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TMI BlogMaster Circular for Online Resolution of Disputes in the Indian Securities Market(Updated as on August 11, 2023)X X X X Extracts X X X X X X X X Extracts X X X X ..... Institutions (MIIs)),1 by expanding their scope and by establishing a common 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 complaints2 for due resolution by harnessing online conciliation and/or online arbitration as specified in this circular. 3. Disputes between institutional or corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 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 conciliators and arbitrators. The norms for empanelment of ODR Institutions are specified in Schedule C of this circular as also the continuing obligations of the ODR Institutions. The ODR Portal shall have due connectivity with each such ODR Institution as is required for undertaking the role and activities envisaged in this circular. Such ODR Portal shall establish due connectivity with the SEBI SCORES portal / SEBI Intermediary portal. 7. All the MIIs shall participate on the ODR Portal and provide investors/clients and listed companies (including their registrar and share transfer agents) and the specified intermediaries / regulated entities in the securities market access to the ODR Portal for resolution of disputes between an investor/client and listed companies (including their registrar and share transfer agents) and the specified intermediaries / regulated entities in the securities market, through time bound online ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 (including when moratorium under the Insolvency and Bankruptcy Code is in operation due to the insolvency process or if liquidation or winding up process has been commenced against the Market Participant). 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 transaction or the date of disputed transaction, whichever is later). ODR Portal and allocation system 15. The ODR Portal shall have the necessary features and facilities to, inter alia, enrol the investor/client and the Market Participant, and to file the complaint/dispute and to upload any documents or papers pertaining thereto. It shall also have a facility to provide status updates on the complaint/dispute which would be obtained from the ODR Institutions. The features and facilities shall be periodically reviewed and upgraded by the MIIs as well as new features and facilities added from tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor 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/dispute, the conciliator may consider advising the Market Participant to render required service in case of service-related complaints/disputes and/or consider issuance of findings on admissibility of the complaint/dispute or otherwise in case of trade related complaints/dispute (as the case may be). 19. If the process of conciliation is successful, the same shall be concluded by a duly executed settlement agreement between the disputing parties. Such an agreement shall be executed and stamped through an online mode, as permissible in law. When such agreement requires the Market Participant to pay the admissible claim value to the investor/client, the MII shall monitor the due payment/adherence to the terms of the settlement agreement until due receipt by the investor/client and/or performance of the required terms of settlement agreement. 20. In case the matter is not resolved through the conciliation process within the 21 calendar days (or within the extended per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor/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 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 till such time as the investor/client returns the amount to the Market Participant. If security had been obtained, the same could be enforced/realised and adjusted towards the amount required to be returned. In the event, the arbitration proceeding is decided in favour of the investor/client, subject to the terms of the arbitral award, the MII shall release the balance deposit held by it (as deposited by the Market Participant) to the investor/client. The MII shall also monitor the due compliance by the Market Participant with the terms of the arbitral award. Arbitration 21. When the investor/client and/or the Market Participant pursue online ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Tribunal may, having regard to the nature of the claim and/or counterclaim, provide interim relief as may be required for reasons to be recorded after affording hearing to the parties to the dispute. The parties may make an application under the relevant section of the Arbitration and Conciliation Act, 1996 for correction/rectification of the award. 23. Upon the conclusion of the arbitration proceedings and issuance of the arbitral award, subject to the terms of the arbitral award, when such arbitral award requires payment of any amount by the Market Participant or performance by it of a certain nature, then such payment shall be made by the Market Participant within a period of 15 calendar days from the date of the arbitral award (unless such award requires payment sooner), and/or performance within such period as specified by the arbitral award. The MII shall monitor the due payment/adherence to the terms of the arbitral award until due receipt by the investor/client and/or performance of the terms of arbitral award. In the event, the parties do not comply with the arbitral award, the relevant MII shall inform the Board regarding such non-compliance on a periodic basis. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 till such time as the investor/client returns the amount to the Market Participant. If security had been obtained, the same could be enforced/realised and adjusted towards the amount required to be returned. In the event, the challenge is decided in favour of the investor/client, subject to the terms of the judgement of the appellate forum, the MII shall release the balance deposit held by it (as deposited by the Market Participant) to the investor/client. The MII shall also monitor the due compliance by the Market Participant with the terms of the arbitral award/judgement of the appellate forum. Form of Proceedings 26. The ODR Institutions shall conduct conciliation and arbitration in the online mode, enabling online/audio-video participation by the investor/client, the Market Participant and the conciliator or the arbitrator as the case may be. The investor/client may also participate in such online conciliation and arbitration by accessing/utilizing the facilities of Investor Service Centers (I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Market Participant if it is initiating the dispute process. The Market Participant 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 1,000/- 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 Arbitrator) ₹ 4,800/- ₹ 8,000/- ₹ 12,000/- ₹ 16,000/- ₹ 60,000/-** ₹ 1,20,000/-** ODR Institution' s fees, in addition to the arbitrator' s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitutions 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 undergone training and certification program/s or possess sufficient experience for such individual being regarded qualified or expert in online dispute resolution (conciliation or arbitration) and technology, finance, securities law, securities product or services, etc. to cater to the specific nature of a given complaint/dispute arising in the Indian securities market or such programs as specified by the Board from time to time (including courses provided by National In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agement 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 documents are adequately preserved, including in cases of change in the ODR Institution. 