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SEBI issues a Circular on Redressal of investor grievances through the SCORES

Margesh Rai
05 Jun, 2024 05 Jun, 2024
SEBI issues a Circular on Redressal of investor grievances

The Securities Exchange Board of India (SEBI) has issued a circular on the redressal of investor grievances through the SEBI Compliant Redressal (SCORES) Platform. It links it to the Online Dispute Resolution Platform.

What are SCORES?

SCORES is a centralized web-based complaint redressal facilitation platform. It was launched in 2011 vide a circular no. CIR/OIAE/2/2011) dated 3rd June 2011. It was formed to provide a facilitative platform for the benefit of the aggrieved investors whose grievances are against (a) a listed company, (b) a registered intermediary, or (c) a market infrastructure institution (“Entities) remain unsolved. Such measures by SEBI have revised and strengthened the process of facilitating the redressal of grievances by such Entities. Master Circular No. SEBI/HO/OIAE/IGRD/P/CIR/2022/0150 dated 07 November 20222 on “Processing of investor complaints against listed companies in SEBI Complaints Redress System-SCORES” governs the process of investor grievances. To strengthen the existing investor grievance handling mechanism through SCORES, the entire redressal process of grievance has been made comprehensive. It has been made more efficient by reducing timelines and introducing auto-routing and auto-escalation of complaints vide SEBI (facilitation of Grievance Redressal Mechanism) (Amendment) Regulations, 2023. As a result, it becomes necessary to revise the extant process of redressal of investor grievances against the Entities and provide a mechanism through which Designated Bodies may monitor the process of the redressal of investor grievances by entities.

Implementation of this Circular

  • The Entities must submit the Action Taken Report (ATR) to SEBI within 21 days of receipt of the complaint.
  • The provision of this circular related to the workflow of processing investor grievances by Entities and the framework for monitoring and handling investor complaints by the Designated Bodies will be effective on 4 December 2023.
  • The designated bodies may apply for SCORES Authentication and/or for Application Programming Interface (API) integration within such period to ensure that the Designated Bodies can comply with the provisions of this Circular by 4 December 2023 and onwards.

Framework for the handling of investor grievances received through SCORES

Submission of Complaint and handling of the Complaint by the Entity

  • All Entities shall review the investor grievance redressal mechanism from time to time to strengthen it and rectify the existing shortcomings.
  • All complaints shall be resolved within 21 days of the receipt of such Complaint.
  • The Complaints against any Entity lodged on SCORES shall be automatically forwarded to the concerned Entity through SCORES for resolution and submission of ATR. Entities should resolve the Complaint within 21 days of the receipt of such Complaint. The ATR should be uploaded on SCORES, and the ATR of the entity shall be automatically routed to the complainant.
  • The Complaint against the Entity shall be forwarded to the relevant Designated Body through SCORES. The Designated Body shall ensure that the concerned Entity submits the ATRs within the stipulated time of 21 calendar days.
  • The Designated Body shall monitor the ATRs submitted by the entities under their domain and inform the concerned entity to improve the quality of redressal of grievances whenever required.
  • SEBI may concurrently monitor the grievance redressal process by entities and Designated Bodies.

First Review of the Complaint

  • If the complainant is satisfied with the resolution provided by the entity vide the ATR or the complainant does not choose to review the Complaint, then the Complaint shall be disposed of on SCORES. However, if the complainant is not satisfied and the complainant requests a review of the resolution provided by the entity within 15 calendar days from the date of the ATR.
  • If the complainant requests for a review of the resolution provided by the entity or the entity has not submitted the ATR within 21 days, then 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 whenever required. The Entity shall submit the ATR to the Designated Body wherever sought and within such timeline as the Designated Body may stipulate. The Designated Body shall stipulate the timeline in such a manner as to ensure that the Designated Body submits the revised ATR to the complainant on SCORES within 10 days from the date when the review is sought.
  • Responsibilities of the Designated Bodies:
    • To monitor and handle grievance redressal of investors against respective entities.
    • Take non-enforcement actions such as issuing advisories and caution letters for non-redressal of investor grievances and referring to SEBI for enforcement actions.
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Second Review of the Complaint

