SEBI introduces new Alternative Dispute Resolution Mechanism vide ADR Amendment Regulations 2023

On 3-7-2023, SEBI notified the Securities and Exchange Board of India (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023 to amend the following:

1. Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992,

2. Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993,

3. Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993,

4. Securities and Exchange Board of India (Mutual Funds) Regulations, 1996,

5. Securities and Exchange Board of India (Custodian) Regulations, 1996,

6. Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999,

7. Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999,

8. Securities and Exchange Board of India {KYC (Know Your Client) Registration Agency} Regulations, 2011,

9. Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012,

10. Securities and Exchange Board of India (Investment Advisers) Regulations, 2013,

11. Securities and Exchange Board of India (Research Analysts) Regulations, 2014,

12. Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014,

13. Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014,

14. Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015,

15. Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019,

16. Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020,

17. Securities and Exchange Board of India (Vault Managers) Regulations, 2021.

The provision came into force on 3-7-2023.

Key Points:

1. Dispute Resolution- The amendment in all the regulations seeks to amend the “dispute resolution mechanism” between the parties in the abovementioned regulations to “mediation, conciliation, and arbitration”, in accordance with the procedure specified by the Board.

2. Rule 14A(2) of Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993– The trust property will not bear out any loss or damage or expenses that have been incurred by the debenture trustee or the body corporate which has appointed the debenture trustee.

3. Rule 25, First Proviso of Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012– Again, the trust property will not bear any loss or damage or expenses, incurred by the Manager or officers of the Manager if the Alternative Investment Fund has been established as a trust.

4. Rule 22A(2) of Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014– The trust property will not be used to meet any loss or damage, or expenses incurred by the investment manager or officers of the investment manager.

5. Rule 22A(2) of Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014– The trust property would not be used to settle any loss or damage or expenses incurred by the investment manager or officers of the investment manager, including those in relation to the resolution of claims or disputes of investors.