SEBI modifies norms for transferring securities in physical mode; does away with difficulties faced during transfer of physical share/s

SEBI modifies norms for transferring securities in physical mode; does away with difficulties faced during transfer of physical share/s

November 9, 2018 CORP, Industries, states 0

The Securities and Exchange Board of India (“SEBI”) has in  a Circular dated November 6, 2018, issued the modified standardised norms for transfer of securities in physical mode.

Background

The requirements for transfer of securities in physical mode had been specified under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”).

However, there was a variance in the documents being sought by Registration and Transfer Agents (“RTAs”) for transfer of securities and several representations about the difficulties faced in procurement of documents were also made to SEBI.

In the light of difficulties faced by investors in transfer of physical shares, modifications to standardized procedure, in consultation with Registrars Association of India (RAIN), has been issued.

Ø  Transfer deeds executed prior to December 01, 2015 may be registered with or without the PAN of the transferor.

Ø  In case of a mismatch of name in PAN card and name on share certificate/ transfer, transfer will be registered on submission of any of the following additional documents explaining the difference in names-

  •         Copy of Passport
  •         Copy of legally recognized Marriage Certificate
  •         Copy of gazette notification regarding change in name
  •         Copy of Aadhar Card

Ø  In case of non-availability / major mismatch in transferor’s signature the transferor must update his / her signature by submitting bank attested signature along with an affidavit and cancelled cheque to the RTA/company.

To ensure that the transferor does not avoid updating his signature the following comprehensive procedure / documentation must be followed –

  1. For major difference or non-availability of signature of the transferors RTAs must follow the procedure as laid down in Schedule VII of LODR.
  2. Efforts to contact the transferor must be made:

a) by checking the Dividend history and obtaining the current contact details from the bank where dividend was encashed.

b) from the address, email ids and phone numbers, if any, available with the Depositories / KYC Registration Agency (“KRA”)

3.   In case of non- delivery of the objection memo to the transferor or non-cooperation by / inability of the transferor to provide the required details to the transferee, company / RTA can register the transfer after following the procedure stated below:

a)Collecting following additional documents from the transferee:

  • An indemnity bond from the transferee in Annexure A
  • Copy of address proof – Passport / Aadhar Card /Driving License of the transferee
  • An undertaking that the transferee will not transfer/demat the physical securities until the lock-in period is completed.

b)Verifying the documents submitted by the transferee with the KYC details available with the Depositories/ KRAs.

c)Companies / RTAs must publish an advertisement in at least one English language national daily newspaper having nationwide circulation and in one regional language daily newspaper published in the place where the registered office of the listed entity is situated, giving notice of the proposed transfer and seeking objection, if any, to the same within a period of 30 days from the date of advertisement. A copy of the advertisement must also be published on the company’s website.

d)Transfer will take effect only after the expiry of 30 days from the publishing of advertisement in the newspaper. The securities transferred must bear a stamp affixed by the company / RTA stating that these securities will be under lock-in for a period of 6 months from the date of registration of transfer and cannot be transferred / dematerialized during the such period.

e)Disclosure on Company website – Names of the transferor, transferee and no. of securities transferred under this procedure must be disclosed on the company’s website for a period of 6 months from the date of transfer. The information must also be displayed on stock exchange website as a corporate announcement;

The above procedure must also be followed in case any document required for transfer is not available and the transferor is not co-operating or not traceable.

  • In case the bank attested address of the transferor differs from the records available with the company / RTA, companies/ RTAs must register the transfer by updating the new address as attested by the bank. An intimation by the RTA with for updation of address on the old and new address of the transferor may also be sent.

Source:  Securities and Exchange Board of India

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