  • The second review of the Complaint can be sought by the Complainant within 15 days from the date of submission of the ATR by the Designated Body. Where the complainant is satisfied with the ATR provided by the concerned Designated Body or the complainant does not choose to review the Complaint within 15 days, the Complaint shall be disposed on SCORES.
  • Where the complainant is dissatisfied with the ATR provided by the Designated Body or the concerned Designated Body has failed to submit the ATR within 10 days, then the SEBI may take cognizance of the complaint for a second review through SCORES.
  • SEBI may review with the stakeholders involved, including the concerned entity and/or Designated Body. The concerned entity and/or Designated Body shall take immediate action on receipt of the second review complaint from SEBI and submit a revised ATR to SEBI through SCORES within the timeline specified by SEBI.
  • SEBI or the Designated Body may seek clarification on the ATR submitted by the concerned entity for the SEBI review complaint. The concerned entity shall provide clarification to these respective Designated Body and/or SEBI, wherever sought and within such timeline as specified. The second review Complaint shall be treated as ‘resolved’, ‘ disposed’, or ‘closed’ only when SEBI ‘disposes’ or ‘closes’ the complaint in SCORES. Hence, the mere filing of ATR with respect to the SEBI review complaint will not mean that the SEBI review complaint is disposed of.

SCORES authentication for companies intending to list their securities on recognized stock exchanges

  • SCORES authentication shall be obtained by all companies intending to get their securities listed on the recognized stock exchanges. It shall be obtained through an online mechanism available at the SCORES website, www.scores.gov.in.
  • The companies shall have to apply for the authentication through the online form available on the abovementioned SCORES website as per the instruction document provided on the website.
  • Companies can fix a declaration with the online form on the letterhead of the company signed by the Compliance Officer, as follows:
    • Companies intending to list on the Main Board
      A declaration has to be made that the Draft Red Herring Prospectus has been submitted to SEBI.
    • Companies wanting to list on the SME/Debt Platform of the stock exchange have to make a declaration that it has applied to list its securities with the stock exchange or that it has obtained from the stock exchange in-principal approval to list its securities.
  • The credentials of SCORES shall be sent to the e-mail ID of the Compliance Officer or the Dealing Officer as provided in the online form.
  • Complaints against listed companies are processed by companies in-house or via its Registrar to Issue and Share Transfer Agent (RTI/STA). Where the RTI/STA processes the complaints in place of the listed company, any failure on the part of the RTI/STA to resolve the complaint or failure to update the Action Taken Report (ATR) in SCORES will be considered a failure of the listed company to furnish information to SEBI and non-redressal of investor complaints by the listed company.
  • The Entities can update their primary e-mail address in SCORES so that notifications related to SCORES complaints can be sent.

Access to SCORES Portal and other requirements applicable to Designated Bodies

  • The Designated Bodies from SEBI shall obtain SCORES authentication. The designated bodies shall fill the form placed at Schedule IV and submit the same to scores@sebi.gov.in. The SCROES credentials shall be sent to the e-mail ID provided in the Registration Form.
  • The Designated Bodies shall provide a generic e-mail id to obtain SCORES authentication. Further, the Designated Bodies shall appoint one nodal officer for the purpose. The details of the nodal officer shall be updated with SEBI through SCORES or/and through e-mail intimation.
  • The Designated bodies who already have a complaint redressal portal of their own and desire to integrate it into SCORES through an Application Programming Interface (API) shall write to SEBI at scores@sebi.gov.in for the same. SCORES authentication is mandatory for all the Designated Bodies even though it is integrated into SCORES through API.
  • Adequate infrastructure/systems shall be in place for the Designated Bodies to comply with the requirements and process laid down in this circular.
  • The Designated Bodies shall have adequate systems in place to curb leakage of any data received through SCORES.
  • The Designated Bodies shall maintain Management Information Systems (MIS) reports, which shall be shared with the concerned entities so the latter can adequately track timelines for submission of ATR. SEBI may also require the Designated Bodies to furnish MIS reports in such form and on such periodicity as may be specified from time to time.
  • SEBI may appoint or remove any Designated Body for various classes of registered intermediaries from time to time.
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Action for failure to resolve investor complaints by listed companies

