The stock market is flirting with the 14,000 mark, FIIs are pumping in over Rs 1,000 crore a day and total market capitalisation is close to Rs 26,86,986 crore. Does anybody care that Ashutosh Pathak has not received dividend on his shares? The 25-year-old Pune-based software engineer bought shares of five companies in 2004. But the dividend declared by these companies in July 2005 never reached him.
The Investor Helpline works in five steps:
|Step 1. Investor logs on to www.investorhelpline.in and files complaint. Is allotted a complaint registration number to track status.|
Step 2. Helpline scrutinises grievance and forwards it to the company concerned. Copies sent to regulators if required.
Step 3. If there is no response from the company within 30 days, Helpline lists the grievance on its website.
Step 4. After another 30 days, if there is still no action, it is presumed that the grievance is still pending and status is accordingly updated on site.
Step 5. If the grievance is not redressed within 90 days of filing, Helpline will approach the regulator for penal action against the company.
Pathak wrote to the erring companies but got no response. So he decided to try his luck by filing a complaint with Investor Helpline, an online forum set up for redressing grievances of small investors. It worked like magic. Within five days, two companies sent him the missing dividend while three others wrote back explaining the delay.
After several months of running after Maharashtra Krishna Valley Development Corporation for the redemption of debentures worth Rs 25,000, Ludhiana-based Deepak Kochchar complained to Sebi against the company. But it didn’t help. So he logged on to www.investorhelpline.in and filed his complaint. Within three days, the company dispatched the cheque to Kochchar.
Scores of small investors have similarly benefited from the Investor Helpline since it was launched in September 2006. The portal, established by the Ministry of Company Affairs (MCA) to help small investors such as Pathak and Kochchar, addresses 11 different kinds of complaints (see graphic). It can also be used to complain against a company if you have not been sent the offer letter of a rights issue. Or a notice for an annual general meeting or an annua report. From interest on fixed deposits to repayment of the principal on maturity, the Investor Helpline promises to take up cudgels on behalf of the small investor on all these issues.
Use the Investor Helpline to complain if...
|- You have not received refund order or allotment advice for shares applied for in a public issue|
- You have not received dividend declared on your shares
- You have not received shares or units after allotment, transfer or declaration of bonus
- You have not received debentures, bond certificate, interest or principal amount on redemption
- You have not got an offer for a rights issue from the company
- You have not received interest payments from collective investment schemes or plantation companies
- You have not received the annual report, notice for AGM or proxy form
- The change in your address has not been recorded
- You have not received receipt of FD and other deposits
- There is a discrepancy in your demat account
Many investors face difficulties in tracking a company that has changed its name or address. The helpline offers an exhaustive database of about 6,284 such companies. Investors can search these companies out by either their new names or old names. The portal is funded by the Investor Education and Protection Fund (IEPF). It is maintained by Midas Touch Investors’ Association that was set up in 1995 by Virendra Jain, a self-motivated investor activist. Jain used to help friends and associates in dealing with small investment-related problems. In 1997, Midas helped over two lakh Canstar unitholders recover Rs 975 crore from CanBank Mutual Fund. Sure, there are other forums for redressal of investor grievances. Both stock exchanges and Sebi have cells to look into problems faced by investors. However, complaints are not always filed online but in the physical format and through snail mail. Though Sebi does have an Internet-based system for complaints, there is no way an individual can track the status of a complaint. Says Kirit Somaiya, Lok Sabha member and director, Investor Grievances Forum (IGF): “Regulators are not focused on addressing individual problems of small investors. It is impossible for investors to approach the grievances cells of stock exchanges or the Sebi.” Last year, IGF took on real estate major DLF for not notifying its minority shareholders about the conversion of debentures into equity. After IGF complained to Sebi, the company was forced to temporarily shelve its IPO plans and make a fresh offer to minority shareholders. “The investor needs protection at every stage as even the regulators are not willing to take on the responsibility of resolving investor complaints,” says Somaiya.
To help small investors get justice, the MCA last year decided to establish a grievances redressal system that was easily accessible, transparent and effective. Jain’s proposal for setting up a portal for complaints was accepted, clearing the way for the helpline. The establishment of the Investor Helpline is a major confidence-building measure for the tiny investor. It is in this world of e-grievances where he can now log on to the website and post the details of erring companies. The whole process is as simple as shift, control and enter. All one has to do is fill in the details in the different fields and submit the complaint. The helpline then takes up the issue with the concerned company. “It is not mandatory to have an e-mail ID also,” says Jain. All complaints are given a unique registration number, which can be used to track the statusof the complaint.
However, the Investor Helpline is far from being a panacea for all the problems faced by small investors. Of the 1,264 complaints filed till December 2006, only 152 have so far been redressed, a success rate of about 12%. This may be higher, though. “Only if a company or a complainant informs us do we know that a problem has been resolved,” says Jain. In 267 cases, companies did not even respond to the notices from the helpline.
|The other redressal options:|
|- Grievances relating to trades executed on NSE can be e-mailed to ignse@nse .co.in or submitted on forms available on the website. Unresolved complaints are referred for arbitration by the NSE|
- The Office of Investor Assistance and Education is Sebi’s single window interface through which it interacts with investors
Complaints can be filed online or submitted on plain paper. If a complaint is not addressed, regulatory action is initiated
- The BSE looks into the grievances of investors against listed companies and members of the exchange.Companies are asked to
appear before a committee if they fail to respond
- RBI’s Banking Ombudsman Scheme looks into grievances regarding deposits with banks and NBFCs.The Registrar of Companies can
be approached for grievances regarding unlisted securities, nonreceipt of annual report or forfeiture of securities
There’s another problem. The helpline only handles complaints against companies, not market intermediaries. It won’t be able to help somebody who has been shortchanged by a broker or an agent. The MCA needs to expand the scope of the helpline. More importantly, it must give it more teeth. Unless a company is afraid of the watchdog’s bite, it will not care forits bark.