Amendment to Circular dated July 31, 2023 on Online Resolution of Disputes in the Indian Securities Market
Summary
This circular amends the guidelines for online dispute resolution in the Indian securities market to clarify scope and procedures. It mandates that entities obtain registration after the implementation date must enroll in the ODR Portal immediately upon grant of registration or listing. The amendment also updates fee structures for arbitration claims above Rs. 50 lakh and expands the list of regulated entities covered under Schedules A and B.
Text
In clause 2 of the circular, the words and brackets “(including institutional/corporate clients)” are added after the words “Investors/Clients”.
In Clause 3(b) of the circular, the words ‘independent institutional’ are added before the word ‘conciliation’ and the word ‘online’ as appears before the words ‘arbitration institution in India’ is substituted with the word ‘independent’.
The seat and venue of mediation, conciliation and/or arbitration shall be in India and can be conducted online... The claims / complaints / disputes that arise from the activities or roles performed or to be performed by the specified intermediaries or regulated entities pertaining to the Indian securities market are in scope of this clause1.
Clause 5 of the circular shall include the following as a footnote to ‘ODR Portal’: URL - https://smartodr.in/login
Entities that obtain registration from the Board as an intermediary or issuers that are getting their securities listed on or after the date of implementation of this circular, shall enrol in the ODR Portal immediately upon grant of registration or listing, as the case may be.
Listed companies (and their registrars and transfer agents), specified intermediaries and regulated entities specified in Schedules A and B as well as institutional or corporate clients shall initiate claims or disputes in accordance with Clause 3(a) and/or 3(b)... unless the matter is non-arbitrable... or is against the Government of India / President of India or a State Government / Governor of a State.
The nature of determination made by the conciliator is only to provide an admissible claim value of the complaint / dispute for purposes of appropriate slab for computation of fees being applied for online arbitration. Subject to the forgoing, the investor / client, the market participant and the arbitrator/s would not be bound by such determination...
The Market Participant against whom the investor/client pursues the online arbitration shall participate in the arbitration process. Accordingly, within 10 days of the initiation of the online arbitration by the investor/client, the Market Participant shall make the deposit of 100% of the admissible claim value with the relevant MII and make the payment of the fees as applicable for online arbitration.
In case the Market Participant wishes to pursue online arbitration... it shall intimate the ODR Institution within 10 days of the conclusion of the conciliation process of its intent to do so and within further 5 days of this intimation, shall deposit 100% of the admissible claim value with the relevant MII and make the payment of fees as applicable for online arbitration for initiating the online arbitration.
For claims between Rs. 50 lakh and Rs. 1 crore, Arbitrator’s Fee is Rs. 1,20,000/- and ODR Institution’s Fees are Rs. 15,000/-. For claims of Rs. 1 crore and above, an ad valorem fees @ 1% of the claim value or Rs.1,20,000/-, whichever is more, towards Arbitrator’s Fees and fees @ Rs 35,000/- towards ODR Institution’s Fees shall be applicable.
The investor may choose to initiate arbitration for a higher claim value subject to payment of applicable fees and charges.
The concerned ODR Institution may collect this fee on behalf of the MII as per mutually agreed terms between them.
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Source: SecMarx — Amendment to Circular dated July 31, 2023 on Online Resolution of Disputes in the Indian Securities Market. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.