  • The procedure and actions specified below shall be applicable for categories of complaints placed at Schedule V.
  • The Designated Stock Exchange (DSE) shall levy a fine of INR 1000 per day per complaint on the listed company for violating Regulation 13(1) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (LODR Regulations) read with SEBI circular no. SEBI/HO/CFD/CMD/CIR/P/2020/12 dated 22nd January 2020.
  • Fines shall be levied on companies which are suspended from trading on the stock exchanges.
  • DSE shall inform the listed company about the levy of fines. It shall also direct the listed company to submit ATRs on the pending complaints and pay fines within 15 days from the date of such notice.
  • Suppose the listed company fails to redress the grievances or pay the fine levied within 15 days from the date of such notice. In that case, the DSE shall issue notices to the promoter of such listed company, ensuring submission of ATRs on the pending complaints and payment of fines within 10 days from the date of such notice.
  • Where the listed entity fails to meet the aforesaid requirement and/or pay the fine levied during the prescribed period as per the notices, the DSE shall immediately intimate the depositories to freeze the shareholding of the promoters in such listed company and all other securities held in the Demat account of the promoters.
  • The depository shall immediately freeze the demat account and inform the promoters(s) about the details of non-compliance resulting in the freezing the demat accounts.
  • Where the listed entity fails to pay the fine or redress the complaint despite receipt of the notice, the DSE may initiate other action as deemed appropriate.
  • While issuing notice, the DSE shall also send intimation to other recognized stock exchanges(s) where the shares of such company are listed.
  • The fine shall be calculated and levied monthly during the non-compliance period.
  • The amount of the fine shall continue to emanate till the date of filing of ATR as a consequence of redressal of grievance by the company or till the company is compulsorily delisted, whichever is earlier.
  • On exhaustion of all options as mentioned and if the number of pending complaints is more than 20 or the value involved in such complaints is greater than 10 lakhs, stock exchanges shall forward all the complaints against such listed companies to SEBI for further action, if any.
  • If found necessary, the stock exchanges might deviate from the above procedure and actions, but it can be done only after recording the reasons in writing.
  • Stock exchanges must inform SEBI via SCORES about all actions taken against the listed company for non-resolution of the complaints and non-payment of fines.
  • The time frame within which the actions are to be taken by the stock exchanges for the non-resolution of investor grievances has been provided in Schedule VI.
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General Provisions regarding Investor grievance redressal

  • Investors shall first address their grievance before the related entity through their designated persons/officials who handle compliance and redressal of investor grievances.
  • Before lodging a complaint on the SCORES platform, the investor must register on www.scores.gov.in by clicking on “register here” under the “Investor Corner”. While filling out the registration form, details like the Name of the investor, Permanent Account Number (PAN), contact details, and email are to be given for effective communication and speedy redressal of the grievances. Upon successful registration, a unique user ID and password shall be generated and communicated through an acknowledgement e-mail to the complainant.
  • To increase ease, speed and accuracy in the redressal of grievance, the investor may lodge the Complaint against any Entity on SCORES within a period of one year from the date of occurrence of the cause of action, where:
    • The complainant has approached the entity for redressal of the complaint, and the Entity has rejected the complaint, or the complainant has not received any communication from the concerned entity, or
    • The Complainant is dissatisfied with the reply or the redressal by the concerned Entity.
  • SEBI may reject the complaint if it is filed on SCORES after the limitation period.
  • The following types of complaints shall not be dealt with through SCORES:
    • Complaints against companies not listed or delisted and companies on the Dissemination Board of Stock Exchanges (except complaints on securities valuation).
    • Complaints pertaining to cases pending in a court or subject matter of quasi-judicial proceedings matters pending with Online Dispute Resolution of SEBI, etc.
    • Complaints under the purview of other regulatory bodies like RBI, IRDAI, PFRDAI, CCI or complaints falling under the purview of other ministries.
    • Complaints against the company under resolution under the relevant provisions of the IBC, 2016.
    • Complaints against the companies where the name of the company is struck off from the Register of Companies (RoC) or a vanishing company as published by MCA.
    • Liquidated Companies or Companies under liquidation.
    • Complaints in the nature of market intelligence, i.e., information given to SEBI regarding violation of any of the provisions of the securities law.
  • Where no designated body has been appointed, then SEBI shall handle the first review complaint for categories of intermediaries.
  • In the event of being dissatisfied, the complainant shall give reasons for not being satisfied with the ATR and provide clear reasons for review at any stage.
  • SCORES shall only be a facilitative platform for investors to get redressal of their grievances from the concerned entity.
  • Where the investors raise issues requiring adjudication on any third party rights, on questions of law or fact or which is in the nature of a law between parties or if investors are not satisfied with disposal on SCORES post SEBI review, they shall seek appropriate remedies through the Online Dispute Resolution mechanism in the securities market. In addition, investors have the option to approach legal forums, including civil courts, consumer courts, etc.
  • Investors can approach the Online Dispute Resolution mechanism or other appropriate civil remedies at any point in time. In case the complainant opts for an Online Dispute Resolution mechanism or other appropriate civil remedies. At the same time, the complaint is pending on SCORES, the complaint shall be treated as disposed of on SCORES.
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