By addressing long-pending switch points and eradicating redundant steps within the present system, Sebi goals to reinforce investor comfort whereas persevering with to advertise dematerialisation within the securities market.
In its session paper, Sebi proposed to quickly loosen up guidelines to permit the switch of such previous shares, regardless that they’re in bodily type.
This exception, nevertheless, can be time-bound, with a sundown clause to make sure that dematerialisation stays the long-term objective. As soon as verified by the corporate or the Registrar and Switch Agent (RTA), these shares can be credited on to the investor’s demat account.
Along with this proposal, the regulator has advised abolishing the present means of issuing a ‘Letter of Affirmation’ (LOC) to additional simplify the dematerialisation process.
The transfer is geared toward eradicating an pointless intermediate step and offering larger comfort to buyers.Below the proposed framework, RTAs and listed corporations will immediately credit score shares to buyers’ demat accounts after finishing up the required due diligence. Traders will solely want to offer their demat account particulars (Shopper Grasp Checklist or CML) when submitting a request, Sebi mentioned.Consequently, appropriate amendments have been proposed to the LODR Rules.
At current, when buyers make service requests comparable to for switch, difficulty of duplicate certificates, or transmission, corporations difficulty a Letter of Affirmation. The investor are then required to submit this LOC to their Depository Participant (DP) inside 120 days to get the shares credited in demat type.
Failure to take action throughout the deadline leads to the shares being moved to a Suspense Escrow Demat Account (SEDA), which provides delays and administrative burden for each buyers and corporations.
This transfer follows Sebi’s earlier efforts to assist buyers regularise previous bodily share transfers.
The regulator had beforehand allowed buyers who had lodged switch requests earlier than April 1, 2019, to re-lodge them until March 31, 2021, if their earlier requests had been rejected. Nonetheless, many buyers missed this window for varied causes, comparable to the vendor being deceased or untraceable, corporations being dissolved, or switch requests being despatched to the incorrect registrar.
To deal with these considerations, Sebi reopened a particular window from July 7, 2025, to January 6, 2026, enabling such buyers to re-lodge their switch paperwork.
“Since many of the switch circumstances pertain to contemporary lodgement of switch deeds for transfers executed previous to April 1, 2019, an exception could also be created in Regulation 40(1) of LODR Rules to facilitate the buyers to get rightful entry to their property,” Sebi mentioned within the paper.
The regulator additional famous that “such exception should be with a sundown clause with the intention to make sure that the general broader goal of Sebi to make sure most dematerialisation is fulfilled, whereas additionally offering an avenue to buyers to switch and dematerialise their securities.” PTI SP SHW
