SEBI Issues Circular on Procedural Requirement to Process Investors Service Requests by RTA

SEBI Issues Circular on Procedural Requirement to Process Investors Service Requests by RTA

The Securities Market Exchange of India (SEBI) has issued circular on simplified procedural requirements for processing investors' service requests by registrar and share transfer agents (RTAs) to push ease of doing business.

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

This development came after the securities market regulator 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 11 April, the Securities and Exchange Board of India (SEBI) as per its circular.

As per SEBI, it is 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 1 October would be frozen by the RTA.

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 Circular reads, “the security holder(s) whose folio(s) have been frozen shall be eligible r any payment including dividend, interest or redemption payment in respect of such frozen folios, only through electronic mode with effect from April 01, 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 stated in this Circular.”

The security holder/claimant may provide the documents/details to the RTAs for various service requests by way of ‘In Person Verification’ (IPV) or Post or electronic mode with e-sign; unless otherwise prescribed in the Companies Act, 2013 or the Rules issued thereunder or in SEBI Regulations or Circulars issued.

According to the Circular, while processing service requests and related complaints, the RTAs shall raise all objections, if any, in one instance only. The additional information may be sought only in case of any deficiency / discrepancy in the documents / details furnished by the security holder.

Moreover, the Circular stated that listed companies, RTAs and Stock Exchanges shall disseminate the requirements to be complied with by holders of physical securities of all listed companies on their respective websites. Listed companies shall 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 shall be sent by the listed companies on or before May 31, 2023.