SEBI comes out with simplified procedural requirements to process investors' service requests by RTAs

The Securities and Exchange Board of India (SEBI) – a capital markets regulator – on Friday came out with simplified procedural requirements for processing investors' service requests by the registrar and share transfer agents (RTAs) to push ease of doing business.

In addition, the regulator has issued framework for furnishing PAN, KYC (Know Your Client) details and nomination by holders of physical securities.

This came after SEBI received representations from investors regarding difficulties being faced by them with regard to certain procedural aspects of guidelines and varied interpretations pertaining to the documentation required for processing investor service requests.

The new framework would come into force from April 1, the market regulator said in a circular.

The regulator has made it mandatory for all holders of physical securities in listed companies to furnish PAN, nomination, contact details, bank account details and specimen signature for their corresponding folio numbers.

The folios or investor accounts wherein any one of such documents are not available by October 1 would be frozen by the RTA.

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The security holder, whose folio has been frozen, can lodge grievances or avail any service request from the RTA only after furnishing the complete documents.

"The security holder(s) whose folio(s) have been frozen shall be eligible for any payment, including dividend, interest or redemption payment in respect of such frozen folios, only through electronic mode with effect from April 1, 2024. An intimation shall be sent by the listed company to the security holder that such payment is due and shall be made electronically only upon complying with the requirements," Sebi said.

The investor may provide the documents to the RTAs for various service requests by way of in-person verification or electronic mode with e-sign.

Sebi said that self-attested copies of documents will be accepted by the RTA for processing of service requests and for any service request except transmission and request for issuance for duplicate security certificates, indemnity would not be required.

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RTAs have been asked to update the PAN as well as KYC details across all the folios of the holder managed by it and details, which are already available with the RTA are to be overwritten, upon specific authorisation for the same from the holder, in a specified form.

Listed companies, RTAs and stock exchanges will have to disseminate the requirements to be complied with by holders of physical securities of all listed companies on their respective websites.

Further, listed companies will also directly intimate its security holders about folios, which are incomplete with regard to details required on an annual basis within 6 months from the end of the financial year. However, for the financial year 2022-23, intimation would be sent by May 31, 2023.

While processing service requests and related complaints, the RTAs will have to raise all objections in one instance only. The additional information may be sought only in case of any discrepancy in the documents furnished by the security holder.

In addition to responding to queries and complaints through hard copies, the RTA would also process the same received through e-mails.

RTAs will have to provide their complete contact details -- postal address, phone numbers and e-mail address on their respective websites. The same will also be provided on the websites of the listed companies and the stock exchanges on which such company is listed. RTA shall arrange to update the same as and when there is a change.

With PTI Inputs