Securities Appellate Tribunal Asks Securities And Exchange Board Of India to Recalculate Fee Levied On ICAP India

The Securities Appellate Tribunal (SAT) has directed the Securities And Exchange Board of India (SEBI to recalculate turnover fee liability which was recently imposed on ICAP India.

The SAT has asked SEBI to recalculate the turnover fee liability from October 20, 2000, for a period of five years at the rate of 0.001% of the turnover of the appellant, effectively setting aside the imposition of the fee on ICAP India at the rate of 0.01% of its turnover.

The order was issued after ICAP India appealed against SEBI’s decision to grant the firm fresh registration and calculation of turnover fee liability after it began to be controlled by foreign company called Garban PLC.

Earlier, ICAP India was originally incorporated as Pennar Investments Ltd in July 1994, but became Garban Intercapital IL Ltd after Garban PLC invested in the company. Later, the name of the company became ICAP India Pvt Ltd in July 2003.

After the change in ownership, SEBI granted the company a fresh registration certificate in October, 2000 in the name of Garban Intercapital IL Ltd and levied a turnover fee of more than Rs 37.29 crore.

According to the SAT, this fee included principal amount calculated at the rate 0.01% and the interest amount.

This led the company to contend that transfer of membership should not be considered as new membership and the turnover fee should be calculated at the rate of 0.001% as applicable to the wholesale debt market segment.

The SAT ruled that the appellant company deals only in the wholesale debt market segment and the turnover fee applicable to that segment is only 0.001%. Hence, it is not appropriate for SEBI to impose a turnover fee at the rate of 0.01%, without any legal basis, which is also highly arbitrary.

The SAT has asked SEBI to recalculate the turnover fee at the rate of 0.001% since October 20, 2000, for a period of five years.