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  • Writer's pictureTrivedi and Parashar (Advocates and Solicitors)

Legislative Updates -

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

The Securities and Exchange Board of India (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023, were published by the SEBI on July 3rd, 2023. In accordance with the Board's established procedure, this Amendment establishes measures targeted at resolving various issues that arise in the securities market through a dispute resolution structure that includes mediation, conciliation, and/or arbitration.


Here are the key points of the Amendment:

  • Disputes between Merchant Bankers and Clients: In accordance with the new Regulation 28B, any claims, disagreements, or conflicts involving activity in the securities market between a merchant banker and its client shall be resolved through the prescribed dispute resolution process, which may include arbitration, conciliation, mediation, or both.


  • Disputes between Registrars to an Issue and Share Transfer Agents and Clients: In accordance with the new Regulation 15B, any claims, disagreements, or conflicts involving activity in the securities market between a registrar to an issue and share transfer agent and its customers and investors shall be settled through the specified dispute resolution system.


  • Disputes between Debenture Trustees and Corporate Entities: In accordance with the new Regulation 14A, claims, disagreements, or disputes arising from activities in the securities market between a debenture trustee and a body corporate that appointed the debenture trustee will be submitted to a resolution mechanism that includes mediation, conciliation, and/or arbitration.


  • Disputes between Asset Management Companies and Investors: The defined dispute resolution procedure will be used to settle any claims, disagreements, or conflicts between an asset management company and investors over activity in the securities market, as per the new Regulation 59B.


  • Disputes between Custodians and Clients: In accordance with the new Regulation 17A, the designated dispute resolution process shall be used to resolve any claims, disagreements, or disputes between a custodian and its clients relating to activity in the securities market.


  • Disputes involving Credit Rating Agencies and Clients: The designated dispute resolution process will be used to settle claims, disagreements, or disputes between a credit rating agency and its clients that result from activity in the securities market, in accordance with the new Regulation 14A.


  • Disputes between Collective Investment Management Companies and Investors: A Collective Investment Management Company and investors will submit any claims, disagreements, or disputes relating to securities market activities to a dispute resolution system involving mediation, conciliation, and/or arbitration in accordance with the new Regulation 14A.


  • Disputes between KYC Registration Agencies and Intermediaries: In accordance with the new Regulation 16B, any claims, disagreements, or conflicts relating to activity in the securities market between a KYC Registration Agency and an Intermediary shall be resolved through the approved dispute resolution procedure.


  • Disputes involving Alternative Investment Funds and Managers: In accordance with the new Regulation 25, the authorized dispute resolution process will be used to settle any claims, disagreements, or conflicts between investors and the Alternative Investment Fund or its Manager resulting from activity in the securities market.


  • Disputes involving Research Analysts or Entities and Clients: In accordance with the new Regulation 26A, claims, disagreements, or conflicts involving activity in the securities market between a research analyst or research firm and its customers shall be settled through the designated dispute resolution procedure.


  • Disputes between Investors and Investment Managers: A resolution process incorporating mediation, conciliation, and/or arbitration will be used to settle any claims, disagreements, or conflicts between investors and investment managers relating to activity in the securities market, as per the new Regulation 22A.


  • Disputes involving Investors and Managers: In accordance with the recently introduced Regulation 22A, a recognized dispute resolution process must be used to resolve any claims, disagreements, or conflicts between investors and the manager of a Real Estate Investment Trust (REIT), by way of arbitration, conciliation, or mediation.


  • Disputes between Listed Entities and Investors: In accordance with the recently introduced Regulation 40, a listed company and its investors will resolve any claims, disagreements, or disputes that arise from activity in the securities market using the specified dispute resolution process.


  • Disputes involving Foreign Portfolio Investors and Designated Depository Participants: In accordance with the recently introduced Regulation 24A, a foreign portfolio investor and a designated depository participant will have to use the designated dispute resolution process to settle any claims, disagreements, or disputes relating to securities market activity.


  • Disputes between Investors and Portfolio Managers: In accordance with the recently introduced Regulation 22A, claims, disagreements, or disputes relating securities market activity between investors and portfolio managers shall be settled in line with the applicable dispute resolution procedure.


  • Disputes involving Vault Managers and Beneficial Owners: In accordance with the recently introduced Regulation 16A, any claims, disagreements, or disputes between a vault manager and a beneficial owner connected to transactions in the securities market shall be resolved in accordance with the predetermined dispute resolution method. By introducing this Amendment, SEBI hopes to improve the fairness, effectiveness, and transparency of dispute resolution in India's securities market. It also offers a methodical way to handle various stakeholder conflicts.

 
 

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