Sebi issues SOP for stock exchange arbitration system
MUMBAI: The Securities and Exchange Board of India (Sebi) has come out with a new standard operating procedure (SOP) for resolution of disputes between a listed firm or Registrars to an Issue and Share Transfer Agents (RTAs) and its shareholders under the stock exchange arbitration mechanism.
The arbitration mechanism will be initiated post exhausting all actions for resolution of complaints including those received through the Sebi Complaints Redress System (SCORES) portal. The arbitration reference will be filed with the stock exchange where the initial complaint has been addressed.
The new framework will come into force with effect from June 1, Sebi said in a circular on Monday.
The SOP will be applicable to listed companies or RTAs offering services on behalf of listed companies. In case of claims or disputes arising between the shareholder or investor of listed firms and the RTAs, the RTAs will be subjected to the stock exchange arbitration mechanism.
In all such instances, the listed company will necessarily be added as a party.
In case of arbitration matters involving a claim of up to ₹25 lakh, a sole arbitrator will be appointed. If the value of the claim is more than ₹25 lakh, a panel of three arbitrators will be appointed.
The process of appointment of arbitrator needs to be completed by the stock exchange within 30 days from the date of receipt of application.
Disputes pertaining to or emanating from investor service requests including transfer/ transmission of shares, demat, transposition of holders, investor entitlements such as corporate benefits, dividend, bonus shares, rights entitlements, credit of securities in public issue and delay in processing or wrongful rejection of such investor service requests may be considered for arbitration.
The fee per arbitrator will be ₹18,000 plus stamp duty and service charge and this will be collected from RTAs or listed companies and shareholders or investors separately by the exchange, for defraying the cost of arbitration, said the capital market regulator.
If the value of claim is less than or equal to ₹10 lakh, the cost of arbitration with respect to the shareholders or investors will be borne by the exchange.
For appellate arbitration, fees of ₹54,000 plus stamp duty and service charge will be paid by the appellant only.