L] OTHER FUNCTIONS

Grievance Redressal

The grievance redressal rate of the SEBI has been increasing through the years as can be seen from the following table III.11.

Table III.11 - Investor grievances -year-wise

 
Source: SEBI

The reasons for the improvement in the rate of investor grievances redressal in the year under review included effective follow up with the companies, tightening of the procedure for issuing the No Objection Certificate for release of the 1 per cent security deposits kept by the companies with the stock exchanges and periodic meetings held with the recalcitrant companies. Further, the SEBI also sent reply paid post cards to those investors whose complaints were pending as per the SEBI database asking them to confirm whether the resolution as reported by the companies is correct or not. Based on the confirmation received, the SEBI updated the Investor Grievances Database.

The grievances received during the year 1997-98 were substantially lower than those received in the earlier years. The average receipts consequently declined to around 450 per day. The decline was pronounced with regard to non receipt of refund orders, allotment order, and share/debenture certificates on allotment.

Table III.12 - Investor Grievances - Cumulative

Source: SEBI

It can be observed from table III.12 that the redressal rate has been consistently increasing over the years. In the year 1997-98, with continued focus on the area of investor grievance redressal, SEBI has improved the redressal rate significantly.

Defaulting Companies

During 1997-98, periodic meetings were held by the SEBI with the CEO / Compliance Officer / Sr. Officers of the companies which did not register satisfactory investor grievance redressal position. During such meetings, the SEBI impressed on them the need to redress the investor grievances with greater urgency. The impact of these meetings on the record of redressal was good and therefore the SEBI decided to make this a continuing exercise.

During 1997-98, the SEBI had also prosecuted 4 companies for their failure to redress investor grievances.

Issue of NOC for release of 1 per cent Security Deposit

The data relating to issue of No Objection Certificate for the release of one Security Deposit by the stock exchanges are as follows :

Table III.13 - Release of Security Deposit by the Stock Exchanges

 
Source: SEBI

Investor Grievance Redressal - Action taken against companies

During the year 1997-98, two companies, Girish Hotel, Resort and Health Farm Limited and Reliable Finstock Limited were found to have submitted forged documents to the Ahmedabad Stock Exchange (ASE) for getting their security deposits released. They were issued directions under Section 11 B of SEBI Act, 1992, accordingly to which both the companies, their promoters and their associate companies were prohibited from accessing capital market for five years with effect from March 4, 1998 and their security deposits kept with ASE, for forfeited.

Investor Associations

There are 8 investor associations registered with the SEBI. The renewal of their registration was under process. During 1997-98, the SEBI received two applications for registration. Based on scrutiny, both the applications were rejected.

The SEBI reviewed its policy relating to registration of investor associations during the year. Based on this review, the format of the application for registration was revised so as to elicit detailed information about the constitution, functioning and the financial position of the investor associations.

The SEBI has also been granting financial assistance to the registered investor associations to conduct investor education programmes. Mumbai Grahak Panchayat , a registered association had conducted a seminar on Depository Services on November 11, 1997. The SEBI has also been providing financial assistance to the registered investors associations to hold seminars.

A meeting of the representatives of Investors Associations was held in June, 1997. In the meeting, matters relating to investor associations and the steps taken by the SEBI in the interests of investors were discussed.

Co-ordination with Overseas Regulators

The SEBI is a member of the International Organisation of Securities Commissions (IOSCO), and participated in its meetings at Johannesburg in South Africa and Taipei in Taiwan. The SEBI is also a member of the Emerging Markets Committee of IOSCO. In 1996-97, the SEBI was elected to the chairmanship of the Asia Pacific Regional Committee of IOSCO and became a member of the Executive Committee of IOSCO, its highest policy making body.

The SEBI is committed to working with overseas regulators on issues related to entities which act as intermediaries or investors in different jurisdictions, and maintains close contact with them. An agenda has been set within IOSCO for achieving a given standard of disclosure norms, capital adequacy and compliance standards for different markets. The SEBI remains committed to implementation of this agenda for ensuring that the fairness, integrity and transparency of Indian securities markets remain comparable to markets abroad.

In February 1998, the SEBI hosted meetings of the Asia Pacific Regional Committee (APRC) of IOSCO and of APRC Enforcement Directors in Mumbai. This marked the first time that an IOSCO meeting was held in the country. The meetings gave a further boost to regulatory and enforcement co-operation between regulators in the region, who in several cases are addressing similar issues in the development of their securities markets. Regional co-operation has also assumed greater significance in the light of integration of international securities markets and the impact of developments in certain markets affecting other markets, largely through the actions of large international institutional investors who tend to treat emerging markets in general and Asian markets in particular as a distinct asset class, and with securities firms increasingly operating across jurisdictions.

In March 1998, the SEBI entered into a Memorandum of Understanding (MoU) with the United States Securities and Exchange Commission (SEC) regarding co-operation, consultation and the provision of technical assistance.

The MoU is a statement of the intent of the two authorities and does not create any binding international legal obligations. In the MoU, the authorities have declared their intent to provide each other assistance in obtaining information and evidence to facilitate the enforcement of their respective laws relating to securities matters.

The authorities also intend to work together to establish and implement an ongoing technical assistance program. The authorities will work together to identify and address training and technical assistance needs to facilitate the development of a regulatory framework for the offer, purchase and sale of securities in India as well as the cross border offering of securities.

The MoU signed with the US SEC is the first such MoU signed by the SEBI with another securities regulator. Several other regulatory agencies have expressed an interest in entering into similar MoUs with the SEBI.