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Securities and Exchange Board of India
MASTER CIRCULAR
CIR/MRD/DP/ 13 /2013 April 15, 2013
To,
All Depositories
Dear Sir / Madam,
Sub: Master Circular for Depositories
Securities and Exchange Board of India (SEBI) has been issuing various
circulars/directions from time to time. In order to enable the users to have an
access to all the applicable circulars/directions at one place, Master Circular for
Depositories has been prepared.
This Master Circular is a compilation of the circulars/communications issued by
SEBI up to March 31, 2013 and shall come into force from the date of its issue.
This Master Circular shall supersede previous Master Circular
CIR/MRD/DP/10/2012 dated April 13, 2012.
Maninder Cheema
Deputy General Manager
maninderc@sebi.gov.in
1
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Securities and Exchange Board of India
Table of Contents
Section - 1: Beneficial Owner (BO) Accounts
1.1 Opening of BO Account by non-body corporates
1.1.1 Proof of Identity (PoI)
1.1.2 Proof of Address (PoA)
1.1.3 Acceptance of third party address as correspondence
address
1.2 Exemptions from and clarifications relating to mandatory requirement
of PAN
1.3 Change of Name in the Beneficial Owner (BO) Account
1.4 Fees/Charges to be paid by BO
1.5 Transfer of funds and securities from Clearing Member pool account to
BO Account
1.6 Printing of Grievances Redressal Mechanism on Delivery Instruction
Form Book
1.7 Exemption to Depository Participants (DPs) from providing hard
copies of transaction statements to BOs
1.8 Safeguards on transfer of securities in dematerialized mode
Section - 2: Issuer related
2.1 Charges to be paid by Issuers
2.2 Activation of International Securities Identification Number (ISIN) in
case of IPOs and additional issue of shares/ securities
2.3 Registrar and Share Transfer Agents
2.4 Mandatory admission of debt instruments on both the Depositories
2.5 American Depository Receipts (ADRs)/Global Depository Receipts
(GDRs)
2.6 Electronic Clearing System (ECS) facility
2.6.1 Use of ECS for refund in public/ rights issues
2.6.2 Usage of electronic payment modes for making cash payment to
the investors.
2
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Securities and Exchange Board of India
Section - 3: Depositories/ Depository Participant (DP) Related
3.1 Facility for a Basic Services Demat Account (BSDA)
3.2 Rajiv Gandhi Equity Savings Scheme, 2012 (RGESS)
3.3 Limitation period for filing an arbitration reference
3.4 Designated e-mail ID for redressal of investor complaints
3.5 Redressal of complaints against Stock Exchanges and Depositories
through SEBI Complaints Redress System (SCORES).
3.6 Approval of amendments to Bye Laws / Rules of Stock Exchanges and
Depositories
3.7 Preservation of Records
3.8 Foreign investments in infrastructure companies in securities markets
3.9 Activity schedule for depositories for T+2 rolling Settlement
3.10 Settlement of transactions in case of holidays
3.11 Supervision of branches of depository participants
3.12 Designated e-mail ID for regulatory communication with SEBI
3.13 Disclosure of investor complaints and arbitration details on Depository
website
3.14 Disclosure of regulatory orders and arbitration awards on Depository
website
Section - 4: Other communications to Depositories having policy implications
4.1. Amendment in DP-BO Agreement
4.2. Activity of Demat of warehouse receipts
4.3. Pledge of Shares through depository system
4.4. Transmission of shares
4.5. SMS alerts for demat accounts operated by Power of Attorney
4.6. Opening of demat account in case of HUF
4.7. Exemption from sending quarterly statements of transactions by
depository participants (DPs) to clients in respect of demat accounts
with no transactions and no security balances
4.8. Withdrawal by issuers from the depository
4.9. Discontinuation of sending transaction statements by depository
participants to clients
4.10. Further issue of shares under Section 86 of Companies Act and
Companies (Issue of Share capital with Differential Voting Rights)
Rules, 2001
4.11. Updation of bank accounts details, MICR code and IFSC of bank
branches by Depository Participants (DPs)
4.12. Establishment of connectivity by Clearing House / Clearing
Corporation (CH/CC) with the Depository – Clarification
3
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Securities and Exchange Board of India
4.13. Computing and monitoring of the Aggregate Value of Portfolio of
Securities (AVPS) of the BOs held in dematerialised form by Stock
Broker DPs
4.14. Deadline time for accepting non pay-in related instructions
4.15. Clarification on our circular no. SMDRP/Policy/Cir-28/99 dated
August 23, 1999
4.16. Voting rights in respect of securities held in pool account
4.17. Operation of minor’s demat account
SCHEDULE
4
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Securities and Exchange Board of India
Section 1: Beneficial Owner (BO) Accounts
1.1 Opening of BO Account by non body corporates
1.1.1 Proof of Identity (PoI)
i. Permanent Account Number (PAN) to be the sole identification number
for all transactions in the securities market1
With effect from July 02, 2007, PAN is the sole identification number for all
transactions in the securities market, irrespective of the amount of
transaction. A copy of the PAN card with photograph may be accepted as
Proof of Identity. In this regard, intermediaries shall:-
a. Put necessary systems in place so that the databases of the clients and
their transactions are linked to the PAN details of the client.
