The new framework will come into effect from June 1.
New Delhi:
Capital markets regulator SEBI has come out with a new Standard Operating Procedure (SOP) for dispute resolution under the stock exchange arbitration mechanism for disputes between a listed firm or registrar and between share transfer agents (RTAs) and its shareholders.
The mediation mechanism will be initiated after exhausting all the tasks for redressal of grievances including complaints received through SCORES portal.
The arbitration reference shall be filed in the stock exchange where the initial complaint has been resolved.
The Securities and Exchange Board of India (SEBI) said in a circular on Monday that the new framework will come into effect from June 1.
The new SOP will be applicable to listed companies or RTAs providing services on behalf of listed companies. In case of claims or disputes between the shareholder or investor of the listed firms and the RTA, the RTA stock exchanges shall be subject to the arbitration mechanism.
In all such cases, the listed company shall compulsorily be added as a party.
In case of arbitration cases involving claims up to Rs 25 lakh, a sole arbitrator will be appointed and if the value of the claim exceeds Rs 25 lakh, a panel of three arbitrators will be appointed.
The stock exchange is required to complete the process of appointment of an intermediary within 30 days from the date of receipt of complete application from the applicant.
Disputes relating to or arising out of investor service requests including transfer/transmission of shares, demat, transfer of holders, corporate profits, dividends, bonus shares, rights entitlements, credit of securities in public issue and processing, delayed or wrongful rejection of such investor service Requests may be considered for arbitration.
With regard to arbitration fee, SEBI said that the per arbitrator fee would be Rs 18,000 plus stamp duty and service charge and this amount would be collected from RTA or listed companies and shareholders or investors separately by the exchange to meet the cost of arbitration.
If the value of the claim is less than or equal to Rs 10 lakh, the cost of arbitration in respect of the shareholders or investors shall be borne by the Exchange.
Further, upon passing of the arbitral award, the fees and stamp duty paid by the party in whose favor the award is passed shall be refunded and the fees and stamp duty of the party against whom the award is passed. will be used for payment. intermediary fee.
For appellate arbitration, a fee of Rs 54,000 plus stamp duty and service charges shall be paid by the appellant only, which shall be non-refundable.
If the appeal is filed by a shareholder/investor who has a claim of more than Rs.10 lakh, the appellant will have to pay a fee exceeding Rs.30,000 along with stamp duty and service charge and in case of a claim up to Rs. 10 lakhs, the appellant is required to deposit a fee not exceeding Rs 10,000 along with stamp duty and service charges.
The further expenses thus arising shall be borne equally by the Stock Exchanges and the Investor Protection Fund of the Stock Exchanges.
With regard to the place of arbitration, SEBI said that the arbitration and appellate arbitration shall be conducted at the regional center of the stock exchange nearest to the shareholders or investors. The application against the decision of the Appellate Panel of Arbitrators should be filed in the nearest competent court of such Regional Centre.
SEBI said that the arbitration proceedings would be terminated by issuing the arbitration award within four months from the date of appointment of the arbitrator. However, exchanges cannot extend the time for issuance of arbitral awards beyond two months on a case to case basis after recording the reasons therefor.
An appeal against an arbitral decision shall be disposed of by issuing an appellate arbitral decision within three months from the date of appointment of the Appellate Tribunal. In addition, exchanges cannot extend the time for issuance of appellate arbitral awards by more than two months on a case-by-case basis after recording its reasons.
The party aggrieved by an appellate arbitration award may file an application under the Arbitration and Conciliation Act in a court of competent jurisdiction.
If the parties wish to settle or withdraw the dispute, the arbitral appellate panel may pass a decision on the terms of the consent. Where the award is against a listed company or RTA, such entities are required to promptly update the compliance status of the arbitration award to the Exchange.
“Stock exchanges will put in place a framework for imposing penalty on listed companies in cases where the listed companies/RTAs do not honor the arbitral decision,” Sebi said.
Stock exchanges are required to preserve the documents relating to arbitration for five years from the date of arbitral award, appellate arbitral award or court order, as the case may be; and register of permanent destruction of records relating thereto.
In addition, they are required to disclose, on their website, the details of settlement of arbitration proceedings and arbitrator-wise settlement of arbitration proceedings.