Securities and Exchange Board of India (SEBI) has recently cancelled the registration certificates of around five (5) AIFs through summary proceedings under Regulation 30A of the SEBI (Intermediaries) Regulations, 2008, primarily for repeated non-filing of Quarterly Activity Reports (QARs).
What deserves closer attention is not merely the violation, but the enforcement architecture now being actively deployed by SEBI.
๐๐ฎ๐ฆ๐ฆ๐๐ซ๐ฒ ๐๐ซ๐จ๐๐๐๐๐ข๐ง๐ ๐ฌ
Regulation 30A was originally introduced under the SEBI (Intermediaries) Regulations, 2008 in a limited context for cases such as expulsion from stock exchange membership or termination of depository participant agreements. However, through the SEBI (Intermediaries) (Second Amendment) Regulations, 2024, SEBI substantially expanded the scope of Regulation 30A into a broader framework for โsummary proceedingsโ covering certain categories of compliance violations, including non-filing of periodic reports.
The rationale behind this expansion was clear. In its September 2024 proposal, SEBI noted that the regular enforcement process under Chapter V (involving designated authorities, inspection of documents, personal hearings and multiple procedural stages) was often too lengthy for violations that were obvious in nature, admitted by the intermediary, or required minimal evidentiary examination.
What deserves particular attention is Regulation 30A(6).
Unlike regular intermediary proceedings, Regulation 30A(6) expressly provides that โNo opportunity of personal hearing shall be grantedโ while disposing proceedings under the summary mechanism.
That is a significant departure from the standard framework under Chapter V, where personal hearing is ordinarily contemplated, especially in cancellation matters.
In effect, Regulation 30A compresses the enforcement cycle into a written-response-based process, enabling SEBI to move from SCN to cancellation without oral hearings in specified categories of cases enumerated under Regulation 30A(1).
Interestingly, in several recent AIF orders, noticees argued that the funds were dormant, had NIL activity, had not onboarded investors, or that the non-filing occurred due to administrative oversight. Yet SEBI proceeded with cancellation.
๐๐๐ค๐๐๐ฐ๐๐ฒ
The regulatory message appears fairly direct that inactivity is not a defence against continuing compliance obligations, and reporting defaults may now invite swift supervisory consequences through a truncated enforcement process.
