It is a violation of CDA rule but the nature of violation is not much of serious nature.
Inform it now stating you could not inform it by mistake only.
Generally nothing happens in such cases.
Purchase of shares of my employer
I am employed in a CPSU. I had purchased 55000rs worth of shares of same CPSU six months ago. But being unaware of CDA rules, I haven't informed my seniors. CDA rules states to inform if we purchase more than 20000rs of shares of employer company within 4days of purchase. What should I do now? Will there be any action against me as per CDA in future?
Asked 5 years ago in Labour
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10 Answers
Inform your seniors that you had purchased the shares
inadvertently you did not inform your organisation about purchase of shares on account of lock down prevalent in India
You don't declare it you can transfer the same or sell it to your relatives
If I sell the shares now, will that be fine?
Asked 5 years ago
You can sell at any time. It has no relevancy to your reporting share purchase to your employer.
You can sell the shares but inform your employer of the same
Investments in shares, debentures and mutual funds can be made by the Government servant.
However “frequent buying and selling” of these are considered as “speculation” and is banned.
35(1) No Government servant shall speculate in any stock, share or other investment: Provided that nothing in this sub-rule shall apply to occasional investments made through stockbrokers or other persons duly authorized and licensed or who have obtained a certificate of registration under the relevant law.
Explanation - Frequent purchase or sale or both, of shares, securities or other investments shall be deemed to be speculation within the meaning of this sub-rule.
40(2) (i) No Government servant shall make, or permit any member of his family or any person acting on his behalf to make, any investment which is likely to embarrass or influence him in the discharge of his official duties. For this purpose, any purchase of shares out of the quotas reserved for Directors of Companies or their friends and associates shall be deemed to be an investment which is likely to embarrass the Government servant.
The Centre has increased the over 26-year-old monetary limit on disclosure of investment in shares and mutual funds by employees to six months of their basic pay, according to an order issued by the Personnel Ministry.
According to the earlier rules, Group 'A' and 'B' officers were to disclose such details if the total transaction in shares, securities, debentures or mutual fund schemes etc. exceeded Rs 50,000 during the calendar year.
The upper limit was Rs 25,000 for those working in Group 'C' and 'D'.
The government has now decided that all government employees need to send an intimation if total transactions in shares, securities, debentures, mutual funds scheme and the like exceeds six months' basic pay during the calendar year.
You first of all go through the the said rules which prohibits you from purchasing the shares beyond the amount what you have mentioned and the penal action against the employee for violating the said rules.
Have you been issued with any show cause notice by the department in this connection.
If so, you can give a reply claiming your innocence of the prevailing law in this regard and express your willingness to pay penalty if any imposed by the authorities concerned in this regard and assure that it will not happen again.
Even if this notice was not issued so far, you may make a volunteer disclosure in this connection and request to apologise you for your ignorance of law and express your willingness to accept the penalty or any fine that may be imposed by the authorities concerned in this regard.
Service rules say no government servant shall speculate in any stock, share or other investment.
It has also been explained in the service rules that frequent purchase or sale or both, of share, securities or others investments shall be deemed to be speculation.
"But, the occasional investments made through stock brokers or other persons duly authorized and licensed or who have obtained a certificate of registration under the relevant laws is allowed in this rule," the Personnel Ministry said.
The move to revise the monetary limit may have been necessitated after government employees' salary hike following the recommendation of seventh central pay commission, officials said.
The latest disclosure will be in addition to the one already need to be filled by the employees under the Central Civil Services or CCS (Conduct) Rules, 1964, the government clarified.
"It is also clarified that since shares, securities, debentures, etc. are treated as movable property for the purpose of rule 18(3) of CCS(Conduct) Rules, 1964, if an individual transaction exceeds the amount prescribed in it, the intimation to the prescribed authority would still be necessary," the directive said.
According to the rules, government servants need to report any transaction in respect of movable property either in their own name or in the name of a member of their family if the value of the property exceeds two months' basic pay.
This needs to be done within one month from the date of the transaction.
Service rules say no government servant shall speculate in any stock, share or other investment.
It has also been explained in the service rules that frequent purchase or sale or both, of share, securities or others investments shall be deemed to be speculation.
"But, the occasional investments made through stock brokers or other persons duly authorized and licensed or who have obtained a certificate of registration under the relevant laws is allowed in this rule," the Personnel Ministry said.
The move to revise the monetary limit may have been necessitated after government employees' salary hike following the recommendation of seventh central pay commission, officials said.
The latest disclosure will be in addition to the one already need to be filled by the employees under the Central Civil Services or CCS (Conduct) Rules, 1964, the government clarified.
"It is also clarified that since shares, securities, debentures, etc. are treated as movable property for the purpose of rule 18(3) of CCS(Conduct) Rules, 1964, if an individual transaction exceeds the amount prescribed in it, the intimation to the prescribed authority would still be necessary," the directive said.
According to the rules, government servants need to report any transaction in respect of movable property either in their own name or in the name of a member of their family if the value of the property exceeds two months' basic pay.
This needs to be done within one month from the date of the transaction.
See you don't have any option now
If you yourself at this stage reveal your shareholding in the PSU in the prescribed format without further delay, then there chances that the disciplinary body shall charge you with minor penalties such as:
a) censure; OR
b) withholding of increments of pay with or without cumulative effect; OR
c) withholding of promotion; OR
d) recovery from pay of the whole or part of any pecuniary loss caused to the Corporation/Company by negligence or breach of order; OR
e) reduction to a lower stage in the time-scale of pay for a period not exceeding 3 years, without cumulative effect and not adversely affecting his terminal benefits.
If the disciplinary committee of the company finds out by themselves or their sources they may charge you with major penalties as prescribed in CDA Rules.
You may have an option to transfer those shares in name of your inmates/family members and then sell them out or sustain in their name which shall help you to surpass the threat of facing disciplinary actions.
Not informing will certainly impose penalty. Better inform the employer or sale the excess share stealthily.