b. Build necessary infrastructure to enable accessibility and query based
on PAN thereby enabling retrieval of all the details of the clients.
c. Collect copies of PAN cards issued to the existing as well as new clients
by the Income Tax Department and maintain the same in their record
after verifying with the original.
d. Cross-check the aforesaid details collected from their clients with the
details on the website of the Income Tax Department i.e.
http://incometaxindiaefiling.gov.in/challan/enterpanforchallan.jsp2.
List of documents admissible as Proof of Identity3
a. Unique Identification Number (UID) (Aadhaar)/ Passport/ Voter ID
card/ Driving license.
b. PAN card with photograph.
c. Identity card/ document with applicant’s Photo, issued by any of the
following: Central/State Government and its Departments,
Statutory/Regulatory Authorities, Public Sector Undertakings,
Scheduled Commercial Banks, Public Financial Institutions, Colleges
affiliated to Universities, Professional Bodies such as ICAI, ICWAI,
ICSI, Bar Council etc., to their Members; and Credit cards/Debit cards
issued by Banks.
1 Reference circular MRD/DoP/Cir-5/2007 dated April 27, 2007
2 Income Tax Department since changed the link for verification to:
https://incometaxindiaefiling.gov.in/e-Filing/Services/KnowYourPanLink.html
3 Reference Circular MIRSD/SE/Cir-21/2011 dated October 05, 2011
5
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Securities and Exchange Board of India
1.1.2 Proof of Address (PoA)4
List of documents admissible as Proof of Address:
(*Documents having an expiry date should be valid on the date of
submission.)
a. Passport/ Voters Identity Card/ Ration Card/ Registered Lease or Sale
Agreement of Residence/ Driving License/ Flat Maintenance bill/
Insurance Copy.
b. Utility bills like Telephone Bill (only land line), Electricity bill or Gas
bill - Not more than 3 months old.
c. Bank Account Statement/Passbook -- Not more than 3 months old.
d. Self-declaration by High Court and Supreme Court judges, giving the
new address in respect of their own accounts.
e. Proof of address issued by any of the following: Bank Managers of
Scheduled Commercial Banks/Scheduled Co-Operative
Bank/Multinational Foreign Banks/Gazetted Officer/Notary public/
Elected representatives to the Legislative
Assembly/Parliament/Documents issued by any Govt. or Statutory
Authority.
f. Identity card/document with address, issued by any of the following:
Central/State Government and its Departments, Statutory/Regulatory
Authorities, Public Sector Undertakings, Scheduled Commercial Banks,
Public Financial Institutions, Colleges affiliated to Universities and
Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their
Members.
g. For FII/sub account, Power of Attorney given by FII/sub-account to the
Custodians (which are duly notarized and/or apostiled or
consularised) that gives the registered address should be taken.
h. The proof of address in the name of the spouse may be accepted.
i. Aadhaar Letter issued by UIDAI shall be admissible as Proof of
Address in addition to its presently being recognized as Proof of
Identity.5
DP shall ensure that all documents pertaining to proof of identity and
proof of address are collected from all the account holders.6 Submission of
the aforesaid documents is the minimum requirement for opening a BO
Account. DPs must verify the copy of the aforementioned documents with
4Reference Circular MIRSD/SE/Cir-21/2011 dated October 05, 2011
5Reference Circular MIRSD/09/2012 dated August 13, 2012
6 Reference Circular MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004
6
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Securities and Exchange Board of India
the original before accepting the same as valid. While opening a BO
Account, DPs shall exercise due diligence7 while establishing the identity
of the person to ensure the safety and integrity of the depository system.
1.1.3 Acceptance of third party address as correspondence address8
i. SEBI has no objection to a BO authorizing the capture of an address of a
third party as a correspondence address, provided that the Depository
Participant (DP) ensures that all prescribed ‘Know Your Client’ norms are
fulfilled for the third party also. The DP shall obtain proof of identity and
proof of address for the third party. The DP shall also ensure that customer
due diligence norms as specified in Rule 9 of Prevention of Money
Laundering Rules, 2005 are complied with in respect of the third party.
ii. The depository participant should further ensure that the statement of
transactions and holding are sent to the BO’s permanent address at least
once in a year.
iii. However, the above provision shall not apply in case of PMS (Portfolio
Management Services) clients.
