TMI BlogOnline Resolution of Disputes in the Indian Securities MarketX X X X Extracts X X X X X X X X Extracts X X X X ..... Online Dispute Resolution Portal ( ODR Portal ) which harnesses online conciliation and online arbitration for resolution of disputes arising in the Indian Securities Market. Investors and Listed Companies/Specified Intermediaries/Regulated entities under the ambit of ODR 2. Disputes between Investors/Clients and listed companies (including their registrar and share transfer agents) or any of the specified intermediaries / regulated entities in securities market (as specified in Schedule A) arising out of latter s activities in the securities market, will be resolved in accordance with this circular and by harnessing online conciliation and/or online arbitration as specified in this circular. Listed companies / specified intermediaries / regulated entities OR their clients/investors (or holders on account of nominations or transmission being given effect to) may also refer any unresolved issue of any service requests / service related complaints [ Service related complaints shall include non-receipt/ delay of account statement, non-receipt/ delay of bills, closure of account/branch, technological issues, shifting/closure of branch without intimation, improper s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to develop and operationalize the ODR Platform. For the purposes of implementation of this circular, the MIIs shall enter into an agreement amongst themselves, which will, inter alia, outline the nature of their responsibilities, the cost of development, operating, upgradation, maintenance (including security of data of investors and intermediaries as specified by the Board from time to time) and for inspection and/or audit of the ODR Platform. The Board may, from time to time, undertake inspection in order to ensure proper functioning of ODR Portal and MIIs shall provide complete cooperation to the Board in this regard. It is clarified that MIIs which are initially excluded from the round robin system (as described below) are not required to incur any costs for development and maintenance of the ODR Portal during the period of such exclusion. 6. Each MIIs will identify and empanel one or more independent ODR Institutions which are capable of undertaking time-bound online conciliation and/or online arbitration (in accordance with the Arbitration and Conciliation Act, 1996 and any other applicable laws) that harness online/audio-video technologies and have duly qualified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... she/they can initiate dispute resolution through the ODR Portal. 12. Alternatively, the investor/client can initiate dispute resolution through the ODR Portal if the grievance lodged with the concerned Market Participant was not satisfactorily resolved or at any stage of the subsequent escalations mentioned in the paragraph 11 above (prior to or at the end of such escalation/s). The concerned Market Participant may also initiate dispute resolution through the ODR Portal after having given due notice of at least 15 calendar days to the investor/client for resolution of the dispute which has not been satisfactorily resolved between them. 13. The dispute resolution through the ODR Portal can be initiated when the complaint/dispute is not under consideration in terms of the paragraph 11 above or SCOREs guidelines as applicable or not pending before any arbitral process, court, tribunal or consumer forum or are non-arbitrable in terms of Indian law. 14. The dispute resolution through the ODR Portal can be initiated when within the applicable law of limitation (reckoned from the date when the issue arose/occurred that has resulted in the complaint/date of the last transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant MII with the aim of amicable resolution and which review shall be concluded within 21 calendar days (or such other period that the Board may specify). Conciliation 17. The ODR Institution that receives the reference of the complaint/dispute shall appoint a sole independent and neutral conciliator from its panel of conciliators. Such conciliator shall have relevant qualifications or expertise (please refer to Schedule D), and should not be connected with or linked to any disputing party. MIIs shall ensure that appropriate measures are put in place by regarding appointment of conciliators by the ODR Institutions. 