SEBI prescribes detailed norms w.r.t. SOP for dispute resolution

Circular no. SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2022/76, Dated: 30.05.2022

SEBI has prescribed detailed arbitration mechanisms norms w.r.t Standard Operating Procedure (SOP) for operationalizing the resolution of all disputes pertaining to investor services such as transfer/transmission of shares, demat/remat, issue of duplicate shares, transposition of holders etc.

Accordingly, the Arbitration Mechanism shall be initiated after exhausting all actions for the resolution of complaints including those received through the SCORES Portal. Further, the detailed norms w.r.t arbitration, Appellate Arbitration, arbitration fees, an arbitration award, and reporting have also been provided. The circular shall be effective from 01.06.2022

Arbitration

The limitation period for filing an arbitration application shall be as prescribed under the law of limitation, i.e., The Limitation Act, 1963. In case of arbitration matters involving a claim of up to Rs. 25 lakhs, a sole arbitrator shall be appointed, and, if the value of the claim is more than Rs. 25 lakhs, a panel of three arbitrators were required to be appointed. The process of appointment of the arbitrators shall be completed by the stock exchange within 30 days from the date of receipt of the complete application from the applicant.

Appellate Arbitration

Any party aggrieved by an arbitral award may file an appeal before the appellate panel of arbitrators of the stock exchange against such award within one month from the date of receipt of the arbitral award by the aggrieved party. The appellate panel shall consist of three arbitrators who shall be different from the ones who passed the arbitral award appealed against.

Arbitration Fees

The fees per arbitrator shall be Rs. 18,000/- plus stamp duty, service charge, etc. as applicable per case. The fees plus stamp duty, service charge, etc. as applicable shall be collected from RTAs/ Listed companies and shareholder(s)/ investor(s) separately by the Exchange, for defraying the cost of arbitration. If the value of the claim is less than or equal to Rs.10 lakhs, then the cost of arbitration with respect to the shareholders/investors shall be borne by the Exchange.

Arbitral Award

The arbitration proceedings shall be concluded by way of the issue of an arbitral award within four months from the date of appointment of the arbitrators. The stock exchanges may extend the time for issue of an arbitral award by not more than two months on a case-to-case basis after recording the reasons for the same

Record and Disclosures

The stock exchanges shall preserve the documents related to arbitration for five years from the date of an arbitral award, appellate arbitral award or Order of the Court as the case may be and register of the destruction of records relating to the above permanently.

The stock exchanges shall disclose on its website, details of the disposal of arbitration proceedings and details of arbitrator-wise disposal of arbitration proceedings as per the formats prescribed by SEBI for already available arbitration mechanisms.

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