9911796707
TMI BlogSEBI/HO/OIAE/OIAE_IAD-3/P/CIR/2023/195X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 (including institutional/corporate 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 corporate clients and specified intermedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 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 Ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with the process laid out therein. After exhausting these options for resolution of the grievance, if the investor/client is still not satisfied with the outcome, he/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 (including when moratorium under the Insolvency and Bankrupt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to the ODR Institution/s empaneled by the relevant Stock Exchange6, and disputes arising with a specific depository participant, shall be referred to the ODR institution/s empaneled by the relevant DepositoryIf the MII has empaneled more than one ODR Institution, then at such level as well, a round robin system will govern allocation of references among them. b. Further, Stock Exchanges operating only commodities segment, the ODR Institution/s empaneled by such Stock Exchange is/are excluded from the market-wide round robin system. Other conditions in (a) above will continue to apply to such Stock Exchanges and ODR Institution/s. c. Further, references to ODR Institutions shall be made after a review of such complaint/dispute by the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Subject to the forgoing, the investor / client, the market participant and the arbitrator/s would not be bound by such determination for the making or defending or deciding the claim / complaint / dispute, as the case may be. b. An investor/client may pursue online arbitration (which will be administered by the ODR Institution, which also facilitated the conduct of conciliation) on or after the conclusion of a conciliation process when the matter has not been resolved through such process, subject to payment of fees as applicable for online arbitration. The Market Participant against whom the investor/client pursues the online arbitration shall participate in the arbitration process. Accordingly, within 10 days of the initiation of the online arbitration by the investor/client, the Market Participant shall make the deposit of 100% of the admissible claim value with the relevant MII and make the payment of the fees as applicable for online arbitration. Non-adherence of the foregoing by the Market Participant may result in action against the Market Participant by MIIs and/or the Board. c. In case the Market Participant wishes to pursue online arbitration (which will be adminis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitration 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 arbitration, the ODR Institution shall appoint a sole independent and neutral arbitrator from its panel of arbitrators within 5 calendar days of reference and receipt of fees, costs and charges as applicable. Such arbitrator shall have relevant qualifications or expertise (please refer to Schedule D), and should not be connected with or linked to any disputing party. In the event that the aggregate of the claim and/or counter-claim amount exceeds Rs 30,00,000/- (Rupees Thirty Lakhs) or such amount as the Board may specify from time to time, the matter shall be referred to an Arbitral Tribunal consisting of three Arbitrators within 5 calendar days of reference and receipt of fees, costs and charges as applicable. MIIs shall ensure that measures are put in place reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment 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. Furthermore, the relevant MII shall provide necessary assistance to the investor/client for enforcement of the arbitral award. 24. Upon the issuance/pronouncement of the arbitral award, the party against whom order has been passed, will be required to submit its intention to challenge the award under Section 34 of the Arbitration Act within 7 calendar days in the ODR Portal for onward notification to the party/ies in whose favour the arbitral award has been passed and the relevant MII. Further, in the course of such a challenge, if a stay is not granted within 3 months from the date of the receipt of award, complete adherence to the terms of the arbitral award must be done. 25. If the Market Participant wishes to challenge such an arbitral award, then the Market Part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate 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 (ISCs) operated by any of the MIIs. 27. The venue and seat of the online proceedings shall be deemed to be the place: a) In case of disputes between investor/client 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): where the investor resides permanently or, where the investor is not an individual, the place where it is registered in India or has its principal place of business in India, as provided in the relevant KYC documents b) In case of disputes between institutional or corporate clients and specified intermediaries / regulated entities in securities market as specified in Schedule B: (i) where the institutional or corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be as under: Rs. 0 -1 Above Above Rs. Above Rs. Above Rs. Above Rs. lakh * Rs. 1 lakh - 10 lakh 10 lakh - 20 lakh 20 lakh - 30 lakh 30 lakh - 50 lakh 50 lakh - Rs. 1 crore 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 fees (to be collected by ODR Institution) ₹ 600/- ₹ 1,000/- ₹ 1,500/- ₹ 2,000/- ₹ 7,500/- ₹ 15,000/- Applicable GST, Stamp Duty, etc. on actual outgoings * This slab will be applicable for service request related disputes also ** Fee for panel of arbitrators shall be split into a ratio of 40:30:30 with the higher proportion being payable to the arbitrator writing the arbitral award Further, for claims of Rs. 1 crore and above, an ad valorem fees @ 1% of the claim value or Rs.1,20,000/-, whichever is more, towards Arbitrator's Fees** (to be collected by the ODR institution and paid to the arbitrator) and fees @ Rs 35,000/- towards ODR Institution's Fees, in addition to the arbitrator's fees (to be collected b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese 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 Institute for Securities Market - NISM). Such training shall be taken on a periodic basis and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 user-friendly 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 including providing any information required to resolve the complaint in effective manner and within st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 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 and arbitrators by such ODR Institutions on or before August 1, 2023 b. registration of Trading Members and Depositor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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, accrued or incurred under the superseded circulars, any penalty, incurred in respect of any violation committed against the superseded circulars, or any investigation, le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvisors 5. InvITs - Investment Manager 5A. Merchant Bankers10 6. Mutual Funds - AMCs11 7. Portfolio Managers 8. Registrars and Share Transfer Agents 9. REITs - Managers 9A. Research Analyst 10. Stock brokers12 (including Online Bond Platforms & Online Bond Platform Providers) Schedule B (See Paragraph 3 of the Circular) Specified Intermediaries and Regulated Entities 1. Clearing Corporations and their constituents 1A. Commodities Clearing Corporations13 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 5A. ESG Ratings Providers and their clients 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 empanelmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 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 availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 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 empan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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; (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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing/closure of branch without intimation, improper service by staff, freezing of account, alleged debit in trading account, contact person not available, demat account transferred without permission etc. 3For example, non-disclosure agreements signed by specified intermediaries or regulated entities with their institutional or corporate clients for receiving confidential corporate or other information by itself would not be related to the Indian securities market. Separately, regulated entities such as Credit Rating Agencies or Debenture Trustees also undertake non-securities market related work which would be outside the scope of the clause. 4As 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
