Sebi plans to put in place revised norms for recovering investors' money in cases of illegal collective investment schemes, wherein a registered insolvency professional will be appointed as administrator to undertake sale of assets.
The Insolvency and Bankruptcy Board of India (IBBI) is implementing the Insolvency and Bankruptcy Code.
Before appointment as administrator, such an entity should provide an undertaking with Sebi that it does not have any "conflict of interest with the unregistered collective investment scheme entity, its directors, promoters and its group entities," the official said.
According to the official, the proposal is likely to be taken up during Sebi's board meeting scheduled for June 21.
The expenses pertaining to the administrator would be borne by the entity or come from the sale proceeds of the entity's assets.
The proposed norms would also be applicable in instances of refunding investors in deemed public issues and cases where a particular entity has failed to comply with directions to disgorge ill-gotten gains.
In case the administrator is not able to raise the entire dues by sale of the entity's assets, then repayment would be done on a pro-rata basis.
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