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In exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 and in order to protect the interests of investors in securities and to regulate the securities market, SEBI has directed all Listed Companies (through Stock Exchanges), Registrars to an Issue & Share Transfer Agents (RTAs), Depositories, Recognized Stock Exchanges, Depository Participants (DP) for Re-lodgement of Transfer Requests of Shares in terms of Regulation 40 (1) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 since the transfer of securities held in physical mode has been discontinued w.e.f. April 01, 2019.

Subsequently, SEBI vide Press Release No.12/2019 dated March 27, 2019, clarified that transfer deeds lodged prior to the deadline of April 01, 2019, and rejected/returned due to deficiency in the documents may be re-lodged with requisite documents. Further, SEBI vide vide circular no. SEBI/HO/MIRSD/RTAMB/CIR/P/2020/166 dated September 07, 2020, has fixed March 31, 2021, as the cut - off date for re-lodgement of transfer deeds and the shares that are re-lodged for transfer (including those request that is pending with the listed company / RTA, as on date) shall henceforth be issued only in demat mode.

Now, further to above, again, SEBI vide Circular No. SEBI/HO/MIRSD/RTAMB/CIR/P/2020/236 dated December 02, 2020, came up with operational guidelines for crediting the transferred shares into the respective demat account of the investor, with inputs from stakeholders, as under:

Analysis of SEBI’s Operational guidelines for Transfer and Dematerialization of re-lodged physical shares

Guidelines to credit the transferred physical shares in demat mode:

1. Subsequent to processing of the re-lodged transfer request, the RTA shall retain the physical shares and intimate the investor (transferee) about the execution of transfer through Letter of Confirmation. This letter shall be sent through Registered / Speed Post or through email with a digitally signed letter and shall, inter-alia, contain details of endorsement, shares, folio of investor (required on Demat request form) as available on the physical shares.

The investor shall submit the demat request, within 90 days of issue of Letter of Confirmation, to Depository participant (DP) along with the Letter of Confirmation. RTA shall also issue a reminder at the end of 60 days of issue of Letter of Confirmation, informing the investor to submit the demat request as above.

Depository Participant will process the Demat Request on the basis of Letter of Confirmation, as this letter is a confirmation of holding of physical shares on behalf of the investor by RTA.

The suggested format of the Letter of Confirmation is as under:

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(Pursuant to SEBI/HO/MIRSD/RTAMB/CIR/P/2020/236, Dated December 02, 2020)
RTA / ISSUER COMPANY ADDRESS
Name: Date:
Address:
Dear Sir/Madam,

 

CONFIRMATION LETTER

Sub: Transfer of Shares Name of the Company:

We refer to the request received from you for the transfer of the subject shares in your name. We would like to inform you that the transfer of shares has been approved as detailed below:

Name of first holder & PAN

Joint holder 1 & PAN

Joint holder 2 & PAN

 

Number of shares

 

Folio Number

 

Certificate numbers

 

Distinctive numbers

 

Lock-In

Yes or No.

If yes, lock-in from dd.mm.yyyy till dd.mm.yyyy

 

As you may be aware, SEBI vide their Circular No. SEBI/HO/MIRSD/RTAMB/CIR/P/2020/166 September 07, 2020, has mandated that the shares that are re-lodged for transfer shall henceforth be issued only in demat mode and hence the duly endorsed original certificates are retained at our end.

Accordingly, within 90 days of this letter, please request your Depository Participant (DP) to demat these shares using the Dematerialization Request Form (DRF). Please fill it up with the details mentioned in this letter, sign it, and present this letter in original to your DP along with the DRF for enabling your DP to raise a Demat Request Number (DRN). In case you do not have a demat account, kindly open one with any DP. Please note that you can open a Basic Service Demat Account at minimal / nil charges.

Please note that this letter is valid only for a period of 90 days from the date of its issue within which time you have to raise a demat request with the DP as above. Any request for demat processing after this date will not be entertained and as per the operating guidelines issued by SEBI, the subject shares shall be transferred to a Suspense Escrow Demat Account of the company.

Further, please note that in terms of SEBI Circular No. SEBI/HO/MIRSD/DOS3/CIR/P/2018/139 dated November 06, 2018, the above transfer of shares is/are approved with a lock-in period of six months from the date of transfer and shall remain in lock-in till dd.mm.yyyy, even after dematerialization. [STRIKE OFF IF NOT APPLICABLE].

Thanking you,
Yours faithfully,
For ABCD Limited (RTA) Authorised Signatory

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2. In case of the shares that are required to be locked-in as per the SEBI Circular SEBI/HO/MIRSD/DOS3/CIR/P/2018/139, dated November 06, 2018, the RTA while approving/confirming the demat request, shall also incorporate/intimate the Depository about the lock-in and its period. Such shares shall be in lock-in demat mode for 6 months from the date of registration of transfer.

3. In case of non-receipt of demat request from the investor within 90 days of the date of Letter of Confirmation, the shares will be credited to Suspense Escrow Demat Account of the Company.

4. SEBI has also directed Depositories to make necessary amendments to the relevant bylaws, rules, and regulations for the implementation of the above directions, as may be applicable; and bring the provisions of this circular to the notice of their participants and also disseminate the same on their websites.

All the capital market participants must keep in mind the aforementioned circulars and directions of SEBI for re-lodgement of transfer deeds and documents.

Source:

The text of circulars is extracted from https://www.sebi.gov.in/legal/circulars/dec-2020/operational-guidelines-for-transfer-and-dematerialization-of-re-lodged-physical-shares_48336.html

The author is Practising Company Secretary and can be approached at roopalcs2001p@gmail.com.


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Category Corporate Law, Other Articles by - Rupal 



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