Securities and Exchange Board of India (SEBI) has issued a circular dated 5th November 2019 regarding enhanced Due Diligence for Dematerialization of Physical Securities.
The Circular is issued to protect the interests of the investors in Securities and to promote the development of the Securities Market.
The following directions are issued to all the Depositors and the listed companies/ RTAs, to uphold the integrity of the system in processing of dematerialization request in respect of the remaining physical shares:
- All Listed Companies or their RTAs shall provide static database (name of shareholder, folio number, certificate number, distinctive numbers and their PAN details) of their members holding shares in physical mode to the Depositors as on 31st March 2019 latest by 31st December, 2019. The common format for this data shall be specified jointly by the Depositories and be communicated to Issuer companies / their RTAs.
- Depositors are directed to capture the relevant details from the static database and put in place systems to validate any dematerialization request received after 31st December 2019. Depository System will retrieve the shareholders name recorded against the folio number and certificate number in Static Data for each DRN request received and validate the same against the Demat account holder name as available in the records of the Depositories.
- In case of mismatch of name on the share certificate(s) vis-à-vis name of the beneficial owner of demat account, the depository system shall generate flag / alert. In instances, where such flags / alerts have been generated, the following additional documents explaining the difference in name are to be furnished; –
- a) Copy of Passport
- b) Copy of Legally recognized marriage certificate
- c) Copy of gazette notification regarding change in name.
- d) Copy of Aadhar Card
- In case of complete mismatch of the name of the share certificate with respect to name of the beneficial owner of the Demat Account, then the applicant should approach the Issuer company/ RTA for establishing his title/ ownership.
- Depositors are directed to make necessary amendments to the relevant byelaws, Rules and Regulations for the implementation of the above direction, bring the provisions of this circular to the notice of their participants and also disseminate the same on their websites; and communicate to SEBI, the status of implementation of the provisions of this circular in their Monthly Report.
Source: Securities and Exchange Board of India (SEBI)
