Releasing a framework for the redressal of investor grievances through the SEBI complaint redressal (SCORES) platform and linking it to an online dispute resolution platform, market regulator Securities and Exchange Board of India (SEBI) has asked regulated entities, including listed companies, registered intermediaries and market infrastructure institutions (MII) to submit the action taken report (ATR) (in the investor complaint) within 21 days from the date of receipt of the complaint. The provisions of the circular related to the workflow of processing of investor grievances by entities and the framework for monitoring and handling of investor complaints by the designated bodies will come into force from 4 December 2023.
In a circular, SEBI says, “The complaints lodged on SCORES against any entity shall be automatically forwarded to the concerned entity through SCORES for resolution and submission of ATR. Entities shall resolve the complaint and upload the ATR on SCORES within 21 calendar days of receipt of the complaint. The ATR of the entity will be automatically routed to the complainant.”
If the investor is not satisfied with the ATR, she can request a review of the resolution provided by the entity within the next 15 days. “In case the complainant has requested for a review of the resolution provided by the entity or the entity has not submitted the ATR within the stipulated time of 21 calendar days, the concerned designated body shall take cognizance of the complaint for the first review of the resolution through SCORES. The designated body shall take up the first review with the concerned entity, wherever required. The concerned entity shall submit the ATR to the designated body within the time stipulated by the designated body.”
The designated body should ensure to submit a revised ATR within 10 calendar days from the review on SCORES.
Even then, if the investor complainant is not satisfied with the revised ATR, she can seek a second review of within 15 calendar days from the date of the submission of the revised ATR by the designated body.
In that case, SEBI or the designated body would take up the review with the stakeholders involved, including the concerned entity and/ or the designated body. “The concerned entity shall provide clarification to the respective designated body and/ or SEBI, wherever sought and within such timeline as specified. The second review complaint shall be treated as ‘resolved’ or ‘disposed’ or ‘closed’ only when SEBI ‘disposes’ or ‘closes’ the complaint in SCORES. Hence, mere filing of ATR with respect to SEBI review complaint will not mean that the SEBI review complaint is disposed of.”
The SEBI circular also has a provision for imposing fines on the listed company which fails to redress investor complaints within the stipulated time. The designated stock exchange (DSE), which will be the designated body for listed companies, would levy a fine of Rs1,000 per day per complaint on the listed company. These fines would also be imposed on companies that are suspended from trading.
If the company fails to redress investor complaints or pay the fine within 15 days, then the DSE will issue a notice to the promoter/s of the listed company to ensure submission of ATRs on pending complaints and payment of fines within 10 days.
SEBI says, “In case the listed entity fails to comply with the aforesaid requirement and/ or pay a fine levied within the stipulated period as per the notices, the DSE shall forthwith intimate the depositories to freeze the entire shareholding of the promoter(s) in such listed company as well as all other securities held in the demat account of the promoter/s.
The depository(ies) shall immediately freeze such demat accounts and also intimate the promoter(s) about the details of non-compliances resulting in freezing of their demat accounts.”
“Upon exhaustion of all options as mentioned above, and if the number of pending complaints exceeds 20 or the value involved in such complaints is more than Rs10 lakh, stock exchanges shall forward all the complaints against such listed companies to SEBI for further action, if any,” the circular says.
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