Company Share Transfer

Common and Simplified norms for Processing Investor’s Service Requests by RTAs

Capital markets regulator Sebi released standard and simplified norms for processing investors’ service requests by the registrar and share transfer agents (RTAs) to enhance the ease of doing business. The regulator has also released guidelines for providing PAN, KYC (Know Your Customer) information, and nomination by holders of physical securities.

This came about as a result of investor complaints to Sebi regarding challenges being faced by them with regard to certain procedural features of the regulations and varying interpretations with regard to the documentation required for processing an investor service request.

Based on the investor comments and discussions with the Registrars Association of India (RAIN^[1]), the norms and procedural requirements for processing service requests of investors are outlined in the circular.

Holders of the Company’s physical securities are compelled to provide the following information to the Company’s RTA as mandated by the market regulator:

• Permanent Account Number (PAN)
• Know Your Customer (KYC) details
• Nomination
• Contact information 
• Bank account information
• Sample Signature for their associated folio numbers.

Who is Registrar and Transfer Agent?

Registrar and Transfer Agents assist mutual fund companies in maintaining their records. RTAs provide investors with a single-window resource for all information pertaining to their mutual fund investments. They are registered with the Securities and Exchange Board of India as private businesses (SEBI).

For businesses that have issued shares to the public, Registrar and Transfer Agents (RTAs) are SEBI-registered organisations that offer services related to share registering management and share transfer activities. The following are the RTAs’ functions:

• Gathering of investor applications regarding any issue.
• Keeping accurate records of all applications and payments made by investors or made to securities sellers.
• Provide assistance to the corporate body:

1. To decide, in consultation with the stock exchange, the basis for the allocation of securities.
2. Completing the list of individuals eligible for the allotment.
3. Processing and dispatching out allocation letters, refund orders or certificates, and other pertinent papers regarding an issue.

Key points of the new notification

1. Freezing of Folios without PAN, KYC details and Nomination.

The RTA shall freeze the folios containing any of the referenced documents or facts stated in the notification if they become unavailable on or after October 1, 2023. The security holders whose folios have been frozen are qualified for the following:

• You can only file a complaint or request a service from the RTA once you’ve provided all of the information required in this circular.

• Starting on April 1, 2024, all payments, including dividends, interest, and redemption payments for these frozen folios, must be made electronically. The Listed Company must notify the security holder that the payment is required and must be made electronically only after meeting the conditions outlined in the circular.

• Suppose frozen folios are still frozen as of December 31, 2025. In that case, the RTA or listed business must send them to the administrative body designated by the Benami Transactions (Prohibitions) Act, 1988 or the Prevention of Money Laundering Act, 2002.

2. Attestation of documents 

Self-attested copies of all the documents will be accepted by the Registrar and Transfer Agents for processing of service requests unless otherwise prescribed in the Indian Companies Act, 2013 or the norms issued thereunder or in Securities and Exchange Board of India Regulations or Circulars issued thereunder.

3. Common, standardised procedures for handling investor service requests

In Annexure-C, information is provided regarding simplified and standard norms as well as operational guidelines for processing various service requests, such as mismatches in signature and name, name changes, updating bank information and contact information, and mismatches in signature and name.

4. Documents 

For requesting different investor services, Investors who hold securities in physical form interact with RTAs, among other things, to register/update their KYC information and process service requests. The necessary forms and service requests are provided in Annexure D.

5. KYC details across all folios of the holder, maintained by the RTA

• Upon receiving specific authorisation for the update from the holder as specified in Form ISR-1, RTAs must update the PAN and KYC details across all of the folios of the holder handled by them. Information that is already available with the RTA is to be overwritten.

• Suppose the holder or claimant submits the Client Master List (CML) along with a duly completed and signed Form ISR-1. In that case, RTA will update the holder’s folio(s) with the information on the current address, bank information, e-mail address, and mobile number from the details available in the CML.