18. Such conciliator shall conduct one or more meeting/s for the disputing parties to reach an amicable and consensual resolution within 21 calendar days (unless extended for a maximum period of 10 calendar days by consent of the disputing parties to be recorded in writing/electronically) from the date of appointment of conciliator by the ODR Institution, which shall do so within 5 days of receipt of reference of the complaint/dispute by the ODR Institution. Apart from attempting to actively facilitate consensual resolution of the complaint/dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also be liable to be declared as not Fit and Proper in terms of the SEBI (Intermediaries) Regulations, 2008 and would be, inter-alia, liable to have their registration cancelled or their business activities suspended. A listed company that fails to deposit the amount may also face consequences as determined necessary or appropriate by the Stock Exchange. On an application made by the investor/client in this behalf to the relevant MII, the MII may, from the deposit received, release such amount to the investor/client not exceeding Rs 5,00,000/- (Rupees Five lakhs) or such sum as may be specified from time to time. On or before release of the said amount to the investor/client, the MII shall obtain appropriate undertaking/ indemnity / security in such form, manner and substance from the investor/client to ensure return of the amount so released, in case the arbitration proceedings are decided against the investor/client. If the arbitration proceeding is decided against the investor/client, subject to the terms of the arbitral award, such investor/client should return the released amounts. If the investor/client fails to return the amount released, then the investor/client (based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unterclaim is Rs 1,00,000/- (Rupees One Lakh) or below (or such other sum as the Board may specify from time to time), the Sole Arbitrator shall conduct a document-only arbitration process and pass the arbitral award within 30 calendar days (or such other period as the Board may specify) of the appointment in the matter. [ If parties to the dispute do not provide any representation in the arbitral proceedings, the arbitrator may pass an ex-parte order after giving a notice of 7 calendar days to the concerned non-cooperative party(ies). ] However, the arbitrator, for reasons to be recorded in writing/electronically , may grant a hearing to the parties to the dispute. The Sole Arbitrator or Arbitral Tribunal shall be at liberty to extend such time for disputes exceeding claims and/or counterclaims of Rs 1,00,000/- (Rupees One Lakh) (or such other sum as the Board may specify from time to time), upto a further period of 30 calendar days (or such other period as the Board may specify) and for reasons to be recorded in writing/electronically, when the matter requires detailed consideration. The Sole Arbitrator or Arbitral Tribunal may, having regard to the nature of the claim and/or c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce consequences as determined necessary or appropriate by the Stock Exchange. On an application made by the investor/client in this behalf to the relevant MII, the MII may, from the deposit received, release such amount to the investor/client not exceeding Rs 5,00,000/- (Rupees five lakhs) or such sum as may be specified from time to time. On or before release of the said amount to the investor/client, the MII shall obtain appropriate undertaking/ indemnity / security from the investor/client to ensure return of the amount so released, in case the challenge is decided against the investor/client. If the challenge is decided against the investor/client, subject to the judgement of the appellate forum, such investor/client should return the released amounts. If the investor/client fails to return the amount released, then the investor/client (based on PAN of the investor/client) shall not be allowed to trade on any of the Stock Exchanges or participate in the Indian Securities Market till such time the investor/client returns the amount to the Market Participant. Further, the securities lying in the demat account(s) or the mutual fund holdings of the investor/client shall be frozen t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pant shall not shift the incidence of such fees to the investor/client at any time. Unsuccessful Conciliation: In the event the disputing parties are not able to arrive at a settlement within the stipulated time (or such extended period as agreed to by them) it shall be said to be unsuccessful conciliation. Late Fees: Initiation of conciliation process after six months from the date of transaction/dispute arising will require payment of Rs 1000/- by the initiator of the complaint/dispute (whether such initiator be the investor/client or the Market Participant) and shall be collected by the MIIs and applied as specified by the Board from time to time. c. The fees for the arbitration process will be as under: Rs 0 1 lakh * above Rs 1 lakh - 10 lakh above Rs 10 lakh - 20 lakh above Rs 20 lakh - 30 lakh above Rs 30 lakh - 50 lakh Above Rs 50 lakh Arbitrator s fee (to be collected by ODR Institution and paid to Arbitrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay and which shall be on non-refundable basis. Such late fees shall be collected by the MIIs and applied in relation to operationalization and effective functioning of the ODR Platform and for the purposes as specified by the Board from time to time. The fees shall be uniform across MIIs, ODR Institutions, conciliators and arbitrators. 