18-Nov-2023
2 mins read
The Securities and Exchange Board of India (SEBI), in a significant move, has recently announced the relaxation of its rules regarding the holders of physical securities. This decision, effective immediately, marks a departure from the previously stringent requirements.
Previous Regulations and Challenges
Until now, SEBI mandated all holders of physical securities in listed companies to provide comprehensive documentation. This included PAN, nomination, contact details, bank account information, and specimen signatures linked to their folio numbers. Failure to comply by October 1, 2023, would result in the freezing of the folios by the registrars to an issue and share transfer Agent (RTA).
Feedback Leads to Policy Revision
The decision to revise these rules came after SEBI received feedback from the Registrars’ Association of India and various investors. The prior regulations posed unintended challenges, leading to complications and potential freezing of folios. This freezing of accounts also carried the implication of referring these cases to the administering authority under the Benami Transactions (Prohibition) Act, 1988, and/or Prevention of Money Laundering Act, 2002.
New Circular: Easing the Burden
Responding to the feedback, SEBI has now removed the requirement for freezing folios lacking PAN, KYC details, and nominations. The recent circular signifies a notable shift, intending to simplify the process for investors and mitigate the challenges previously faced due to the freezing of folios.
This latest move by SEBI is a welcome change for investors in the Indian capital market, offering greater ease and flexibility. It reflects the regulator’s commitment to considering stakeholder feedback and adapting its policies to better suit the evolving market landscape.