be made in pursuance of the information so provided by the Informant. The information provided must be supported by facts/ documents and should be specific and actionable.
- Submission of Information
The information shall be submitted by the informant in the format specified in Form A of these Guidelines along with a statement/ declaration in the format specified in Form B to a Recovery Officer designated as the Nodal Officer for the purpose, in a sealed envelope superscribing -‘Information for grant of reward under Recovery Proceedings” or at the designated email ID (as and when specified from time to time) or by online submission at the SEBI Intermediaries Portal (https://siportal.sebi.gov.in/)
- Examination of Information.
- i. Upon receipt of Original Information, the Nodal Officer shall verify the comprehensiveness of the details so provided. If the details are complete in the specified formats, the Nodal Officer shall enter or cause to be entered the information into the register kept for the said purpose. In case the details are not submitted in the specified forms or information is incomplete, the Nodal Officer shall within one week’s time from receipt of such incomplete details, advise the informant to furnish the complete details as specified. Upon receipt of complete details and entering the same into the register, the Nodal Officer shall forward within a week of the information so received along with documents / forms to the Recovery Officer having jurisdiction.
- ii. Upon receipt of complete information by the Recovery Officer having jurisdiction in the case, the same shall be examined further to decide the nature of actionable information. The informant shall provide further documents / information or render assistance, if any, required by the Recovery Officer to the Nodal Officer or to the Recovery officer directly. The Original Information along with documents shall be kept in the safe custody by such Officer as required by the Recovery Officer having jurisdiction in the case.
- iii. Where Original Information is furnished by informant in the expectation of a reward, the informant shall be required to appear before the Nodal Officer or the Recovery Officer or the Recovery Officer posted at a Regional Office, at the option of the informant as and when called upon to sign the Forms A and B again for the purpose of ascertaining his / her identity and veracity of the information so provided. No reward shall be admissible if the informant refuses to appear or refuses to provide required information/ documents, etc.
- Undertaking by the Informant.
When an informant furnishes any information or documents in the expectation of a reward, following written undertaking shall be taken from him which shall be part of Form-B: -
- a) That he is aware that the information or documents furnished by him does not ipso facto confer on him the right to any reward and that he shall be bound by the decision of the competent authority of the Board in this regard.
- b) That he is aware that the extent of reward depends on the precision of the information and usefulness of the documents furnished by him;
- c) That he shall provide further documents / information or render assistance, if any, as and when required;
- d) That the reward would pertain only to the dues recovered/realized which are directly attributable to the information supplied by him;
- e) That the provisions of section 182 of the Indian Penal Code, 1860 have been read by him or explained to him and he is aware that if the information furnished by him is false and is intended to cause harm / injury to any other person directly or indirectly, then, he would be liable to prosecution;
- f) That he accepts that the Board is under no obligation to enter into any correspondence regarding the details of any dues realized as a result of his information; and
- g) That he accepts that the payment of reward is ex-gratia at the discretion of the authority competent to grant rewards and he has no right to challenge the correctness of the decision in any court of law.
- Reward Amount.