29. All other usage or administrative fees as well as out-of-pocket expenses borne by the MIIs or the ODR Institutions in the management or operation or use of the ODR Portal would be subsumed in these fees and would not be separately chargeable. Empanelment and Training of the Panel of Conciliator and Arbitrators 30. All MIIs and the ODR Institutions empaneled by the MIIs shall ensure that: a. The number of conciliators and arbitrators on the panel of the ODR Institutions is commensurate to the number of references of complaints/disputes received so that a conciliator / arbitrator / panel of arbitrators handle a reasonable number of references simultaneously and that all references are disposed of within the prescribed time. b. The conciliators and arbitrators on the panel of the ODR Institutions should have undergo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt, payment and disbursal of any amount including the fees, payments as required to be made vide the settlement agreement / arbitral awards or at the time of initiating an arbitration or challenge to an arbitral award, etc. 33. MIIs shall ensure that resolution of complaints/disputes referred on the ODR Portal are undertaken by the ODR Institutions empaneled by the MIIs within the stipulated timelines. 34. MIIs and the ODR Institutions empaneled by the MIIs, shall maintain Management Information Systems (MIS) reports, which shall be shared with the concerned Market Participant so the latter can adequately track timelines of any dispute. The Board may also require MIIs to furnish MIS reports in such form and on such periodicity as it may specify. 35. MIIs and the ODR Institutions empaneled by the MIIs, shall maintain relevant records, including directions/recommendations/orders passed at pre-conciliation, conciliation and arbitration stage for the period as specified in the extant law, and produced to relevant authorities as and when required. MIIs shall also ensure, in terms of their internal processes and contractual arrangements with ODR Institutions, that doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r undertaking dispute resolution in the manner specified in this Circular. 42. The Market Participants shall promptly attend to all complaints or disputes raised by its investors or clients in accordance with applicable SEBI rules, regulations and circulars. The communications shall clearly specify, the availability of the SCOREs portal and the ODR Portal to the investor/client and that the same could be accessed by such investor/client if unsatisfied with the response (or the lack thereof) of the Market Participant. 43. The Market Participants shall duly train their staff in attending to complaints/disputes and in handling the references arising from the SCOREs portal or the ODR Portal, and in participating in online conciliation and arbitration. Due cooperation and coordination with the MIIs and with the ODR Institutions shall be ensured by the Market Participants. 44. The Board may require the Market Participants to maintain such level of interest-free deposit with the MIIs or with the concerned designated body identified vide the revised the SCOREs guidelines and shall be such sums that it considers necessary and appropriate for honouring of any arbitral awards o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, 2020 h. Circular No. SEBI/HO/MRD/DDAP/CIR/P/2020/16 dated January 28, 2020 i. Circular No. CIR/CDMRD/DCE/CIR/P/2018/48 dated March 14, 2018 j. Circular No. CIR/CDMRD/DEICE/CIR/P/2017/77 dated July 11, 2017 k. Circular No: CIR/CDMRD/DEICE/CIR/P/2017/53 dated June 13, 2017 l. Circular No: SEBI/HO/MRD/DRMNP/CIR/P/2017/24 dated March 16, 2017 m. Circular No. SEBI/HO/DMS/CIR/P/2017/15 dated February 23, 2017 n. Circular No. CIR/CDMRD/DIECE/02/2015 dated November 16, 2015 o. Circular No. CIR/MRD/ICC/30/2013 dated September 26, 2013 p. Circular No. CIR/MRD/ICC/20/2013 dated July 05, 2013 q. Circular No. CIR/MRD/ICC/8/2013 dated March 18, 2013 r. Circular No. CIR/MRD/ICC/ 29 /2012 dated November 7, 2012 s. Circular No. CIR/MIRSD/2/2012 dated February 15, 2012 t. Circular No. CIR/MRD/DSA/03/2012 dated January 20, 2012 u. Circular No. CIR/MRD/DP/4/2011 dated April 7, 2011 v. Circular No. CIR/MRD/DSA/2/2011 dated February 09, 2011 w. Circular No. Cir. /IMD/DF/13/2010 dated Oct 05, 2010 x. Circular No. CIR/MRD/DSA/29/2010 dated August 31, 2010 y. Circular No. CIR/MR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpetent authority. 