One of my clients, Rohit, recently got approval from SEBI for his Investment Adviser application.
He called me up last week and asked, “Kruti, finally, I received the certificate of registration from SEBI. I feel so relieved now. Thank you for your help. What next?”
“Rohit, the work has just begun. You have to now focus on the most important aspect of your practice – compliance. Compliance of SEBI regulations, various circulars and notifications apply to intermediaries begins as soon as one becomes a SEBI registered intermediary.
In fact, one of the things you should do immediately is get SCORES authentication.”
I knew this would throw him off the foot and that’s what happened.
“SCORES! Now, what is that? One more application to SEBI?”
“Let me give you a brief background. In 2011, SEBI launched a system called SCORES (SEBI Complaints Redress System) where an investor can lodge a complaint online against a listed company or a registered intermediary. She can also view the action taken by the company / intermediary and the status of the complaint. SEBI oversees this platform.
Do you remember I had informed you about an order issued by SEBI against CapitalVia Global Research Limited (CapitalVia)? The company received an order for non-compliance of various regulations of SEBI (Investment Advisers) Regulations, 2013.
Read more: SEBI strikes Investment Advisers!
SEBI had received many complaints from clients of CapitalVia. The complaints registered on SCORES were approximately 240. Most of them were in the nature of allegation of ‘loss in trade’ due to advisory services provided by CapitalVia.”
He said, “Now, that’s a big number!”
I continued, “Yes. Now, I know you want to provide the best of the services to your clients. However, there is always a chance that one of your clients may want to complaint against you to SEBI. Once you get SCORES authentication, your clients can use and it even you can view complaints, if any, and respond to them.
Even if you do not have SCORES authentication, the clients can go directly to SEBI. However, in that case, SEBI may not take the fact kindly that you have not registered on SCORES and hence not provided an adequate grievance redress mechanism.”
SEBI has issued a consolidated circular SEBI Circular No. CIR/OIAE/1/2014 dated December 18, 2014 about SCORES registration. Click here to view the circular.
“Oh! Tell me, what I have to do? How to get registered on SCORES?”
This is what I explained to him.
What is the process to get registered?
It is mandatory for every listed company and every SEBI registered intermediary (except Stock Brokers, Sub-Brokers and Depository Participants) to get registered on the SCORES.
Here is the step-by-step process:
#1 – Preparation of application form:
Once the company is listed or the intermediary is registered with SEBI, an application has to be made to SEBI for obtaining User ID and Password for SCORES in Form A and Form B respectively. The application has to be made within one month from the date of registration.
Click here to download the application form for listed company (Form A of the circular).
Click here to download the application form in case of registered intermediary (Form B of the circular).
Note: Please make sure that the email ID provided in the application for SCORES is a permanent one and preferably a corporate email ID.
For entities, it is advisable to not give email ID of any employee. Create a email ID like compliance@abc.com or investorgrievance@abc.com.
#2 – Submission of application form:
- The application form needs to be sent in hard copy as well via email to scores@sebi.gov.in.
- The registered intermediaries have to submit the details in hard copy to the Department / Division of SEBI which has granted them registration to operate in the securities market.
For Investment Advisers and Research Analysts, the Department is “Investment Management Department” and Division is “Division of Funds – I.”
#3 – Issue of login credentials by SEBI:
SEBI will then issue a login ID and password to the company / intermediary. You can login to SEBI SCORES portal and check the status of the complaints received against you. Click here to login to SEBI SCORES portal. Once you get the login credentials, I would recommend you to check the portal regularly.
What is the process to be followed in case someone complains?
#1 – Direct approach by investors:
As a first step, the investors are supposed to directly get in touch with the company / intermediary. If the grievance is not solved by the company / intermediary, then the investor can lodge a complaint on SCORES.
#2 – Resolving the complaint:
All listed companies and SEBI registered intermediaries have to regularly login to SCORES and check if there are any complaints against them.
If any complaint is received against the company / intermediary through SCORES, immediate action needs to be taken to resolve the complaint within 30 days of receipt.
The company / intermediary also have to keep the complainant informed about the action taken.
#3 – Upload Action Taken Report
- The listed companies and SEBI registered intermediaries have to update the Action Taken Report (ATR) along with supporting documents, if any, online, on SCORES. ATR in physical form need not be sent to SEBI. Click here to download sample format of ATR.
- The proof of dispatch of the reply from the listed company / SEBI registered intermediary to the concerned investor should also be uploaded in SCORES and preserved for future reference.
- It is important to note here that mere filing of ATR by a listed company or SEBI registered intermediary with respect to a complaint will not mean that the complaint is not pending against them. A complaint shall be treated as resolved / disposed / closed only when SEBI disposes / closes the complaint in SCORES.
If a company / intermediary does not upload ATR within 30 days of receipt of complaint, it will be taken as non-redressal of grievance.
Is it necessary for an entity to take SCORES authentication separately for each category of intermediary registration granted by SEBI?
Yes, an entity has to take SCORES authentication separately for each category of intermediary registration granted by SEBI.
So if you are registered as a Merchant Banker as well as Research Analyst, you need to take SCORES authentication for both categories.
But if the entity is registered as a Stock Broker as well as a Research Analyst, the entity has to take SCORES authentication for Research Analyst registration only. (Stock Brokers have been excluded from taking SCORES authentication).
What will happen if the intermediary / company is not registered with SCORES?
If any listed company or SEBI registered intermediary fails to obtain or has delayed obtaining the SCORES authentication, it would mean non-redressal of investor grievances as well as indicate wilful avoidance of the same.
Every listed company as well as registered intermediary is registered with SCORES. Even if listed company / intermediary fails to obtain SCORES authentication, the clients can still complaint online against the listed company or registered intermediary.
However, if the company / intermediary does not take SCORES authentication, it will not be able to view the complaints filed by its users / clients, if any.
SEBI may also impose penalty for not obtaining SCORES authentication and violating circular on SCORES authentication.
“Thanks Kruti, I understand the importance of compliance. Let’s get started. I will immediately send my SCORES application Form B to SEBI. I need your help in setting up my processes for compliance of Investment Advisers Regulations.”
“Sure Rohit, would be happy to assist you!”
Recently SEBI has issued orders against various listed companies and intermediaries for non-obtaining of SCORES authentication. You can view some of the order here –
- To view the order against Shublaxmi Exports Pvt. Ltd., click here.
- To view the order against Sam Tul Investments Ltd., click here.
- To view the order against Shikhar Consultants Ltd., click here.
Have you taken SCORES authentication yet? Did you face any difficulties in getting the same? For any queries, you can write to me at kruti@cskruti.com.