SECURITIES AND EXCHANGE BOARD OF INDIA (ALTERNATIVE DISPUTE RESOLUTION MECHANISM) (AMENDMENT) REGULATIONS, 2023

INTRODUCTION

The Securities and Exchange Board of India (SEBI) plays a crucial role in regulating and overseeing the securities market in India. To enhance the effectiveness and efficiency of dispute resolution in the securities market, SEBI has introduced the Securities and Exchange Board of India (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023.

The amendment regulations bring significant changes to various existing regulations governing different entities in the securities market, such as merchant bankers, registrars to an issue and share transfer agents, debenture trustees, mutual funds, custodians, credit rating agencies, collective investment schemes, KYC registration agencies, alternative investment funds, investment advisers, research analysts, infrastructure investment trusts, real estate investment trusts, listing obligations, foreign portfolio investors, portfolio managers, and vault managers.

The key focus of these amendments is to establish a comprehensive dispute resolution mechanism for resolving claims, differences, or disputes between these entities and their clients or investors. The mechanism includes mediation, conciliation, and/or arbitration, and aims to provide a fair and transparent platform for resolving conflicts in the securities market.

By introducing these amendments, SEBI aims to promote investor confidence, protect the interests of investors, and ensure timely and efficient resolution of disputes. The regulations specify the procedures to be followed and mandate the submission of disputes to the designated dispute resolution mechanism.

Overall, these amendments reinforce SEBI's commitment to maintaining the integrity and transparency of the securities market in India. By providing a standardized and regulated framework for dispute resolution, these regulations aim to foster trust, promote fair practices, and uphold the rights of investors and market participants.

KEY POINTS

The Securities and Exchange Board of India (SEBI) has introduced the Securities and Exchange Board of India (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023 on 03-07-2023. These regulations amend various existing regulations related to different entities in the securities market. Here is a summary of the amendments:

1. Amendments to the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992:

A new regulation, 28B, is inserted, which mandates the submission of all claims, differences, or disputes between a merchant banker and its client to a dispute resolution mechanism. The mechanism includes mediation, conciliation, and/or arbitration.

2. Amendments to the Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993:

A new regulation, 15B, is inserted, requiring all claims, differences, or disputes between a registrar to an issue and share transfer agent and its client/investor to be submitted to a dispute resolution mechanism. The mechanism includes mediation, conciliation, and/or arbitration.

3. Amendments to the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993:

A new regulation, 14A, is inserted, stating that all claims, differences, or disputes between a debenture trustee and a body corporate that has appointed the trustee shall be submitted to a resolution mechanism. The mechanism includes mediation, conciliation, and/or arbitration.

4. Amendments to the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996:

A new regulation, 59B, is inserted, requiring all claims, differences, or disputes between an asset management company and investors to be submitted to a dispute resolution echanism. The mechanism includes mediation, conciliation, and/or arbitration.

5. Amendments to the Securities and Exchange Board of India (Custodian) Regulations, 1996:

A new regulation, 17A, is inserted, stating that all claims, differences, or disputes between a custodian and its client shall be submitted to a dispute resolution mechanism. The mechanism includes mediation, conciliation, and/or arbitration.

6. Amendments to the Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999:

A new regulation, 14A, is inserted, mandating the submission of all claims, differences, or disputes between a credit rating agency and its client to a dispute resolution mechanism. The mechanism includes mediation, conciliation, and/or arbitration.

7. Amendments to the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999:

A new regulation, 14A, is inserted, requiring all claims, differences, or disputes between a Collective Investment Management Company and investors to be submitted to a resolution mechanism. The mechanism includes mediation, conciliation, and/or arbitration.

8. Amendments to the Securities and Exchange Board of India (KYC Registration Agency) Regulations, 2011:

A new regulation, 16B, is inserted, stating that all claims, differences, or disputes between a KYC Registration Agency and an Intermediary shall be submitted to a dispute resolution mechanism. The mechanism includes mediation, conciliation, and/or arbitration.

