SEBI Proposes Procedural Requirements for Handling Investor Service Requests Through RTA

SEBI has introduced simplified procedural requirements to handle investor service requests from RTAs.

Capital markets regulator SEBI on Friday introduced simplified procedural requirements for handling investor service requests from registrars and share transfer agents (RTAs) to facilitate the ease of doing business. Additionally, the regulator has released a framework for providing PAN, KYC (know your customer) details and nomination of holders of physical securities.

This comes after SEBI received investors’ difficulties with certain procedural aspects of the guidelines and different interpretations of the documents required to process investor service requests.

The new framework will come into effect on April 1, the Securities and Exchange Board of India (SEBI) said in a circular. The regulator has made it mandatory for all holders of physical securities of listed companies to provide a signature sample of PAN, nomination, contact details, bank account details and corresponding portfolio number. The RTA will freeze portfolios or investor accounts that do not have access to any such documents before October 1.

Securityholders whose portfolios have been frozen may file an appeal or utilize any service request from RTA only after providing complete documentation. “Effective April 1, 2024, security holders whose portfolios are frozen shall be eligible to receive electronically any payment, including dividend, interest, or redemption payments related to such frozen portfolios. The listed companies shall Notices issued to holders of securities that such payments are due and will only be made electronically if the requirements are complied with,” SEBI said.

Investors may provide RTA with documents for various service requests through in-person verification or electronically with an electronic signature. SEBI said RTA would accept self-certified copies of documents for processing service requests and will not require compensation for any service requests other than transmission and request for issuance of duplicate security certificates.

The RTA has been required to update the PAN and KYC details of all portfolio holders it manages. The details already provided by the RTA will be overridden under the specific authorization of the holder, specifying the form. Listed companies, RTAs and stock exchanges must publish on their respective websites the requirements that all holders of physical securities of listed companies must comply with.

In addition, listed companies will also directly inform their security holders within 6 months of the end of the financial year about their balance sheets, which require incomplete details on an annual basis. However, for the 2022-23 financial year, notifications will be sent by May 31 2023. When dealing with service requests and related complaints, RTA only needs to raise all objections once. Additional information should only be sought in case of any discrepancy in the documentation provided by the security holder.

In addition to responding to inquiries and complaints via paper copies, the RTA will also deal with the same received via email. RTAs must provide complete contact details – postal address, telephone number and email address – on their websites. The same information will be available on the public company’s website and the stock exchange on which the company is listed. The RTA should be scheduled to be updated promptly when there are changes.

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