36. The ODR Portal and the facilities provided by the ODR Institutions will be userfriendly and accessible online/through audio-video to all the concerned parties and stakeholders, at all times. 37. The ODR Institutions to whom the dispute is referred and the Market Participant which is party to the dispute shall provide complete cooperation to the conciliator and/or arbitrator and/or panel of arbitrators ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 interestfree deposit with the MIIs or with the concerned designated body identified vide the revised SCOREs guidelines and shall be such sums that it considers necessary and appropriate for honouring of any arbitral awards or amounts payable pending initiation of arbitration or challenge to an arbitral award. The amount of such deposit may vary depending on the category of Market Participant and may factor in the extent and nature of complaints or disputes against any specified Market Participant that are observable. Timelines for Implementation 45. The provisions of this Circular will be implemented in phases: 46. The first phase shall include: a. development of the ODR Portal, empanelment of ODR Institutions by the MIIs, empanelment of conciliators an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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/MRD/DSA/24/2010 dated August 11, 2010 z. Circular No. CIR/MRD/DP/19/2010 dated June 10, 2010 aa. Circular No. SEBI/MRD/ OIAE/ Dep/ Cir- 4/2010 dated January 29, 2010 50. Notwithstanding such supersession, a. anything done or any action taken or purported to have been done or taken under the superseded circulars, prior to such supersession shall be deemed to have been done or taken under the corresponding provisions of this Circular; b. the previous operation of the superseded circulars or anything duly done or suffered thereunder, any right, privilege, obligation or liability acquired, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive Investment management company 2A. Commodities Clearing Corporations 3. Depository Participants 4. Investment Advisors 5. InvITs - Investment Manager 6. Mutual Funds - AMCs6 7. Portfolio Managers 8. Registrars and Share Transfer Agents 9. REITs - Managers 9A. Research Analyst 10. Stock brokers7 Schedule B (See Paragraph 3 of the Circular) Specified Intermediaries and Regulated Entities 1. Clearing Corporations and their constituents 2. Credit Rating Agency and rating clients 3. Custodians and their clients/FPIs 4. Debenture Trustees and issuers 5. Designated Depository Participant and their clients/FPIs 6. KYC Registration Agency and their clients/intermediaries 7. Merchant Banker and issuers 8. Mutual Funds and Mutual Fund Distributors 9. Proxy Advisory and their clients 10. Proxy advisors and listed entities 11. Registrars and Share Transfer Agents and their clients 12. Research Analyst and their clients 13. Stock brokers and their Authorised Persons 14. Trading Members and Clearing Members 15. Vault Managers and beneficial owners Schedule C Norms for empanelment of ODR Institutions by MIIs and continuing obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /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 or sectors, languages conversant with (spoken/written) and other demographic details such as age, sex, location. 5. MIIs shall ensure that the ODR Institutions eligible for empanelment have the ability to integrate their own platform/systems with the ODR Portal for requirements and purposes as specified from time to time, and on or prior to empanelment undertake necessary integration. MIIs shall also ensure that the ODR Institutions also have sufficient technologies to ensure due secrecy, confidentiality and cyber-security for the dataflow between the ODR Portal and its platform/systems, collection of fees and charges (or its refund) and for the conduct of online conciliation and arbitration. MIIs shall also ensure the ODR Institution deploys and makes available such features or facilities on its platform/system ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igned, 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, redacted or masked to ensure identity of the parties is not ascertainable, to help develop a database of matters and decisions, which will be available freely to the public in such form, manner and mode as the Board may specify. 11. MIIs shall inspect and/or audit the ODR Institution directly or through such person or firm that it may appoint, for, inter alia, verifying the adherence to these norms and applicable SEBI regulations, circulars and advisories. 12. MIIs shall ensure that the ODR Institutions abide by the SEBI regulations, circulars and advisories on online conciliation and online arbitration as applicable. MIIs shall ensure empaneled ODR institutions shall furnish an irrevocable, unconditional undertaking that it shall abide by the norms of empanelment specified, and SEBI regulations, circulars and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity 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; (ii) good reputation and character; and (iii) honesty; b. The person has not been convicted by a court for any offence involving moral turpitude or any economic offence or any offence against the securities laws; c. The person has not been declared insolvent and if yes, has not been discharged; d. No order, restraining, prohibiting or debarring the person, from dealing in securities or from accessing the securities market, has been passed by the Board or any other regulatory authority; e. No other order is passed against the person, which has a bearing on the securities market; f. The person has not been found to be of unsound mind by a court of competent jurisdiction; and g. The person is financially sound and has not been categorised as a willful defaulter. Schedule E Code of Conduct for Conciliators and Arbitrators The Conciliators and Arbitrators shall: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransferred without permission etc. 3 As and when the same is made operational, in order to avoid conflict of interest, in case of a complaint/dispute involving a MII or its holding or subsidiary or associate company, the same will not be allocated to that MII and the ODR Institution empaneled by such MII or to the direct competitor of such MII and the ODR Institution empaneled by such MII: such dispute will be directed to another MII and the ODR Institution empaneled by it. For instance, any dispute against NSE shall be allocated to CDSL and in case of a dispute in relation to BSE, the same be allocated to NSDL and vice versa. 4 For instances where the dispute pertains to an intermediary linked to more than one Stock Exchange/ Depository (or a company listed on more than Stock Exchange) then the Stock Exchange/ Depository with which the complaint was escalated becomes the relevant Stock Exchange/ Depository, otherwise it shall be subject to round robin 5 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). 6 Includin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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