(1) For the purposes of inviting claims from the investors, the Administrator shall -
(a) issue advertisements in an English and a Hindi newspaper having nationwide circulation and if so directed by the Recovery Officer, issue such advertisement in vernacular newspaper(s) having circulation in the area(s) where the investors are concentrated;
(b) direct the defaulter to issue advertisement in its website, if available.
(2) The advertisement referred to sub-regulation (1) may also be hosted on the website of the Board.
(3) The advertisements referred to in sub-regulation (1) shall contain instructions on the manner of making claims by investors and the documents and information that are to be submitted for verifying and processing their claim applications.
(4) The invitation of claims from the investors shall be through electronic mode or be received in the office of the Administrator;
Provided that the investors’ claims received, if any, by the Board and forwarded to the Administrator shall also be included in the relevant records maintained by the Administrator.
(5) The Administrator or the chartered accountant engaged by the Administrator, shall consider the total eligible claims as against the monies available for distribution to investors in order to determine whether the whole amount or a proportionate amount may be repaid to the investors as may be directed by the Recovery Officer.
(6) Upon ascertaining the eligibility, the Administrator in consultation with the Recovery Officer, shall repay the money to the eligible investors only through pay orders, demand drafts and electronic transfer through NEFT or RTGS.
(7) The refund process shall be kept open for an appropriate period as may be decided in consultation with the Recovery Officer.
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(8) The monies remaining in the interest bearing escrow bank account after satisfying all the permissible claims of investors and other charges, shall be retained therein for a period of three years in order to meet the claims that may be received from any unpaid investor.
(9) Upon completion of the period specified under sub-regulation (8), the unpaid monies due to investors, if any, shall be transferred to the Investor Protection and Education Fund of the Board.
(10) In case any claim is received from an unpaid investor after the refund process has been closed, the same may be made from the Investor Protection and Education Fund after necessary verification by the Administrator in consultation with the Recovery Officer:
Provided that the claim shall be made within a period of three years from the date of transfer of monies to the Investor Protection and Education Fund in terms of subregulation (9).
(11) The defaulter, and its officers who are in default as defined under section 2 of the Companies Act, 2013, as applicable, shall furnish an undertaking that they shall be liable for payment if any complaint is received in future by the Board from any investor.
Costs incurred in administration and repayment process.
10.(1)The entire costs incurred in relation to the sale of properties, verification of investors’ claims, remuneration of Administrator including the fees paid, if any, to the chartered accountant or valuer or such other person engaged by the Administrator and registrar and share transfer agent and all other expenses incurred in connection with the recovery and/or the repayment process shall be borne by the defaulter(s), failing which, the monies recovered by the Board shall be appropriated in priority to the other liabilities.
(2) The cost and expenses referred to in sub-regulation (1) shall be reasonable and directly related to and necessary for the act and purposes referred to in these regulations.
(3) Where the Administrator is appointed on the request of a person against whom an order for disgorgement or refund had been issued by the Board, the remuneration of the Administrator and the other costs incurred in respect of recovery and/or refund to the investors shall be borne by such person.
Page 9 of 12 Priority in distribution of sale proceeds.
11. The proceeds from the sale of properties of the defaulter shall be distributed in the following order of priority, namely, - i. the costs of administration incurred by the Board, if any, and the fees and charges payable to the Administrator and other persons appointed by the administrator in performing its functions under these regulations;
ii. disgorgement and/or monies payable to investors:
Provided the Board may direct the Administrator to initiate the process of refund to the investors with the monies realized at the relevant time.
For this purpose, the Administrator may call for claims in tranches iii. any other penalty or fees due from the defaulter to the Board under the provisions of the Act, the Securities Contracts (Regulation) Act, 1956 or the Depositories Act, 1996.
Return of monies exceeding the liability.
12. In case the proceeds realised by way of sale of properties of the defaulter is in excess of the monies due from him under the certificate and the applicable interest and other charges, the excess money shall be paid to the defaulter after completion of three years from the date of completion of the refund process.
Filing of the repayment report.
13. Upon completion of the repayments to all investors or recovery of the disgorgement amount from the defaulter, the Administrator shall file a detailed repayment/recovery report to the Recovery Officer or Board, as the case may be, within the period as may be specified.
Part V – Disgorgement of amounts
14. The provisions of these regulations in relation to recovery of disgorgement amount ordered by the Board shall be applied in so far as it is applicable and the disgorgement amount so recovered shall be credited to the Investor Protection and Education Fund of the Board.
Provided the disgorgement amount shall be paid to investors only in cases where the eligible investors are identified in the order passed by the Board and the remaining Page 10 of 12 amount, if any, after such payment, shall be credited to the account of Investor Protection and Education Fund of the Board.
Part VI - General obligations and responsibilities Obligations and Responsibilities
15. An Administrator - a) shall maintain high standards of integrity, promptitude and fairness in the conduct of all his business.
b) shall act with due skill, care and diligence in the conduct of all his business.
c) shall not misrepresent any facts or situations and shall refrain from being involved in any action that would bring disrepute to the profession.
d) shall act with objectivity during the course of his professional dealings by ensuring that all decisions are made without any bias, conflict of interest, coercion, or undue influence of any party, whether directly or indirectly connected to sale of properties, verification of claims and refund of monies.
e) shall not acquire, directly or indirectly, any of the assets of the defaulter.
f) shall maintain complete independence in all professional relationships and conduct the verification and refund process, as the case may be, independent of external influences.
g) shall not conceal any material information or knowingly make a misleading statement to the Recovery Officer or the Board.
h) shall not act with mala fide or be negligent while performing the functions and duties under the regulations.
i) shall provide all information and records as may be required by the Recovery Officer within the time specified by him.
j) shall ensure that confidentiality of the information relating to the sale of properties, verification and refund process, is maintained at all times:
Provided that the Administrator may disclose any information after obtaining written authorization of the Recovery Officer or the Board.
k) shall disclose all costs towards the verification and refund process and endeavour to ensure that such costs are not unreasonable.
l) shall comply with the terms and conditions of its appointment.
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CHAPTER III Action in case of default By an Administrator.