Section 15EA of The Securities and Exchange Board of India Act, 1992
Where any person fails to comply with the regulations made by the Board in respect of alternative investment funds, infrastructure investment trusts and real estate investment trusts or fails to comply with the directions issued by the Board, such person shall be liable to penalty which shall not be less than one lakh rupees but which may extend to one lakh rupees for each day during which such failure continues subject to a maximum of one crore rupees or three times the amount of gains made out of such failure, whichever is higher.
Summary
- This section sets penalties specifically for alternative investment funds, infrastructure investment trusts, and real estate investment trusts.
- A penalty applies if these specific groups fail to follow the Board's regulations or ignore the Board's directions.
- The starting penalty for breaking these rules is at least one lakh rupees.
- The penalty can grow by up to one lakh rupees for every single day the rule breaking continues.
- The maximum limit is either one crore rupees or three times the amount of money gained by breaking the rule, whichever number is higher.
Practical examples
FAQ
1. Which exact types of funds are covered by this specific section?
It covers alternative investment funds, infrastructure investment trusts, and real estate investment trusts.
2. What is the absolute maximum penalty under this section?
The maximum is one crore rupees or three times the amount of gains made out of the failure, whichever number is larger.
3. Does this section apply if a fund simply ignores a direction from the Board?
Yes, failing to comply with the Board's directions triggers the exact same penalties as breaking formal written regulations.
Test yourself
Q1.Under Section 15EA of The Securities and Exchange Board of India Act, 1992, how is the maximum penalty calculated if a real estate investment trust makes a massive profit by breaking a rule?
Q2.Which of the following groups is NOT specifically targeted by Section 15EA of The Securities and Exchange Board of India Act, 1992?
Q3.Under Section 15EA of The Securities and Exchange Board of India Act, 1992, what happens if an alternative investment fund breaks a rule but makes zero financial gain from the mistake?
Q4.Under Section 15EA of The Securities and Exchange Board of India Act, 1992, what is the minimum penalty for failing to comply with the Board's directions?