53. This Circular is available on the SEBI website at www.sebi.gov.in under the link Legal Circulars . Yours faithfully, S. Manjesh Roy General Manager Tel no.: 022- 26449710 Email: manjeshsr@sebi.gov.in Schedule A (See Paragraph 2 of the Circular) Specified Intermediaries and Regulated Entities List of securities market intermediaries / regulated entities against whom investors may invoke the ODR process: 1. AIFs Fund managers 2. CIS Collective Investment management company 3. Depository Participants 4. Investment Advisors 5. InvITs - Investment Manager 6. Mutual Funds AMCs [Including for any claims/complaints/disputes arising on account of Mutual Fund Distributors of the Mutual Fund AMCs] 7. Portfolio Managers 8. Registrars and Share Transfer Agents 9. REITs Managers 10. Stock brokers [Including for any claims/complaints/disputes arising on account of Authorised Persons of the Trading Members] Schedule B (See Paragraph 3 of the Circular) Specified Intermediaries and Regulated Entities 1. Clearing Corporations a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ODR Institution, norms for such empanelment, fees, costs and charges levied for conduct of online conciliation and arbitration, institutional/corporate clients or other ecosystems where rendering online conciliation and arbitration, aggregate number of disputes received for resolution whether for online conciliation or arbitration, aggregate number of disputes resolved by means of online conciliation and arbitration, aggregate value of disputes resolved by means of online conciliation and arbitration, types and nature of disputes resolved by mean of online conciliation and arbitration, technologies, platform, platform features and facilities in conducting online conciliation and arbitration. Such credentials shall be furnished at the time of empanelment and thereafter on a quarterly basis (April/July/October/January). 4. The details of conciliators and arbitrators required to be furnished shall include: unique count of conciliators and arbitrators trained in the securities market, along with the education, training and professional qualification, number of years of experience, previous experience in conciliation / arbitration including experience in specific types, natures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd post the findings/conclusions, MII shall take appropriate actions. 9. An ODR institution may seek to be removed as an empaneled ODR Institution after disposal of all pending references. Further, in the event of a breach by the ODR Institution of the norms of empanelment specified, and/or SEBI regulations, circulars and advisories or norms of the MII, the MII may suspend/terminate the empanelment of the ODR Institution, without prejudice to its rights to take any further action against the ODR Institution. No new complaints/disputes will be assigned after the receipt of its notice to such effect. 10. MII shall ensure that each ODR institution shall abide by the following norms for furthering transparency and evolving precedents: a) Publish at pre decided regularity, data regarding disputes assigned, count of disposal of such references through conciliation, and count of disposal of references through arbitration (indicating to the extent feasible, decisions in favour of investors and in favour of intermediaries), which will be available freely to the public in such form, manner and mode as the Board may specify, and b) Publish decisions of the arbitrators, red ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, and /or arbitration independently; and/or c. Ex-officials from the Indian financial sector regulators viz., the Insurance Regulatory and Development Authority, the Pension Funds Regulatory and Development Authority, the Reserve Bank of India and the Securities and Exchange Board of India. 5. Knowledge and Skills such as: a. Knowledge on the functioning of the securities market; b. Securities Laws and Arbitration Conciliation laws in India; c. Proficiency in English language (reading, writing and speaking); d. Proficiency in one or two regional languages and ability to read/write/speak/all - required for communication and for effective dispute resolution; e. Legal drafting and communications skills; f. Decision making skills required for imparting fair judgement; g. Understand party psychology and common online behaviours: Diversity and cross-cultural communication and possessing professional behaviour 7. The Conciliators and Arbitrators should satisfy the following criteria for empanelment: a. The person has a general reputation and record of fairness and integrity, including but not limited to (i) financial integrity; (i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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