SEBI Circular on Issuance of Securities in Dematerialized Form in Case of Investor Service Requests

Securities and Exchange Board of India (SEBI) vide Circular no. SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2022/8 dated 25th January, 2022, in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market read with Regulation 101 of SEBI (Listing Obligations and Disclosure Requirements), 2015, has issued a notification on Issuance of Securities in dematerialized form in case of Investor Service Requests. SEBI has also put in place operational guidelines for dematerialisation of securities while processing investor’s service request.

The Circular was issued to:

• All registered Registrars to an Issue and Share Transfer Agents (RTAs)
• All Recognized Stock Exchanges
• All Listed Companies through Recognized Stock Exchanges
• All Recognized Depositories
• All Depository Participants (DPs) through Depositories

Applicability: The Circular shall come into force with immediate effect i.e. 25.01.2022.

SEBI has decided that listed companies shall issue the securities in dematerialized form only, in order to enhance ease of dealing in securities markets by investors, for transactions including Issue of duplicate securities certificate, claim from unclaimed suspense account, renewal / exchange of securities certificate, endorsement, sub-division / splitting of securities certificate, consolidation of securities certificates/folios, transmission and transposition of shares.

The RTA/issuer companies will have to verify and process the service requests and thereafter issue a ‘Letter of Confirmation’ in lieu of physical securities certificate(s), to the securities holder or claimant within 30 days of its receipt of such request after removing objections, if any.

• The ‘Letter of Confirmation’ will be valid for a period of 120 days from the date of its issuance, within which the securities holder/claimant will have to make a request to the depository participant for dematerialising the said securities.
• The RTA / Issuer Companies shall issue a reminder after the end of 45 days and 90 days from the date of issuance of Letter of Confirmation, informing the securities holder/claimant to submit the demat request as above, in case no such request has been received by the RTA / Issuer Company.
• In case the securities holder/claimant fails to submit the demat request within the aforesaid period, RTA / Issuer Companies shall credit the securities to the Suspense Escrow Demat Account of the Company.

The securities holder/claimant will have to submit a form — to be hosted on the website of the issuer companies and the RTAs (Registrars to an issue and share Transfer Agents) — as per the format specified by the regulator (SEBI) along with necessary documents.

Stock Exchanges and Depositories are advised to:

a) make necessary amendments to the relevant bye-laws, rules and regulations, operational instructions, as the case may be, for the implementation of the above circular; and

b) bring the provisions of this circular to the notice of their constituents and also disseminate the same on the website.

SEBI said that requests for effecting transfer of securities will not be processed unless the securities are held in the dematerialised form with a depository. The move will improve ease, convenience and safety of transactions for investors. To give this effect SEBI has amended Listing of Obligations and Disclosure Requirements (LODR) Regulations.

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