Sebi sets rules for transfer of securities in physical mode

The regulator has noted that registrars to an issue and share transfer agents (RTAs) are seeking various documents for effecting the transfer of securities

Markets regulator Sebi on Tuesday put in place a standard framework for transfer of securities in physical mode, in a bid to address the difficulties faced by investors in transmission of such shares.

The regulator has noted that registrars to an issue and share transfer agents (RTAs) are seeking various documents for effecting transfer of securities and the documents sought vary across such RTAs.

Besides, the Sebi has also received representations, highlighting difficulties faced by transferees in providing these documents. In this regard, the regulator had meetings with Registrars Association of India (RAIN) and depositories and pursuant to such meetings, RAIN submitted a standardised procedure for the transfer of securities in physical mode.

The regulator has allowed transfer deeds executed prior to December 1, 2015 to be registered with or without the PAN of the transferor after it noticed that many transfer deeds executed prior to December 1, 2015 have not been registered due to non-availability of PAN of the transferor.

In the case of mismatch of name in PAN card vis-a-vis name on share certificate or transfer deed, Sebi said transfer will be registered on submission of any of these four documents-- passport, marriage certificate, Aadhar card and copy of gazette notification regarding change in name -- explaining the difference in names.

With respect to non-availability or major mismatch in transferor's signature, Sebi said that the transferor is required to update his signature by submitting bank attested signature along with an affidavit and cancelled cheque to the RTA/company.

As per the regulator, 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.

In case of non-delivery of the objection memo to the transferor or non-cooperation to provide the required details to the transferee, Sebi said that RTA needs to register the transfer after collecting documents like a bond from the transferee; copy of address proof -- passport or aadhaar card or driving license; and an undertaking that the transferee will not transfer the physical securities until the lock-in period is completed.

RTA needs to verify the documents submitted by the transferee with the KYC details, if any, available with the depositories.

Besides, RTAs or conerned companies need to publish an advertisement giving notice of the proposed transfer and seeking objection, if any, to the same within 30 days and the transfer will be effected only after the expiry of 30 days from the advertisement.

"The securities 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 / dematerialised during the said period," Sebi noted.

According to Sebi, names of the transferor, transferee and number of securities transferred under this procedure need to be disclosed on the company's website for six months from the date of transfer. This information need to be displayed on stock exchange website as a corporate announcement.