Sebi proposes separate unit of RTAs for service to unlisted companies

Sebi suggests hiving off RTA activities for unlisted companies, placing them under MCA's oversight; also proposes new net worth norms and internal control mechanisms

The market regulator on Thursday proposed hiving off activities of registrars and share transfer agents (RTAs) based on the services offered to listed and unlisted companies.

 

The services provided by RTAs to listed companies and mutual funds will fall under the purview of the Securities and Exchange Board of India (Sebi), while those for unlisted firms will come under the Ministry of Corporate Affairs (MCA).

 

The regulator said the need for this segregation arose due to the increasing importance of dematerialisation across the spectrum.

 

At present, RTAs are providing services to around 35,000 unlisted companies, compared to only around 4,000 listed companies.

 

 

Sebi has proposed a separate business unit by RTAs for their unlisted company operations. It has also recommended a common definition for RTAs, removing the current categorisation, and a revision in the method of calculating net worth.

 

Another key proposal includes establishing an institutional mechanism to increase the accountability of managing directors (MDs), chief executive officers (CEOs), and other key management personnel for internal controls to prevent fraud.