SEBI has introduced a reward program that offers up to Rs 20 lakh to individuals who provide information about the assets of defaulters.
The Securities and Exchange Board of India (SEBI) has implemented this system to incentivize informants to come forward with information.
Interim and final reward amount
The reward system is divided into two stages: interim and final.
The interim reward will not exceed two and a half percent of the reserve price of the asset for which information was provided, or Rs 5 lakh, whichever is lower.
The final reward amount will not exceed 10 percent of the recovered dues or Rs 20 lakh, whichever is less.
Purpose
The new guidelines have been in effect since March 8th.
This system aims to help the market regulator recover fines from elusive offenders.
Eligibility
SEBI has stated that “the information and identity provided by the informant, as well as the reward paid to them, shall be kept confidential.”
To be eligible for a reward, an informant must provide original information related to the asset of a defaulter concerning dues that have been certified as ‘Difficult to Recover.’
“Difficult-to-recover” dues
SEBI has released a list of 515 defaulters for which informants can provide information.
The dues that are “difficult-to-recover” are those that were not recovered despite exhausting all modes of recovery.
As of March 2022, SEBI classified debts worth Rs. 67,228 crore as “difficult-to-recover” (DTR).
Recommending committee
SEBI will establish an Informant Reward Committee that will be headed by the Chief General Manager of the Recovery and Refund Department.
The committee will evaluate the eligibility of informants for the reward. Other members of the committee will include the relevant recovery officer, a nominated recovery officer,
and a deputy general manager or higher officer from the Office of Investor Assistance and Education, nominated by the Chief General Manager in charge of the Investor Protection and Education Fund (IPEF).
Reward payout
The recommendations regarding the informant’s eligibility for reward and the determination of the reward amount will be received by the competent authority through the informant reward committee.
The incentive paid to informants will be financed from the Investor Protection and Education Fund.
