A framework for resolving complaints received through the SCORES platform for registered entities and for monitoring such concerns by designated bodies was released by capital markets regulator Sebi on Thursday.
The Securities and Exchange Board of India said in a circular that the new guidelines will come into force from December 4.
SCORES was introduced in June 2011. Investors who have grievances against firms, intermediaries, or market infrastructure institutions in the securities market can file them online with Sebi.
Under the guidelines, all entities, including businesses that have received investor complaints through SCORES, must address those complaints within 21 calendar days of receiving them.
The complaint lodged on SCORES against any entity will be automatically forwarded to the concerned entity through SCORES for resolution and submission of ATR (Action Taken Report).
Further, the complaint against the entity will be simultaneously forwarded through SCORES to the relevant designated body.
Designated body for listed companies will be stock exchanges and for mutual funds it will be Association of Mutual Funds in India (AMFI).
In case the complainant is satisfied with the resolution provided by the entity or the complainant does not choose to review the complaint, such grievance will be disposed on SCORES.
However, if the complainant is not satisfied, the complainant may request for a review of the resolution provided by the entity within 15 calendar days from the date of the ATR.
Also, the complainant may seek a second review of the complaint within 15 calendar days from the date of the submission of the ATR by the designated body.
Sebi or the designated body may seek clarification on the ATR submitted by the concerned entity.
Additionally, the regulator has put in place a provision for imposing penalty on the listed firm that 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 Rs 1,000 per day per complaint on the listed company. These penalties would also be imposed on companies that are suspended from trading.
The DSE will notify the promoters of the listed firm to ensure the submission of ATRs on outstanding complaints and the payment of fines within 10 days if the company fails to resolve investor complaints or pay the fee within 15 days.
The DSE will have to immediately inform the depositories to freeze the promoter’s full shareholding in that listed firm as well as any other stocks held in their Demat account if the listed entity fails to comply with the requirement. These demat accounts will then be instantly frozen by the depository(ies).
“Upon exhaustion of all options… and if the number of pending complaints exceeds 20 or the value involved in such complaints is more than Rs 10 lakh, stock exchanges shall forward all the complaints against such listed companies to Sebi for further action, if any,” the regulator said.