NISM Series VI Study Notes: Chapter XIII – Additional Services: Basic Services Demat Account (BSDA) and Complaints Redressal (SCORES)

1. Basic Services Demat Account (BSDA)

To achieve wider financial inclusion, encourage the holding of dematerialised accounts, and reduce the overall cost of maintaining securities for retail individual investors, Depository Participants (DPs) are required to offer a specialized account called the Basic Services Demat Account (BSDA).

Core Services Offered under BSDA

A BSDA provides a limited range of essential depository services to eligible retail investors. According to depository guidelines, the primary services offered under a BSDA include:

• Transaction Statements: Periodic statements detailing all debits and credits in the demat account.
• Holding Statement: Statements showing the current valuation and quantity of securities held.
• Charged Physical Statements: Physical statements provided to the client, subject to specified charges.
• SMS Alert Facility: Real-time mobile alerts sent to the investor for transactions and updates.
• Delivery Instruction Slip (DIS): Provision of physical or electronic slips to initiate transfers.

(Note: The provided source material does not specify the asset valuation thresholds or specific tariff structures for categorising an account as a BSDA. To maintain absolute factual accuracy, these outside regulatory limits have been omitted.)

2. Redressal of Complaints through SCORES

The SEBI Complaints Redress System (SCORES) is a web-based, centralised platform developed by SEBI to facilitate the speedy and efficient resolution of investor grievances.

Key Features of SCORES

• Availability: The platform is available to investors 24x7.
• Launch Date: SCORES was formally introduced on June 8, 2011.
• Electronic Logging: SEBI strongly encourages investors to lodge their complaints electronically.
• Physical Complaints: If an investor submits a physical complaint, SEBI digitises the paperwork and uploads it onto the SCORES platform.
• Mandatory Electronic Tracking: Once a complaint is registered, all subsequent communication, progress tracking, and follow-up actions must be executed solely in electronic form through SCORES.
• Accessibility: Investors can easily access, retrieve, and preserve the digital history of all complaints they have lodged on the system.

The Two-Step Grievance Protocol

1. First Instance (Direct Redressal): Market inputs indicate that investor grievances are resolved much faster when taken up directly with the concerned entity. Therefore, investors should approach the listed company or registered intermediary first with all relevant details.
2. Escalation to SCORES: If the listed company or registered intermediary fails to redress the complaint to the investor's satisfaction, the investor may then escalate the matter by filing a formal complaint on the SCORES platform.

3. Transfer of Shares to the IEPF Authority

Under Indian corporate law, companies must handle unclaimed assets systematically to protect investor interests and prevent fraud.

The Legal Mandate (Section 124(6))

In accordance with Section 124(6) of the Companies Act, 2013 and the rules notified thereunder:

• The Seven-Year Rule: Shares in respect of which dividends have not been paid or claimed for a period of seven consecutive years or more must be transferred by the issuer company to the Investor Education and Protection Fund (IEPF) Authority.
• Corporate Action execution: This transfer is mandatory for all eligible shares, regardless of whether they are held in dematerialised form or physical form. The company executes this transfer directly into the demat account of the IEPF Authority by way of a corporate action.

Reporting Exemptions & Disclosures (Form IEPF-3)

• If certain eligible shares are not transferred to the IEPF due to legal restrictions, the company is required to file Form No. IEPF-3 (a statement of shares not transferred to the IEPF).
• Required Attachments: The company must attach the official copy of the active order from the court, tribunal, or statutory authority that prohibits the transfer, explicitly indicating the date of the order.

4. Key Takeaways & Exam-Focused Points

• Financial Inclusion Goal: The primary objective of the BSDA facility is to lower the cost barrier of holding demat assets for retail individual investors.
• SCORES Launch: SCORES was launched on June 8, 2011, to speed up investor grievance redressal.
• Direct Approach Rule: Investors are advised to try resolving complaints directly with the listed company or intermediary before lodging a complaint on SCORES.
• The 7-Year Claim Limit: Unclaimed dividends for 7 consecutive years or more trigger the mandatory transfer of the underlying shares to the IEPF Authority.
• Form IEPF-3: Used by companies to declare shares not transferred to the IEPF, which requires attaching the relevant court/tribunal/statutory order.

5. Important Terms Glossary

• BSDA: Basic Services Demat Account; a limited-service, cost-effective demat account designed for retail individual investors.
• SCORES: SEBI Complaints Redress System; a centralized, web-based 24x7 platform for managing investor grievances against listed companies and market intermediaries.
• IEPF: Investor Education and Protection Fund; a statutory authority set up to safeguard unclaimed dividends and shares.
• Form IEPF-3: The official statutory form submitted by companies to list shares that were not transferred to the IEPF due to court or tribunal orders.

6. Practical Real-World Examples

Example 1: Resolving a Grievance via SCORES

• Scenario: Rajesh faces an issue where his DP has charged him AMC fees despite his account qualifying for BSDA terms.
• Process: Rajesh should first contact his DP's customer grievance department directly to resolve the issue. If the DP fails to resolve the matter to his satisfaction, Rajesh can log onto the SCORES website (available 24x7) and file an electronic complaint against the DP. The entire resolution tracking and communication will occur digitally through SCORES.

Example 2: Mandatory Share Transfer to the IEPF

• Scenario: Meena purchased physical shares of ABC Ltd. in 2015 but forgot to update her address. Consequently, she has not claimed or received any dividends declared by the company from 2019 to 2026 (seven consecutive years).
• Process: Under Section 124(6) of the Companies Act, ABC Ltd. is legally required to transfer Meena's shares to the demat account of the IEPF Authority. ABC Ltd. executes this transfer electronically as a corporate action. If there is a court case actively disputing the ownership of these shares, ABC Ltd. will retain the shares and file Form IEPF-3, attaching the court's order.