Investors’ Complaints: SEBI Issues Guidelines to Expedite Redressal on SCORES Platform

Markets regulator the Securities and Exchange Board of India (SEBI) has introduced a framework for handling complaints received through the SCORES platform for registered entities and monitoring such grievances by designated bodies.

The new guidelines, released on September 21, 2023, will come into force from December 4, 2023.

SCORES is an investor grievance redressal platform which was introduced in June 2011. Investors can lodge their complaints online with the market regulator, which could be related to the securities market, against companies, intermediaries, and market infrastructure institutions.

As per the guidelines, all entities, including companies that received complaints from investors via SCORES, must resolve them within 21 calendar days of receipt of such grievances.

The complaint lodged on SCORES related to any entity will be automatically forwarded to the concerned entity via SCORES for resolution and submission of the Action Taken Report (ATR). At the same time, this particular complaint will be simultaneously forwarded via SCORES to the concerned designated body.

The designated body for listed companies will include stock exchanges, while for mutual funds, it will be the Association of Mutual Funds in India (AMFI). If the complainant is satisfied with the resolution given by the entity or the complainant chooses not to review the complaint, then such a grievance will be disposed of on SCORES.

In case the complainant expresses dissatisfaction, they may request a review of the resolution provided by the entity within 15 calendar days from the date of the ATR. In addition, the complainant could 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 could seek clarification on the ATR submitted by the concerned entity. In addition, the market regulator has introduced a provision for imposing penalties on the listed firm if it fails to redress investor complaints within the stipulated timeframe.

The Designated Stock Exchange (DSE), which will be the designated body for listed companies, would impose a penalty of Rs 1,000 per day per complaint on the listed company. Also penalties would also be levied on companies that are suspended from trading.

In case the particular company is not able to redress investor complaints or pay the fine within 15 days, the DSE will issue a notice to the promoters of the listed company to ensure submission of ATRs on pending complaints and payment of penalties within 10 days. 

Again, in case the listed entity fails to comply with the requirement, the DSE will have to immediately intimate the depositories to freeze the entire shareholding of the promoter in such listed company and all other securities held in the demat (dematerialised) account of the promoters. The depository(ies) will then freeze such demat accounts on an immediate basis. 

Furthermore, on exhaustion of all options and if the number of pending complaints is more than 20 or the value involved in such complaints is over Rs 10 lakh, stock exchanges shall forward all the complaints against such listed companies to SEBI for undertaking further course of action.

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