SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) (SIXTH AMENDMENT) REGULATIONS, 2018
PAN Card Requirement
SEBI vide Circular No. MRD/DoP/Cir-05/2007, dated April 27, 2007 made PAN (Permanent Account Number) the sole identification number for all participants transacting in the securities market, irrespective of the amount of such transaction. In continuation of the aforesaid circular, SEBI vide its Circular No. MRD/DoP/Cir-05/2009 dated May 20, 2009, has clarified that the shareholders/ transferee (including joint holders) holding shares in physical form are requested to furnish a Certified Copy of their PAN Card to the Company / RTA while transacting in the securities market including transfer, transmission or any other corporate action.
Guidelines to strengthen the standards for Share Transfer Agent
The Securities and Exchange Board of India vide Circular SEBI/ HO / MIRSD / DOP1 / CIR / P / 2018 / 73 dated April 20, 2018 with the intention to strengthen the standards for Share Transfer Agent (RTA) has prescribed guidelines for procedures and processes with regard to handling, maintenance and updating of records, transfer / transmission of securities and payment of dividend.
As per the guidelines where bank account details of the shareholder is not available with RTA or there is change in bank account details, RTA shall obtain account details along with cancelled cheque to update the securities holder’s data. The original cancelled cheque shall bear the name of the securities holder failing which securities holder shall submit copy of bank passbook /statement attested by the bank.
The unpaid dividend shall be paid via electronic bank transfer. In case electronic payment instructions have failed or have been rejected by the bank, the company may ask the banker to make payment though physical instrument such as banker’s cheque or demand draft to such securities holder incorporating his bank account details.
The RTA has been bestowed with the responsibility to take special efforts to collect copy of PAN, and bank account details of all shareholders holding shares in physical form.
Shareholders who are unable to respond and provide PAN and bank details within 180 days of the circular or have informed that the securities available in their name as per the records of RTA does not belong to them, shall be subject to enhanced due diligence.
In case of residents of Sikkim, the requirement of PAN Card be substituted with a valid Identity proof issued by Government.
Accordingly all the shareholders are requested to submit a copy of the PAN card and original cancelled cheque leaf /attested bank passbook showing name of account holder at the earliest. Further it is also requested to update the contact details viz., the complete postal address, the mobile number and any alternate number, and landline and email address for effective communications with Company.
Transfer of shares only in Dematerialised Form
IMPORTANT: SECURITIES OF LISTED COMPANIES WOULD BE TRANSFERRED IN DEMATERIALISED FORM ONLY
On June 8, 2018, SEBI vide Notification No. SEBI/LAD-NRO/GN/2018/24 notified SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) (FOURTH AMENDMENT) REGULATIONS, 2018.
As per the amendment, except in case of transmission or transposition of securities, requests for effecting transfer of securities shall not be processed unless the securities are held in the dematerialized form with a depository. The Notification shall come into force on the 180th day from the date of publication in official gazette. Accordingly, of securities shall not be processed unless the securities are held in the dematerialized form with a depository with effect from December 5, 2018.
In view of the above, it is hereby clarified that:
a) The amendment does not prohibit the investor from holding the shares in physical form; investor has the option of holding shares in physical form even after December 5, 2018.
b) The amendment is not applicable for transmission (i.e. transfer of title of shares by way of inheritance / succession) and transposition (i.e. re-arrangement / interchanging of the order of name of shareholders) cases.
c) Any investor who is desirous of transferring shares (which are held in physical form) after December 5, 2018 can do so only after the shares are dematerialised.
SEBI vide Notification No. SEBI/LAD-NRO /GN/ 2018/49 dated November 30, 2018 notified that “Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Fourth Amendment) Regulations, 2018 in the Gazette of India on June 8, 2018 vide No. SEBI/LAD-NRO/GN/2018/24” shall come into force with effect from April 1, 2019. Accordingly, of securities shall not be processed unless the securities are held in the dematerialized form with a depository with effect from April 1, 2019.
SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) (SIXTH AMENDMENT) REGULATIONS, 2018
SEBI vide notification No. SEBI/LAD-NRO/GN/2018/47 dated November 16, 2018 notified Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Sixth Amendment) Regulations, 2018. The gist of amended Regulations pertaining to transfer, transmission or transposition of shares is as under:
“(b) where the securities are held in single name without a nominee, an affidavit from all legal heir(s) made on appropriate non judicial stamp paper, to the effect of identification and claim of legal ownership to the securities shall be required;
Provided that in case the legal heir(s)/claimant(s) is named in the succession certificate or probate of will or will or letter of administration, an affidavit from such legal heir(s) / claimant(s) alone would be sufficient.
