SEBI releases guidelines for grant of reward to Informants under Recovery Proceedings

SEBI Guidelines, dated: 08-03-2023

The SEBI has released SEBI (Grant of Reward to Informant under Recovery Proceedings) Guidelines, 2023. These guidelines aim to regulate grants and payment of rewards to informants who provide original Information on defaulters’ assets with dues certified as ‘Difficult to Recover’.

The reward may be granted in two stages, namely, Interim and Final. The Interim reward amount shall not exceed 2.5% of the reserve price of the asset regarding which information was furnished or Rs. 5,00,000, whichever is less. Whereas, the final reward amount shall not exceed 10 % of the dues recovered, directly attributed to the Original Information supplied by the informant or Rs. 20,00,000, whichever is less.

A person shall be considered to be an informant eligible for reward if he furnishes Original Information in relation to the asset of a defaulter concerning the dues which are certified as ‘Difficult to Recover’. The difficult-to-recover dues are the ones which could not be recovered even after exhausting all the modes of recovery.

In addition to this, for the purpose of recommending the eligibility of reward, there shall be constituted an Informant Reward Committee comprising the Chief General Manager of Recovery and Refund Department, the concerned Recovery Officer having jurisdiction in the matter, another Recovery Officer nominated by the Chief General Manager 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.

The Informant Reward Committee shall give its recommendations to the Competent Authority on the following matters:

(a) eligibility of Informant for reward;

(b) determination of amount of reward payable to Informant.

Also, the amount of reward granted to the informant shall be paid from the Investor Protection and Education Fund. These guidelines are made effective from March 8, 2023.

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