“I opened an account with a broker and my account got wiped out due to unauthorised trading.”
“My broker is absconding!”
“I have not received the bonus amount post its announcement by the company.”
While the world of finance offers scores of opprtunities to millions of investors in terms of multiplying their money, it also has a darker side. Yes. In the world of finance, act of vanishing companies and stock market related scams are commonplace. Needless to say, such acts are not only annoying but can turn out to be malicious. And filing a complaint is probably the best way out.
These days, investors have multiple options when it comes to filing complaints. The nature of complaints can range anywhere between non-receipt of dividend, securities on account of a bonus to de-merger, interest on debentures and even bonds or other debt instruments, to name a few.
While investors can lodge a complaint to the concerned company or its Board of Directors, they can also choose to approach the investor grievance committee, which is usually set up separately by a company in order to address such issues. However, it might come as a surprise, but many times complaints lodged even with such panels either take too long to be addressed or even remain unresolved. But, today if investors want to lodge a proper complaint especially against listed companies, they can do so with Securities & Exchange Board of India (Sebi), Ministry of Company Affairs (MCA), Concerned Registrar of Office (RoC), Association of Mutual Funds of India (AMFI), Reserve Bank of India (RBI) and even the Ministry of Finance (MoF).
In case an investor wants to file a complaint against an unlisted company, he or she will have to rout the same through the national company law tribunal (NCLT). The concerned individual will have to file a petition before NCLT on his or her own or with the assistance of a lawyer. Commenting on the complaint process at NCLT, Mukesh Jain, Corporate Lawyer and Founder, Mukesh Jain & Associates said, “When it comes to unlisted companies, the aggrieved investor can approach NCLT by invoking the provisions related to ‘oppression of minority and mismanagement’ provided, that the complainant group holds not less than 10 per cent of the total paid up equity share capital of the said company. However, in all cases, civil courts can be approached.”
Experts opine that, these kind of grievances can be divided into three categories. These include delinquency in relation to (a) public issue like non-receipt of allotment advice or interest on delay in redemption amount or fractional share or even relating to an offer of buy-back; (b) corporate action like dividend, redemption amount or securities incidental to bonus, merger, demerger or split of shares; and (c) transfer of securities such as demat, duplicate shares and transfer of shares. Sharing his opinion on the same, Muthuswamy Iyer, Head of Compliance at Karvy Stock Broking said, “Normally clients approach Sebi or stock exchanges with their grievance. However, it has been observed that clients also approach bodies such as consumer forum, print media, social media and sometimes even the police to get their complaint resolved.”
Of late, Sebi and the stock exchanges have formulated a set of rules for investor grievance redressal and arbitration mechanism. Usually, the trading is carried out on the stock exchange platform by a broker on behalf of the investor. “Besides, the complaints, which can be made to Sebi it shall also include irregularities in trading or even manipulation of price or violation of insider trading regulations. Even ponzi schemes are covered,” added Jain. BSE has a Department of Investors Services (DIS) to redress investors’ grievances. The DIS resolves investor’s grievances either against listed companies or against BSE’s trading members. BSE forwards the complaints against listed companies to the concerned authorities and a copy of the complaint is also sent to the complainant. The investor can also lodge a complaint physically by submitting a complaint form supported by documents such as ledger statement, contract notes, bank statement and demat transaction statement.
Apart from the above, investors can also lodge a complaint through either email or through BSE’s website under investor section titled e-Complaint Registration. Commenting on the functioning of the BSE in dealing with grievances, Rachit Chawla, Founder and CEO, Finway said, “BSE through DIS forwards these complaints to the concerned trading members for resolution, where the member has to reply within three-working days from receipt of the complaint. If reply is not received or the reply does not satisfy the complainant, the complaint is placed before Investors’ Grievances Redressal Committee (IGRC).
If an amicable solution is not reached, then IGRC suggests the complainant to opt for arbitration.”
Just like BSE, the National Stock Exchange has its own redressal body aptly named Investor Services Cell, where complaints can be filed along with supporting documents either through the electronic mode or they can visit the nearest service centre in person.
These days’ investors can also lodge complaint on SCORES, a web-based centralised grievance redressal system of Sebi. Commenting on how the platfrom functions, Sandeep Shah, Partner, NA Shah Associates, said, “It allows investors to lodge complaints at any regional Sebi office from anywhere in the country. All grievances are now recorded in the electronic mode and linked to the central server. Besides, investors can also access the status of their complaints, including action taken, if any, on their grievances.” The SCORES is used for shares and mutual fund sector. Further AMFI also provides the status of complaints, scheme wise and year wise. Similarly, MCA also has investor complaint or serious complaint e-forms available to stakeholders for filing complaints online. “In case of RoC, a complaint can be lodged through PG portal, MCA 21 or offline to MCA (HQ) or RoC concerned,” said Jain.
Over time, due to an increase in electronic and web-based portals, investors’ grievances are captured, tracked and their disposal can also be recorded systematically. Keeping these in mind, it can be said, the Indian redressal systems has been quite effective. Shah further added, “The Sebi instructs the stock exchanges to monitor the resolution of the complaints; and if there is a failure to file the quarterly statement by the company, a fine can be levied and such failures can be reported to the Sebi.”
Resolving complaints is a time-consuming process. However, experts opine that a single window remedial mechanism for all kinds of investors which, is time and cost efficient is definitely a great boost to investors’ confidence.
himali@outlookindia.com