Sebi suspends registration of RTA for three months over operational lapses

Findings against Satellite Corporate Services "shocking and disturbing", says Sebi order

The Securities and Exchange Board of India (Sebi) on Friday suspended the registration of Satellite Corporate Services (SCS), a registrar and transfer agent (RTA), for three months for alleged lapses in operations.

An RTA is a Sebi-registered intermediary tasked with the responsibility of recording-keeping of all the transactions. SCS acted as an RTA mainly for SME IPOs.

An inspection done by Sebi found several failures at the RTA. SCS had less than 50 per cent of the specimen signatures with respect to client companies available with it. Also, SCS allowed transfer of shares without making any attempts to verify the genuineness of those transfer requests or without even sending seller notices to the transferors.

“The findings of the enquiry report are indeed shocking and disturbing and show that the noticee (SCS) did not carry out its fiduciary responsibility to its clients. SCS has simply not been diligent enough and happily cut corners,” said Sebi, whole time member, Ashwani Bhatia in an order.

SCS’s certificate of registration will be restored after three months only if the auditor is able to satisfy that the RTA has systems and procedures in place in compliance with Sebi's regulations.

Further, the markets regulator directed the clients to inform Sebi whether they want to continue with the company’s RTA activities following an independent due diligence.