Imagine you're running a big, fancy company, and you have lots of people who invest in your company by buying your stocks. These investors trust you with their money, and sometimes they have questions or concerns. It's important to make sure you handle their problems quickly and efficiently.
To do this, you need a system that helps you manage these investor complaints. This system should be online, like a special website or software (SCORES), where you can receive and solve these issues electronically.
Every three months, you need to tell everyone how you're doing in taking care of these investor complaints. You have to report the number of complaints you had at the beginning of the three months, how many you received during that time, how many you fixed, and how many are still waiting to be solved.
Lastly, you need to show this report to the people who run your company, the board of directors, so they know how well you're looking after the investors. It's like giving them a progress report every quarter.
The provision laid under Regulation 13(3) of SEBI (LODR) is about making sure that companies who sell their stocks to the public have a good system to handle investor complaints, and they have to regularly tell everyone how they're doing in taking care of these complaints. This keeps things fair and transparent for everyone involved.
What is SCORES?
SCORES, which stands for "SEBI Complaints Redress System," is like a special website created by SEBI, which is the Securities and Exchange Board of India. It's there to make things easier for investors who want to complain about something related to the stock market, like issues with companies that are listed on the stock exchange or with the professionals who work in the securities industry.
This online platform allows investors to file their complaints against these companies and professionals directly with SEBI. So, if you're an investor and you feel like a listed company or a registered intermediary has done something wrong, you can use SCORES to submit your complaint. SEBI will then look into it and take the necessary actions to address your concerns.
The key idea here is that SCORES streamlines the complaint process and makes it more accessible for investors, ensuring that their grievances related to the securities market are properly heard and addressed by SEBI. It's all about making sure that the financial system works fairly and transparently for everyone involved.
Which are the complaints that come under the purview of SEBI?
Complaints arising out of issues that are covered under :
SEBI Act,
Securities Contract Regulation Act,
Depositories Act and rules and regulation made there under and
Relevant provisions of Companies Act, 2013.
Which are the matters that cannot be considered as complaints in SCORES?
a. Complaint not pertaining to investment in securities market: SCORES is for complaints related to the stock market; other types of issues don't belong here.
Example: Reporting a lost passport has nothing to do with securities.
b. Anonymous Complaints (except whistleblower complaints): SCORES generally doesn't accept complaints from unidentified sources, except in whistleblower cases where anonymity may be necessary.
Example: A complaint without a name or contact information.
c. Incomplete or un-specific complaints: Complaints need to be clear and provide enough details for SEBI to understand and address the issue.
Example: Filing a complaint with no explanation or specifics.
d. Allegations without supporting documents: Complaints should have evidence or documents to back up the claims.
Example: Accusing a company of fraud without providing any proof.
e. Suggestions or seeking guidance/explanation: SCORES is for resolving issues, not for seeking advice or explanations.
Example: Asking a company for investment advice through SCORES.
f. Not satisfied with trading price of the shares of the companies: SCORES isn't for expressing displeasure with stock prices, as they can fluctuate naturally.
Example: Complaining about a stock's price drop.
g. Non-listing of shares of private offer: SCORES isn't the place for complaints related to private offers or listings.
Example: Complaining that your private company's shares aren't listed on a public exchange.
h. Disputes arising out of private agreements with companies/intermediaries: SCORES doesn't handle disputes from private agreements; it's for market-related complaints.
Example: Arguing about the terms of a personal contract with a company.
i. Matter involving fake/forged documents: SCORES doesn't handle complaints about counterfeit or forged documents.
Example: Reporting a company for using fake credentials.
j. Complaints on matters not in SEBI's purview: SCORES focuses on SEBI-regulated issues, not matters outside its authority.
Example: Complaining to SEBI about traffic violations.
k. Complaints about any unregistered/unregulated activity: SCORES is for securities market-related concerns, not unrelated activities.
Example: Reporting an unlicensed street vendor through SCORES.
How investor complaints are handled in SEBI?
The Securities and Exchange Board of India (SEBI) has a specialized department known as the Office of Investor Assistance and Education (OIAE) dedicated to handling investor complaints and providing guidance to investors through education. When investors have grievances, SEBI manages them by routing the complaints to the relevant operational departments that deal with the specific area of concern. If an investor is dissatisfied with the response they receive from Stock Exchanges or Depositories, they have the option to escalate their complaints to SEBI. Complaints related to stockbrokers and depository participants are directed to the respective stock exchange and depository for resolution, with SEBI monitoring the process by collecting periodic reports from these entities.
For grievances concerning other intermediaries, SEBI engages with these entities directly to seek resolution and continuously monitors their progress. Complaints against listed companies are communicated to the respective company, which is obligated to respond in a specific format called the "Action Taken Report" (ATR). SEBI keeps track of the complaints' status, and if the company's response is inadequate or insufficient, SEBI takes further action.
If the progress in addressing investor grievances by any entity is unsatisfactory, SEBI initiates appropriate enforcement actions, such as adjudication, issuing directions, or even prosecution against that entity. This system ensures that investor complaints are taken seriously and addressed effectively, promoting fairness and transparency in the financial markets. Basically, SEBI's there to ensure the financial playground stays fair and fun, so investors can enjoy the game. It's all about keeping the smiles on everyone's faces in the world of stocks and investments!
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(Disclaimer: The views expressed in this article are strictly personal opinions of the author and do not necessarily reflect the views or opinions of the company or organisation they may be associated with. This article is intended for informational purposes only . It should not be construed as legal or professional advice and no legal or business decision should be based on its content. Readers are encouraged to seek professional guidance or consult relevant experts for specific legal or professional matters.)
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