SEBI

Role & Procedures of RTA Registration

Shares and stock exchange plays a crucial role in the world of economy. There are millions of people who deal in share market either by buying, selling or switching of share units. It is essential to maintain the records of these transactions to help financial institutions and banks to keep track of the investment and to design policies to improve or maximize the investments with minimum possible risk. RTA are the authorized bodies responsible for keeping the financial equilibrium by maintaining accurate records of transactions made by investors. Apart from significant finance companies who appoint themselves as transfer agents for their companies, third party registrar and share transfer agent can also be appointed as record maintaining services.

What is Registrar and Share Transfer Agent (RTA)?

Registrar and share transfer agent (RTA) are the authorized institutions or trusts are instituted to maintain accurate records as well as for investors transfer of shares providing detailed information to the mutual fund houses or banks facilitating or providing convenience to them. The Security And Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 defines Registrar and Share Transfer Agent.

Registrar

Registrar is appointed by a body corporate, a person or group of persons to carry on the following activities on their behalf:

• Collecting the applications from investors in respect of any issue.
• Keeping a proper record of the applications and monies from investors or paid to the seller of the securities.
• Assisting the body corporate in:
  • To determine the basis of allotment of securities in consultation with the stock exchange.
  • Finalising the list of persons entitled to the allotment.
  • Processing and dispatching the allotment letters, refund orders or certificates and other related documents in respect of an issue.

Share transfer agent

A share transfer agent is appointed on behalf of the body corporate who maintains records of holders of securities issued by such authority and deals with the process of transfer and redemption of securities.

There are specific roles to be performed by a share transfer agent. These activities are:

• Endorsement of certificates for allotment or call monies.
• Transmission, consolidation or sub-division of securities.
• Dispatch of transferred securities and securities received for transmission, consolidation, sub-division, etc., directly to the investors.
• Cancelling the name and certificate of the shareholder who had sold the shares and securities, and to replace it with a new shareholder.

What are the Services Offered by RTA?

The basic services provided by the Registrar and share transfer agent includes :

• Processing of both financial and non-financial transactions.
• Buying or selling records as well as managing changes in the investor’s data.

The primary services of Registrar and Share Transfer Agent are:

• Dematerialisation of the Securities through NSDL or CDSL depositories.
• Maintaining a record of investors and the transfer of securities.
• Transfer of share certificate.
•  regulating the reporting services.
• Provide new information to investors about new fund offers.
• Payout of Dividend/Interest and ECS transfer.
• Re-validation of Dividend.

What are the Procedures for Registration of Registrar and Share Transfer Agent?

The procedure for applying for registration are as follows:

1. An applicant can apply using Form A; accompanied by the depositing of non-refundable fees of Rs. 2 lakhs for Category 1 and Rs. 6 lakhs for Category 2.
2. The applicant has to appear before the board with any additional documents if required after the application reaches the board.
3. If the board is not satisfied with the application, it reserves all the right to reject the application.
4. However, the board provides a specified time for the applicant to overcome the shortcomings in the application.
5. The boards also cross-check all the checkboxes related to the activities matter, before granting the registration certificate. Those activities are as follows:
6. The applicant’s office infrastructure must be sound, spacious and well equipped. It should also have adequate manpower to carry out the assigned activities.
7. The applicant’s previous experience in the matter of related activities is also put into consideration.
8. The Board also investigates any relation or link whether direct or indirect with any past applicant whose application was denied before.
9. The applicant must have the capital adequacy of Rs. 25 lakhs of net worth in Category 2 and net worth of Rs.50 lakhs in case of Category 1.
10. The applicant must pass all the criteria mentioned in Schedule 11 of the regulations implying the standards for a person for being fit and proper.
11. If the board gets satisfied with the application, then it intimates the applicant mentioning the category as to why he got cleared.
12. The board approves the registration certificate in Form B.
13. The certificate is valid till the date it gets suspended or rejected, which means it is open for inspection any time.

What is the Registration Fees for RTA?