Provided further that:
- for value of securities, threshold limit of up to rupees two lakh only, per listed entity, as on date of application, a succession certificate or probate of will or will or letter of administration or court decree, as may be applicable in terms of Indian Succession Act, 1925 may be submitted :
Provided that in the absence of such documents, the following documents may be submitted:- 1. no objection certificate from all legal heir(s) who do not object to such transmission or copy of family settlement deed duly notarized and executed by all the legal heirs of the deceased holder;
- an indemnity bond made on appropriate non judicial stamp paper, indemnifying the Share Transfer Agent / listed entity;
- for value of securities, more than rupees two lakh, per listed entity, as on date of application, a succession certificate or probate of will or will or letter of administration or court decree, as may be applicable in terms of Indian Succession Act, 1925 shall be submitted;
- the listed entity however, at its discretion, may enhance value of securities, threshold limit, of rupees two lakh.”
Transfers prior to December 01, 2015
SEBI vide CIRCULAR “SEBI/HO/MIRSD/DOS3/CIR/P/2018/139” dated November 6, 2018 specified standardised norms for transfer of securities in physical mode. The summary of the Circular is as under:
a) Non-availability of PAN of the transferor for transfer deeds executed prior to December 01, 2015:
It has been brought to the notice of SEBI that many transfer deeds executed prior to the notification of LODR, (i.e., December 01, 2015) have not been registered due to non-availability of PAN of the transferor. It is clarified that transfer deeds executed prior to notification of LODR may be registered with or without the PAN of the transferor as per the requirement of quoting PAN under the applicable Income Tax Rules.
b) Mismatch of name in PAN card vis-à-vis name on share certificate/ transfer deed: In such cases, transfer shall be registered on submission of any of the four following additional documents explaining the difference in names:
i. Copy of Passport
ii. Copy of legally recognized Marriage Certificate
iii. Copy of gazette notification regarding change in name
iv. Copy of Aadhar Card
c) Major mismatch / Non-availability of transferor’s signature:
As per procedure laid down in LODR, in case of non-availability / major mismatch in transferor’s signature the transferor is required to update his / her signature by submitting bank attested signature along with an affidavit and cancelled cheque to the RTA/company. Multiple instances have been brought to the notice in such cases, where the transferor did not take efforts to update his signature since he had already received the consideration for the transfer. Further, in many cases, the transferors could not be traced now.
Accordingly, following procedure / documentation shall be followed for registration of transfer of securities, in such cases:
(i) RTA/ company shall follow the procedure as laid down in Para (B)(2) of Schedule VII of LODR for major difference or non-availability of signature of the transferor(s).
Para (B)(2) of Schedule VII of LODR
(2) In case of major differences in, or non-availability of, the signature of the transferor(s), the listed entity shall follow the following procedure for registering transfer of securities:
(a) The listed entity shall promptly send to the transferee(s), via Speed Post, an Objection Memo along with the documents in original marking the reason as “material signature difference/ non-availability of signature” and an advice to ensure submission of requested documents of the transferor(s);
(b) The listed entity shall also send a copy of the Objection memo as per clause (a) of sub-para (2) to the transferor(s), via Speed Post, simultaneously;
(c) The above Objection Memo in clause (a) and (b) of sub-para (2) shall also state the requirement of additional documents of transferor(s) as follows for effecting the transfer:
(i) an Affidavit to update transferor(s) signature in its records;
(ii) an original unsigned cancelled cheque and banker’s attestation of the transferor(s) signature and address);
(iii) contact details of the transferor(s) and ;
(d) If the intimation to both the transferor(s) and the transferee(s) are delivered, requested documents of the transferor(s) are submitted to the listed entity and the address attested by the bank tallies with the address available in the database of listed entity, the listed entity, shall transfer the securities provided the listed entity does not suspect fraud or forgery in the matter:
(ii) Issuers / RTAs shall make efforts to contact the transferor:
1) by checking the Dividend history and obtaining the current contact details from the bank where dividend was encashed.
2) from the address, email ids and phone numbers, if any, available with the Depositories/KRA
(iii) 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 shall register the transfer after following the procedure as under:
1. Following additional documents shall be collected from the transferee:
i) An indemnity bond from the transferee in the format placed at Annexure A;
ii) Copy of address proof - Passport / Aadhar Card / Driving License of the transferee.
iii) An undertaking that the transferee will not transfer/ demat the physical securities until the lock-in period specified under clause (4) below is completed.
2. RTA may also verify the documents submitted by the transferee with the KYC details, if any, available with the Depositories/ KRAs.
3. Companies / RTAs shall 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 of 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 shall also be published on the company’s website.
4. Transfer shall be effected only after the expiry of 30 days from the newspaper advertisement. The shares so transferred shall bear a stamp affixed by the company / RTA stating that these securities shall be under lock-in for a period of 6 months from the date of registration of transfer and should not be transferred / dematerialized during the said period.
5. Names of the transferor, transferee and no. of securities transferred under this procedure shall be disclosed on the company’s website for a period of 6 months from the date of transfer. This information shall also be displayed on stock exchange website as a corporate announcement;
d) In case the bank attested address of the transferor differs from the records available with the company / RTA, companies/ RTAs shall register the transfer by updating the new address as attested by the bank. Further, intimation may also be sent by the RTA with regard to updation of address on the old and new address of the transferor.