Noting the difficulties faced by transferees of physical shares to provide all the required documents as per disclosure regulations, the Securities and Exchange Board of India (SEBI) has decided to simplify the norms to make the transition smoother for these security holders.
In June this year, SEBI made it compulsory to hold shares in demat format only and the conversion should be completed by 5 December 2018.
In a circular this week, the SEBI issued regulations to standardize the process. It was noted that the RTAs (share issue and transfer agents) had varying document requirements from the transferors.
"It has been brought to the notice of SEBI that RTAs are seeking various documents for effecting the transfer of securities and the documents sought vary across RTAs. SEBI has also received representations, highlighting difficulties faced by transferees in providing these documents. In this regard, SEBI had meetings with Registrars Association of India (RAIN) and Depositories in this regard and pursuant to such meetings, RAIN has submitted a standardised procedure for transfer of securities in physical mode," the circular said.
Following are the possible cases of complications in the conversion and standardised solutions as prescribed in the circular:
Non-availability of share holder's PAN for deed transfer prior to 1 December 2015
Transfer of deeds executed prior to the notification of LODR (on 1 December 2015), can now be registered with or without PAN of the transferor, as per the requirements of quoting PAN under the applicable Income Tax Rules.
Mismatch of names
If the name on the PAN does not match the one on the share certificate/transfer deed, the transfer will be registered on submission of any of the four additional documents explaining the difference in names:
- Copy of passport
- Copy of a legally recognised marriage certificate
- Copy of gazette notification regarding the name change
- Copy of Aadhaar card
Major mismatch or non-availability of transferor's signature
The transferor will be required to update his/her signature by submitting bank attested signature along with an affidavit and cancelled cheque to the RTA/company.
SEBI also noticed that there were instances where the transferor did not make efforts to update the signature as he/she had already received the consideration for the transfer and many of these transferors could not be traced.
The issuers or RTAs were required to make efforts to contact the transferor by tracing any address, phone number or email ID available with the depositories/KRA or checking the dividend history to obtain current contact details from the bank where the last dividend was encashed.
You can read the complete circular here.