SEBI notifies SEBI (Grant of Reward to Informant under Recovery Proceedings) Guidelines, 2023

On 8-3-2023, the Securities and Exchange Board of India (Grant of Reward to Informant under Recovery Proceedings) Guidelines, 2023.

Key Points:

1. Applicability & Scope: These guidelines will regulate the grant and payment of reward to an informant providing Original Information about the defaulter’s asset and when this information results in collection of outstanding dues which cannot be recovered these dues are certified as ‘Difficult to Recover’.

2. Any person will be eligible for reward if that person furnishes Original Information in relation to the asset of a defaulter concerning the dues which are certified as ‘Difficult to Recover’.

3. The informant will have to submit the information specified in FORM A along with a statement/declaration specified in FORM B to a recovery agent (Nodal Officer).

4. Examination of Information: It must be verified by the Nodal Officer. In case the information needed I not specified in the Forms then the Nodal Officer, within week, advise the informant to furnish complete details.

5. Reward Award can be granted om 2 stages:

   • Interim stage- it will not exceed 2.5% of the reserve price of the defaulter’s asset or Rs. 5 lakhs, whichever is less.

   • Final stage- it will not exceed 10% of the dues recovered or Rs. 20 lakhs, whichever is less, or whichever is approved by the Board.

6. Informant Reward Committee will comprise of:

   • Chief General Manager of Recovery and Refund Department,

   • Concerned Recovery Officer having jurisdiction in the matter,

   • Recovery Officer nominated by the Chief General Manager of Recovery and Refund Department and

   • an officer in the grade of Deputy General Manager or higher, of the Office of Investor Assistance and Education nominated by the Chief General Manager in charge of Investor Protection and Education Fund.

7. Circumstances for determining the Amount of Reward:

   • Accuracy of the information given by the informant;

   • Extent and nature of the assistance rendered by the informant;

   • Risk and trouble undertaken, and the expense incurred by the informant in securing and furnishing the information / documents;

   • Quantum of work involved in utilizing the information;

   • Quantum of dues recovered which is directly attributable to the information and documents supplied by the informant.

8. The reward which be granted to the informant will be paid from the Investor Protection and Education Fund.

9. The following forms have also been introduced:

   • Form A- Form of Statement provided by the Informant for furnishing Information

   • Form B- Statement/Declaration