As per the new rules, furnishing a Permanent Account Number (PAN card), KYC details, and nomination are mandatory for holders of physical securities
The Securities and Exchange Board of India (Sebi) has issued new simplified norms for registrars, listed companies, and recognised stock exchanges and depositories for processing service requests and PAN card, know-your-customer (KYC) details of investors, aimed at enhancing the ease of doing business, it said.
In a March 16 circular, Sebi said it simplified the norms for processing service requests after feedback from investors and the Registrars Association of India.
Due to various procedural problems, they had approached the regulator over the difficulties they had faced in processing investors’ service requests due to various procedural issues.
As per the new rules, furnishing a Permanent Account Number (PAN card), KYC details, and nomination are mandatory for holders of physical securities.
“It shall be mandatory for all holders of physical securities in listed companies to furnish PAN, nomination, contact details, bank A/c details and specimen signature for their corresponding folio numbers,” it said in the circular.
Registered share transfer agents (RTAs) were asked to freeze the folios if any documents were unavailable on or after October 1, 2023.
Investors can lodge a grievance or avail of service requests from the RTA only after furnishing all the documents.
Further, any payment, including dividend, interest or redemption of the frozen folios, will be made only electronically from April 1, 2024.
Action Against Frozen Folios After 2025
The RTA or the listed company will report the frozen folios to the authority under the Benami Transactions (Prohibitions) Act, 1988 or Prevention of Money Laundering Act, 2002, if they remain frozen by December 31, 2025. Upon receiving all the documents, they will restore the frozen folios to normal status.
RTAs will accept only self-attested copies of documents for processing service requests unless prescribed in the Companies Act, 2013, or Sebi regulations.
Investors must also provide the documents for service requests through ‘In Person Verification’ (IPV) or post or electronic mode with an e-sign.
Sebi has also issued guidelines for processing requests related to mismatches in signature, name, bank and contact details, etc. Under new rules, RTAs must update the PAN and KYC details across all the folios of the holder it manages.
Any cancellation or variation in nomination will take effect from the date the company or the RTA receives the duly completed and signed intimation.
In addition, Sebi has asked the RTAs to raise all their objections, if any, in one instance only. Additional information may be sought only in case of any deficiency in the details furnished by the security holder.
Sebi has published several other changes relating to processing investors’ service requests to ensure the ease of doing business and boost transparency and security in its circular.