The Securities and Exchange Board of India (SEBI) has issued a circular to lay down procedure for handling complaints by the stock exchanges for actions to be taken against listed companies for failure to redress investor grievances. The circular shall come into force from 01 September, 2020. The key highlights of the circular have been briefly discussed as follows:

I. Handling of complaints by stock exchanges

• Investors are encouraged to initially take up their grievances for redressal with the concerned listed company directly.
• In case the company does not redress the complaint within 30 days from the date of receipt of the complaint, such direct complaints shall be forwarded to designated Stock Exchange (DSE) through SEBI Complaints Redress System (SCORES).

Explanation: SEBI launched an app (a mobile application) on March 2020 for lodging investor grievances. The app -- SEBI SCORES -- is an effort to improve the ease of doing business so that investors can conveniently lodge their grievances in SCORES.

• The DSE will take up the complaint and the company would be required to address the complaint within 30 days from the date of its receipt by submitting an Action Taken Report (ATR) to DSE.
• The DSE would submit an ATR with SEBI if satisfied with the redressal by the company. If the grievance is not redressed within 60 days even after giving an additional period of 30 days, the following actions may be initiated by the DSE

II. Action for failure to redress investor complaints by the company

• Levying a fine of Rs. 1000 per day per complaint on the listed entity.
• Fine shall also be levied on companies which are suspended from trading.
• If the company is unable to pay the fine within the prescribed period, the stock exchange shall direct the depositories to freeze the entire shareholding of the promoters. The depositories shall intimate the promoters after freezing of their demat accounts.
• Even after taking the above actions, if the number of pending complaints exceeds 20 or the value involved is more than Rs. 10 lakhs, the stock exchange shall forward the matter to SEBI for further action.

III. Redressal of investor grievance by the company

• Company will be considered ‘compliant’ if it has redressed investor’s complaint or has paid the fine (if any) levied.
• If the promoters demat account is frozen, it will be unfreezed.

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