1.2 Exemptions from and clarifications relating to mandatory requirement of
PAN
1.2.1 Mandatory requirement of Permanent Account Number (PAN) 9
The demat accounts for which PAN details have not been verified are
“suspended for debit” until the same is verified with the Depository
Participant (DP). With effect from August 16, 2010 such PAN non-
compliant demat accounts were also "suspended for credit" other than the
credits arising out of automatic corporate actions. It was clarified that other
credits including credits from IPO/FPO/Rights issue, off-market
transactions or any secondary market transactions would not be allowed
into such accounts.
7 Reference point 5 of part II on ‘Customer Due Diligence’ of master circular no. ISD/AML/CIR-
1/2008 dated December 19, 2008
8 Reference Circular CIR/MRD/DP/37/2010 dated December 14, 2010
9 Reference Circular MRD/DP/22/2010 dated July 29, 2010
7
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Securities and Exchange Board of India
1.2.2 Central and State Government and officials appointed by Courts10
PAN card may not be insisted upon in case of transactions undertaken on
behalf of Central Government and/or State Government and where
transactions are conducted by officials appointed by Courts e.g. Official
liquidator, Court receiver etc.11
However DPs, before implementing the above exemption, shall verify the
veracity of the claim of the organizations by collecting sufficient
documentary evidence in support of their claim for such an exemption.
1.2.3 Investors in Sikkim12
Investors residing in the state of Sikkim are exempted from the mandatory
requirement of furnishing PAN card details for their demat accounts.13 DPs
shall verify the veracity of the claim of the investors that they are residents
of Sikkim, by collecting sufficient documentary evidence in support of their
address.14
1.2.4 UN entities and multilateral agencies exempt from paying taxes/ filling
tax returns in India15
UN entities/ multilateral agencies exempt from paying taxes/filing tax
returns in India are also exempt from the mandatory requirement of
submitting their PAN card details, subject to the DPs collecting
documentary evidence in support of such claims.
1.2.5 FIIs/Institutional Clients16
Custodians shall verify the PAN card details of institutional clients with
the original PAN card and provide duly certified copies of such verified
PAN details to the brokers. This requirement is applicable in respect of
institutional clients, namely, FIIs, MFs, VCFs, FVCIs, Scheduled
10 Reference Circular MRD/DoP/Cir-20/2008 dated June 30, 2008
11 Reference Rule 114C (1)(c) of Income Tax Rules
12 Reference Circular MRD/DoP/Dep/Cir-09/06 dated July 20, 2006
13 Reference Hon’ble High Court of Sikkim judgment dated March 31, 2006
14 Reference Circular MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004
15 Reference Circular MRD/DoP/Dep/Cir-09/06 dated July 20, 2006
16 Reference Circular MRD/DoP/Dep/SE/Cir-13/06 dated September 26, 2006
8
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Securities and Exchange Board of India
Commercial Banks, Multilateral and Bilateral Development Financial
Institutions, State Industrial Development Corporations, Insurance
Companies registered with IRDA and Public Financial Institution as
defined under section 4A of the Companies Act, 1956.
1.2.6 HUF, Association of Persons (AoP), Partnership Firm, unregistered
Trust, Registered Trust, Corporate Bodies, minors, etc.12
The BO account shall be in the name of natural persons, PAN card details
of the respective HUF, AoP, Partnership Firm, Unregistered Trust, etc
shall be obtained. The PAN number of Registered Trust, Corporate Bodies
and minors shall be obtained when accounts are opened in their
respective names.
1.2.7 Difference in maiden name and current name of investors. 12
DPs can collect the PAN card proof as submitted by the account holder
subject to the DPs verifying the veracity of the claim of such investors by
collecting sufficient documentary evidence in support of the identity of
the investors.17
1.2.8 NRI/PIOs18
Citizens of India residing outside India, foreign citizens and other persons
(like companies/ trusts/ firms) having no office of their own in India may
obtain PAN card based on the copy of their passport as ID proof and a
copy of passport/ bank account in the country of residence as address
proof, based on the Directorate of Income Tax (Systems) guidelines.19
1.3 Change of Name in the Beneficial Owner (BO) Account20
1.3.1 In order to simplify the procedure of change of name in individual
Beneficial Owner’s (BO) account, it has been decided that an individual
BO may be allowed to change his/ her name, subject to the submission of
following documents at the time of change of name of the individual in
the BO account.