6. Timelines for PAN registration, KYC updates, and nomination changes

Registrar and Transfer Agents are required to handle any of the aforementioned requests from the holder within the time frames outlined in the circular titled “Publishing Investor Charter and Disclosure of Complaints by Registrar and Share Transfer Agents (RTAs) on their Websites” dated November 26, 2021, or as may be otherwise mandated by the Board as updated from time to time.

According to Rule 19 (10) of the Companies (Share Capital and Debenture) Regulation, 2014, as amended from time to time, the cancellation or modification of a nomination shall be effective as of the day the duly completed and signed notice is received by the company/RTA.

7. Display of contact details of Registrar and Transfer Agents 

On their respective websites, Registrar and Transfer Agents must list all of their contact information, including their postal address, phone number, e-mail address, etc. The same information must be available on the websites of listed firms and the stock exchanges where they are listed. RTA will make arrangements to update the information as soon as a change occurs.

8. Electronic interface for processing queries and complaints

As part of the new circular, the regulator established an electronic interface for processing queries and complaints to ease the process of queries from the comfort of their place. The requirements are as follows: 

• The RTA is required to process enquiries and complaints received by e-mail in addition to replying to hard copy submissions, provided the e-mail comes from the security holder’s already registered e-mail address.

• To substantiate his or her query or complaint, the security holder may annex scanned copies of papers that have been self-attested.

• In addition, the RTA offers an online portal. The security holder may submit his or her query or complaint using this portal by using the proper login and password information. In support of his or her query or complaint, the security holder may submit scanned copies of self-attested copies.

• In order to faster the processing of queries and complaints about the security holder, the RTA must also communicate with the holder or claimant electronically or online.

9. Investors must provide Form ISR-1 to update their PAN and other KYC information

• The investor must provide the original cancelled check and the banker’s attestation of the signature in accordance with Form ISR-2 in the event that the holder’s signature does not match.
• Investors must continue to submit their declaration of nomination and change in nomination using forms SH-13 and SH-14, respectively. However, Form ISR-3 must be submitted if an investor wants to reject the nomination.
• Investors are urged to make sure to update the information before April 1, 2023, since folios for which the information is not available after that date will be frozen.

10. Intimation to security holders

On their separate websites, listed firms, Registrar and Transfer Agents, and stock exchanges must publish the conditions that physical security holders of all listed companies must follow. Every year, within six months of the end of the fiscal year, listed firms must directly advise their security holders of any folios that lack the information required by paragraph 4 of the circular. However, for the Financial Year 2022–2023, the notification must be given by the listed firms by May 31, 2023, at the latest.

• Within 30 days of the date, this circular goes into effect, RTAs must provide a certificate of compliance from a practising company secretary attesting to the changes made, systems put in place, new operating processes implemented, etc., to comply with the provisions of the circular.

• By May 31, 2023, listed companies and Registrar and Transfer Agents are required to report to SEBI on the steps they took to inform the holders of their securities about the requirement to provide PAN, KYC, and nomination information as described in paragraph 4 of the circular.

Applicability

This new circular shall come into force with effect from April 01, 2023, in supersession of the following circulars issued by SEBI dated November 3, 2021, and December 14, 2021. Listed firms, RTAs, and stock exchanges are recommended to adhere to the requirements outlined in this circular:

• Make the necessary changes to the applicable bye-laws, rules and regulations, and operational instructions, as applicable, for the implementation of this new circular.
• Bring the provisions of the new circular to the attention of their constituents and also make them available on the website.
• Communicate with stakeholders and raise awareness on the same.

Conclusion

In order to protect the investor’s interests in securities, encourage the growth of the securities market, and regulate the securities market, this circular is being issued under the authority granted by Section 11(1) of the Securities and Exchange Board of India Act (SEBI), 1992. The market regulator SEBI stated that this circular with a new framework would come into force from April 1, 2023.

Also Read:
All You Need to Know About Registrar and Transfer Agents
Registrar and Transfer Agent (RTA) Registration – A Liaison between Company and Securities Holders