Aid capped at Rs 20 lakh for cases before SC.
The Securities and Exchange Board of India (Sebi) has released guidelines related to monetary aid that investor associations may seek for legal proceedings.
Aid for a legal proceeding would not exceed Rs 20 lakh if the case was before the Supreme Court and Rs 10 lakh if it was before any other forum, Sebi said.
The guidelines would come into force after the Sebi Investor Protection and Education Fund Regulations were notified, said the regulator.
Sebi said it would reimburse only up to 75 per cent of the expenses incurred and endeavour to reimburse the amount within 15 days of the receipt of the claim.
Expenses that will be reimbursed include court fees, processing fees, and bills of solicitors, advocates, and counsels.
Sebi said the investor association would have to furnish an estimate of expenses for the legal proceedings to avail of the aid. If the regulator believed that any legal proceeding was not achieving the objective of investor protection, it woud discontinue the aid after giving notice to the association.
In cases where Sebi receives more than one application for aid, preference will be given to the association that has filed the petition in the court first.
In case legal proceedings relate to misstatement or misrepresentations in case of sale or purchase of securities, the association will have to establish that investors relied on such statements, resulting in a monetary loss. In its application, the association concerned will have to give the name of investors and the number of securities held by them.
An investor association that receives the letter of grant of aid from Sebi will have to submit the original bills certified by an auditor. The aid should be strictly used for the purpose of meeting legal expenses, Sebi said.
An association would have to submit to the regulator a periodic report of legal proceedings and also a statement on the utilisation of the aid.
