NON-SUBMISSION OF DETAILS FOR SCORES AUTHENTICATION, FAILURE TO REDRESS PENDING INVESTOR GRIEVANCES?

SEBI had issued show cause notices to about 20 listed companies on 02.02.2016 for non-submission of details for SCORES authentication (required under SEBI Circular dated 03.06.2011) alleging that Noticee had failed to redress pending investor grievances which renders the Noticee liable for imposition of penalty under Section 15C of the Securities and Exchange Board of India Act, 1992.

Section 15C reads as under:

“Penalty for failure to redress investors’ grievances: 

If any listed company or any person who is registered as an intermediary, after having been called upon by the Board in writing, to redress the grievances of investors, fails to redress such grievances within the time specified by the Board, such company or intermediary shall be liable to a penalty of one lakh rupee for each day during which such failure continues or one crore rupees, whichever is less.”

However the Adjudicating officer observed that the requirement under Section 15C that “…..after having been called upon by the Board in writing….” remains unfulfilled.

Hence the adjudicating proceedings were disposed by the AO.

However it is pertinent to note that Hon’ble Securities Appellate Tribunal in the matter of Port Shipping Company Ltd. vs. SEBI decided on 29.04.2015 observed as follows: 

“…where a listed company fails to obtain SCORES authentication within the time stipulated by SEBI, then it amounts to violating the directions of SEBI and in such a case penalty is imposable under section 15HB of SEBI Act…”