9. Amendments to the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012:

Regulation 25 is substituted with a new version, requiring all claims, differences, or disputes between investors and the Alternative Investment Fund or the Manager to be submitted to a dispute resolution mechanism. The mechanism includes mediation, conciliation, and/or arbitration.

10. Amendments to the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013:

Regulation 21 is modified, mandating that all claims, differences, or disputes between an Investment Adviser and its client shall be submitted to a dispute resolution mechanism. The mechanism includes mediation, conciliation, and/or arbitration.

11. Amendments to the Securities and Exchange Board of India (Research Analysts) Regulations, 2014:

A new regulation, 26A, is inserted, stating that all claims, differences, or disputes between a research analyst or research entity and its client shall be submitted to a dispute resolution mechanism. The mechanism includes mediation, conciliation, and/or arbitration.

12. Amendments to the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014:

A new regulation, 22A, is inserted, requiring all claims, differences, or disputes between investors and the investment manager of an Infrastructure Investment Trust to be submitted to a resolution mechanism. The mechanism includes mediation, conciliation, and/or arbitration.

13. Amendments to the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014:

A new regulation, 22A, is inserted, stating that all claims, differences, or disputes between investors and the manager of a Real Estate Investment Trust shall be submitted to a dispute resolution mechanism. The mechanism includes mediation, conciliation, and/or arbitration.

14. Amendments to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015:

The requirement for arbitration in case of claims, differences, or disputes under regulation 40 is omitted. Instead, all claims, differences, or disputes between a listed entity and its investor shall be submitted to a dispute resolution mechanism.

15. Amendments to the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019:

A new regulation, 24A, is inserted, mandating the submission of all claims, differences, or disputes between a foreign portfolio investor and a designated depository participant to a dispute resolution mechanism. The mechanism includes mediation, conciliation, and/or arbitration.

16. Amendments to the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020:

A new regulation, 22A, is inserted, requiring all claims, differences, or disputes between investors and a portfolio manager to be submitted to a dispute resolution mechanism. The mechanism includes mediation, conciliation, and/or arbitration.

17. Amendments to the Securities and Exchange Board of India (Vault Managers) Regulations, 2021:

A new regulation, 16A, is inserted, stating that all claims, differences, or disputes between a vault manager and a beneficial owner shall be submitted to a dispute resolution mechanism. The mechanism includes mediation, conciliation, and/or arbitration.

 

These amendments aim to establish a standardized dispute resolution mechanism for various entities in the securities market, ensuring the fair resolution of claims, differences, or disputes between the entities and their clients/investors.

CONCLUSION

In conclusion, the Securities and Exchange Board of India (SEBI) has introduced the Securities and Exchange Board of India (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023. These amendments bring significant changes to various regulations governing entities in the securities market.

The amendments establish a comprehensive dispute resolution mechanism that includes mediation, conciliation, and/or arbitration for resolving claims, differences, or disputes between entities such as merchant bankers, registrars, debenture trustees, mutual funds, custodians, credit rating agencies, collective investment schemes, KYC registration agencies, alternative investment funds, investment advisers, research analysts, infrastructure investment trusts, real estate investment trusts, listing obligations, foreign portfolio investors, portfolio managers, and vault managers.

By implementing this mechanism, SEBI aims to enhance the effectiveness and efficiency of dispute resolution in the securities market. The regulations provide a standardized and regulated framework for resolving conflicts, promoting investor confidence, and protecting the interests of investors and market participants.

These amendments reinforce SEBI's commitment to maintaining the integrity and transparency of the securities market in India. By ensuring a fair and transparent platform for resolving disputes, SEBI aims to foster trust, promote fair practices, and uphold the rights of investors.

 

“Unlock the Potential of Legal Expertise with LegallMantra.net - Your Trusted Legal Consultancy Partner”

 

Article Compiled by:-

Mayank Garg

(LegalMantra.net Team)

+91 9582627751

Disclaimer: Every effort has been made to avoid errors or omissions in this material in spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition In no event the author shall be liable for any direct indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information Many sources have been considered including newspapers, Journals, Bare Acts, Case Materials , Charted Secretary, RBI etc.

 

Print