Registrars Call For Setting Up Of Safety Fund By Issuers

The Registrars Association of India (RAIN) has suggested a series of measures to the Bombay Stock Exchange (BSE), when they recently submitted a 10-point list of amendments to be carried out in the listing arrangement of the exchange.

One of the key features is that the issuer should now provide for a safety fund investor security and protection deposit to be deposited with the various regional stock exchanges.

The interest accrued on this fund should then be used to pay the registrar, in the event the issuer fails to pay the listing fee or the registrars dues.

In the past, the companies which failed to pay up the listing fee were delisted by the exchanges. Recently, the Securities and Exchange Board of India has put on hold delisting of companies to protect investors.

 

RAIN too holds similar view on the issue of delisting of the companies from the stock exchanges. According to RAIN sources, invariably the investors are the ones who are hit by the delisting of companies.

At the same time it becomes difficult for the registrars if the issuers fail to pay the listing fees and registrars dues.

Following are the other suggestions made by RAIN:

Imposition of certain minimum security features to be incorporated in the share certificates/debenture certificate to be issued by the corporates.

Endorsement of transfer by pre-printed/pre-signed stickers.

Endorsement of allotment of all money by the pre-printed/pre-signed stickers.

RAIN has also emphasised on the issue of the pre-verification of signature of transfer deeds by the issuer/registrars, which it said should be made conditional.

This, it claims, will reduce the instances of bad deliveries on account of signature mis-match.

This suggestion clearly implies that clause 12 A regarding the pre-verification and authentication of transferors signature, which was recently introduced, should be deleted.

The association, in order to expedite the process of transfer of shares, has also proposed that the issuers/registrars should make it mandatory to submit the details of the lost certificates or shares on which prohibitory order from the court is recovered on the magnetic media.

Besides, companies should hold at least two meetings in a month to approve the lodge of transfers.

These two suggestions indirectly compliment each other, RAIN said.

Meanwhile, regarding affixing signature of one of the authorised signatory on the shares certificates, the association has suggested that the issue needs to be examined.

According to sources, the BSE officials who attended the meeting have in principle agreed to amend the listing agreements as suggested by the RAIN.