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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 ..... 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 (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 complaints 2 for due resolution by harnessing online conciliation and/or online arbitration as specified in this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 conciliators and arbitrators. The norms for empanelment of ODR Institutions are specified in Schedule C of this circular as also the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed satisfactorily, the investor/client may, in accordance with the SCORES guidelines, escalate the same through the SCORES Portal 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified by the Board): a. complaints/disputes arising with a specific trading member for an exchange transaction or a listed company, shall be referred to the ODR Institution/s empaneled by the relevant Stock Exchange 6 , 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor is only to provide an admissible claim value of the complaint / dispute for purposes of appropriate slab for computation of fees being applied for online arbitration. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 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 Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited 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 (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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees: Arbitration initiated after one month of failure of conciliation and upto six months, the fees payable would be double of the non- refundable fees specified in the table above. Arbitration initiated after six months by a Market Participant will require payment of, additional fee of 50% of the fees, specified in the table above applicable per additional month of delay 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 concerned ODR Institution may collect this fee on behalf of the MII as per mutually agreed terms between them. 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 empa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he MIIs and the ODR Institutions empaneled by MIIs may also enter into necessary and appropriate contractual frameworks with the Market Participants, for them and their investors/clients in the Indian Securities Market, participating on the ODR Portal and in the ODR mechanism as specified. 32. All MIIs (and the ODR Institutions empaneled by MIIs as applicable) shall enter into agreements with financial institutions/Banks for opening accounts and effective 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsibilities of the Market Participants 41. All agreements, contractual frameworks or relationships entered into by Market Participants with investors/clients in the Indian Securities market presently existing or entered into hereafter shall stand amended or be deemed to incorporate provision to the effect that the parties agree to undertake online conciliation and/or online arbitration by participating in the ODR Portal and/or 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. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, 2022 c. Circular No: SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2022/76 dated May 30, 2022 d. Circular No.: SEBI/HO/CFD/SSEP/CIR/P/2022/48 dated April 8, 2022 e. Circular No SEBI/HO/CDMRD/DoC/P/CIR/2021/649 dated October 22, 2021 f. Circular No. SEBI/HO/MRD1/ICC1/CIR/P/2021/625 dated September 2, 2021 g. Circular No. SEBI/HO/MIRSD/DOC/CIR/P/2020/226 dated November 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 n-i. Circular No.: CIR/MIRSD/11/2013 dated October 28, 2013 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. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olders including the Market Participants and investors/clients in the Indian Securities Market. 52. This Circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. This circular is issued with the approval of the competent authority. 53. This Circular is available on the SEBI website at www.sebi.gov.in under the link Legal Master Circulars . This circular consolidates the circulars listed at Annexure I. Yours faithfully, S. Manjesh Roy General Manager Tel no.: 022- 26449710 Email: [email protected] 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 1A. Banker to an Issue and Self-Certified Syndicate Banks 8 2. CIS Collective Investment management company 2A. Commodities Clearing Corporations 9 3. Depository Participants 4. Investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its shareholders and investors, and list of its authorised officials / signatories. Changes if any to any of these may be notified to the concerned MII promptly. An MII may drop an ODR Institution from its panel, if there is a delay in notifying or if the changes are viewed by the concerned MII as not conducive to continuance of the ODR institution on the panel. 3. An ODR Institution shall also furnish other credentials that are deemed relevant to the empanelment process including: details of conciliators and arbitrators empaneled by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and details of its members, and list of its authorised officials / signatories. Such association / trade body shall undertake such activities and perform such roles and responsibilities as may be specified from time to time. 8. Any complaint received against a conciliator or arbitrator shall be promptly examined by the ODR Institution and the findings/conclusions/actions taken will be reported to the MII. MII may conduct its own review into such a process and/or specific matter. Any complaint against an ODR Institution shall be promptly examined by the MII and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ODR Institutions: 1. Age: between 35 years to 75 years. 2. Qualification in the area of law, finance including securities market, accounts, economics, technology, management, or administration. 3. Experience: Minimum 7 years of experience as provided below. 4. Professional experience as outlined below could be considered: a. Financial services including securities market i.e. Banks, NBFCs, MIIs, other intermediaries of securities market; b. Legal services Certified professionals handling conciliation, 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 dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med thereunder and the circulars, directions issued thereunder, and the contractual arrangements; viii. Undertake training courses as may be specified time to time by the Board, including from NISM; ix. Endeavour to pass arbitral award expeditiously and within prescribed time; x. Pass reasoned and detailed arbitral awards; and xi. Maintain confidentiality with respect to the proceeding and its associated recordings and only disclose confidential information as required by law or Courts of competent jurisdiction or legal authority. Annexure I List of circulars consolidated by the Master Circular Sl No. Reference Number of Circular Date Subject of the Circular 1 SEBI/HO/OIAE/OIAE_IAD- 1/P/CIR/2023/131 Jul 31, 2023 Online Resolution of Disputes in the Indian Securities Market 2 SEBI/HO/OIAE/OIAE_IAD- 1/P/CIR/2023/135 Aug 04, 2023 Corrigendum cum Amendment to Circular dated July 31, 2023 on Online Resolution of Disputes in the Indian Securities Market ..... X X X X Extracts X X X X X X X X Extracts X X X X
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