• A RTA for category I- Rs. Six lakhs.
• A RTA for category II- Rs. Two lakhs.
• A RTA who has been granted a certificate of registration, to keep its registration in force, shall pay registration fees, every three years from the sixth year, from the date of granting the certificate of registration or the date of grant of certificate of initial registration granted.
• The registration fee to be paid by the registrar and share transfer agent within fifteen days from the date of receipt of information from the Board.

Measure to taken in case on non-grant of Certificate

As per Regulation 3 of Security And Exchange Board of India^[1] (Registrars to an Issue and Share Transfer Agents) Regulations, 1993, the board has the right to:

• Reject the application for a certificate of registration if they find it not satisfactory to the standards prescribed by Regulation 6.

• Rejection, as prescribed in Regulation 6, can only occur after it provides an opportunity to the applicant to be heard.
• The rejection of the registration application must be communicated within 30 days from the date of rejection by the board. It must also enumerate the grounds of rejection of the application.
• The applicant can apply for reconsideration of application to the board within a span of 30 days from the date of being intimated about the rejection.
• The board may then reconsider and send the findings in writing to the applicant.

Records to be maintained by Registrar and Share Transfer Agent

Along with the books, records and documents stipulated in regulation 14(1), 14(2) and 14(3), the following records and documents must be maintained by the Registrar and share transfer agent in hard copy / magnetic media.

Records and Documents to be maintained by Registrar to an Issue

1. Original agreement with the Issuer for handling the issue, a print copy of the Prospectus or offer document.
2.  Reconciliation of applications received with bank certificate, showing the number of applications, the number of shares applied, amount paid, particulars of payment along with bank certificates. 
3. Full particulars of all applications received or deposited.
4. Details of all stock invest received or deposited and particulars of encashment.
5. Full details of dispatch of allotment advice, shares, debenture certificates, letters of allotment refund orders, duplicate refund orders and revalidated refund orders.
6. Records of all the pre-printed issue stationery like allotment advice, share or debenture certificates, refund orders, letters of allotment,  etc., showing details of such stationery received from Issuer, consumed for printing, wastage, destroyed, and handed over to Issuer Company.
7. Copies of the basis of allotment approved by the Stock Exchange.
8. Record of returned mail showing details of securities, contents of the letter, refund orders, warrants dispatched, date of dispatch, and date of return and reasons for being returned.
9. Complaints register containing information of the date of receipt of the complaint, particulars of the complainant, nature of the complaint which are categorized as Types I, II, III, IV as per SEBI guidelines, the date of disposal and how to dispose of it . Complaints received from SEBI shall be recorded in the complaint register in addition to complaints received directly.

Records and documents to be maintained by Share Transfer Agent.

1. Records of allotment made containing proper details received from the Registrar to the Issue or body corporate, details of the securities subject to lock-in-period in respect of each body corporate.
2. Maintaining a record of securities for endorsement, transfer, splitting, consolidation, transmission, etc.
3. Movement register containing the date and details of records sent out of the office of the share transfer agent to body corporate or any other person for any reason whatsoever and time of receiving back by the share transfer agent
4.  Board Resolution approving the transfers attached with the transfer register containing all particulars of both the parties,
5. Details of dispatch of transferred certificates, certificates received for endorsement, splitting, consolidation, transmission, etc.
6. Member register and transfer register in hard copy and magnetic media.
7.  Specimen signature cards and transfer deeds
8. Records of returned mail showing details of contents of the letter, details of securities or refund orders, warrants dispatched, date of dispatch, date of return and reasons for being returned.
9. Complaints register to contain details of the date of receipt of the complaint, particulars of the complainant, nature of complaint categorized as Types I, II, III, IV as per SEBI practice.

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Conclusion

The mutual fund process the transactions of the investors while the registrar and share transfer agent manage all the data generated from the transaction. The RTA act as a third-party service provider on behalf of a fund house. These Registrar and Share Transfer Agent are available across distinct locations to assist their investors in their day to day transactions. Enterslice can serve as one-stop for the investors in terms of offering them detailed information about different investment schemes.