NON-COMPLIANT WITH INVESTOR COMPLAINT-FREEZE PROMOTER HOLDING – Eshwars
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NON-COMPLIANT WITH INVESTOR COMPLAINT-FREEZE PROMOTER HOLDING

Authored by Lakshmi Rengarajan

Promoters of listed companies that do not expeditiously redress investor complaints will have their shareholding frozen as per SEBI’s circular SEBI/HO/OIAE/IGRD/CIR/P/2020/152 dated 13th August 2020, (to be effective from 1st September 2020) in respect of complaints specified in List 1 below.

By this circular, SEBI has shifted the responsibility of monitoring the complaint redressal to the designated stock exchange (“DSE”), in respect of complaints received on the SCORES platform (“Scores”), that are not redressed within a period of 30 days of its receipt. The DSE is now empowered to decide if the compliant has been redressed adequately.

In cases where the DSE views that a complaint is not adequately redressed, or is pending for more than 30 days, the DSE is required to give a reminder to the company to resolve within another 30 days and file an Action Taken Report (“ATR”).

If by the 60th day there is no redressal/ATR, then the DSE is empowered to impose a penalty of Rs. 1,000/- for each day of delay in redressal. Where the penalty is not paid within 15 days of the notice for payment and/or no ATR filed for the complaint, then DSE is to escalate it to the promoters of the company for compliance within the 86th day of receipt of the complaint.

Even after escalation to the promoters, there is no resolution/payment of the penalty, then DSE will intimate the depositories where the promoter/promoter group shares are held to freeze not just their holding in the defaulting company, but also their other shareholding.

With respect to companies having pending complaints exceeding 20 or value of which is more than Rs.10 lakhs, the DSE is required to transfer the matter to SEBI for further actions.

Company will be treated as compliant, and the demat accounts of the promoter will be unfrozen only upon the redressal of the complaint and the payment of the outstanding fines.

LIST – 1

Nature of complaints for which the circular is applicable

1. Non updation of address /Signature or Corrections etc

2. Non-receipt of Bonus

3. Non receipt of Dividend

4. Non receipt duplicate debt securities certificate

5. Non-receipt of duplicate share certificate

6. Non receipt of fractional entitlement

7. Non receipt of interest for delay in dividend

8. Non receipt of interest for delay in payment of interest on debt security

9. Non receipt of interest for delay in redemption proceeds of debt security

10. Non receipt of interest for delay in refunds

11. Non receipt of interest on securities

12. Non receipt of redemption amount of debt securities

13. Non receipt of refund in Public/ Rights issue

14. Non receipt of Rights Issue form

15. Non receipt of securities after conversion/ endorsement/ consolidation/ splitting

16. Non receipt of securities after transfer

17. Non receipt of securities in public/ rights issue

18. Non receipt of shares after conversion/ endorsement/ consolidation/ splitting

19. Non receipt of shares after transfer

20. Non receipt of shares after transmission

21. Non receipt of shares in public/ rights issue (including allotment letter)

22. Non-receipt of interest for delay in dispatch/credit of securities

23. Receipt of refund/ dividend in physical mode instead of electronic mode

24. Receipt of shares in physical mode instead of electronic mode

25. Demat/Remat

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