17 Reference Circular MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004
18 Reference Circular MRD/DoP/Dep/SE/Cir-17/06 dated October 27, 2006
19 Reference Income Tax (Systems) PAN Circular No. 4 dated October 11, 2006
20 Reference Circular CIR/MRD/DP/27/2012 dated November 01, 2012
9
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Securities and Exchange Board of India
i. In case of change in name on account of marriage following documents
shall be submitted:
a. Marriage Certificate or copy of Passport showing husband’s name or
publication of name change in official gazette.
ii. In case of change in name on account of reasons other than marriage
a. Publication of name change in official gazette.
iii. In case of change in father’s name
a. Publication of name change in official gazette.
1.3.2 The Depository Participants (DPs) shall collect the self attested copies of
above documents and maintain the same in their records after verifying
with the original document.
1.4 Fees/Charges to be paid by BO
1.4.1 Account opening, custody and credit of securities21
With effect from February 1, 2005
i. No investor shall pay any charge towards opening of a Beneficial Owner
(BO) Account except for statutory charges as applicable;
ii. No investor shall pay any charge for credit of securities into his/her BO
account; and
iii. No custody charge shall be levied on any investor who is opening a BO
account.
1.4.2 Account Closure22
No Account closure charges shall be levied on BO on the closure of any
account.
1.4.3 Inter Depository Transfer23
Inter-depository transfer of shares does not attract Stamp duty and it does
not require compliance with section 108 of the Companies Act 1956.
21 Reference Circular MRD/DoP /SE/Dep/Cir-4/2005 dated January 28, 2005
22 Reference Circular D&CC/FITTC/CIR - 12/2002 dated October 30, 2002
23 Reference Circular SMDRP/Policy/Cir-29/99 dated August 23, 1999
10
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Securities and Exchange Board of India
1.4.4 Transfer of a BO Account24
With effect from January 09, 2006
No charges shall be levied by a depository on any DP and by a DP on any
BO when the BO transfers all the securities lying in his account to another
branch of the same DP or to another DP under the same depository or
another depository, provided the BO Account(s) at transferee DP and at
transferor DP are one and the same, i.e. identical in all respects. In case the
BO Account at transferor DP is a joint account, the BO Account at
transferee DP should also be a joint account in the same sequence of
ownership.
1.4.5 Account Maintenance Charges collected upfront on annual/ half yearly
basis on demat accounts25
i. In the event of closing of the demat account or shifting of the demat
account from one DP to another, the AMC collected upfront on
annual/half yearly basis by the DP, shall be refunded by the DP to the BO
for the balance of the quarter/s. For instance, in case annual AMC has
been paid by the BO and if the BO closes/shifts his account in the first
quarter, he shall be refunded the amount of the balance 3 quarters i.e.
3/4th of the AMC. Likewise, if a BO closes/shifts his account in the third
quarter, he shall be refunded the amount for the balance one quarter i.e.
1/4th of the AMC.
ii. For the purpose of the above requirement the year shall begin from the
date of opening of the account in quarterly rests.
iii. The above requirements shall be applicable to all existing and new
accounts held with DPs which collect annual/half yearly upfront AMC. It
is clarified that the above requirements shall not be applicable to those
DPs who collect quarterly/ monthly AMC.
1.4.6 Dissemination of tariff/charge structure of DPs on the website of
depositories 26
24 Reference Circular MRD/DoP/Dep/Cir-22 /05 dated November 9, 2005
25 Reference Circular MRD/DP/20/2010 dated July 1, 2010
26 Reference Circular MRD/Dep/Cir- 20/06 dated December 11, 2006
11
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Securities and Exchange Board of India
i. DPs shall submit to their depository the tariff/charge structure every year,
latest by 30th April, and also inform the depository the changes in their
tariff/charge structure as and when they are effected with a view to
enabling the BOs to have a comparative analysis of the tariff/charge
structure of various DPs.
ii. For this purpose depositories shall put in place necessary systems and
procedures including formats, periodicity, etc. for collection of necessary
data from the DPs and dissemination of the same on their website which
would enable the investors to have a comparative analysis of the
tariff/charge structure of various DPs.
1.5 Transfer of funds and securities from Clearing Member pool account to
BO Account27
i. Clearing members shall transfer the funds and securities from their
respective pool account to the respective beneficiary account of their
clients within 1 working day after the pay-out day. The securities lying in
the pool account beyond the stipulated period shall attract a penalty at the
rate of 6 basis point per week on the value of securities. The penalty so
collected by the depositories shall be credited to a separate account with
the depository and earmarked for defraying the expenses in connection
with the investors’ education and awareness programs conducted by the
depository.
ii. The securities lying in the pool account beyond the above period shall not
be eligible either for delivery in the subsequent settlement(s) or for pledging
or stock lending purpose, until the same are credited to the beneficiary accounts.
iii. The securities lying in the Clearing member’s pool account beyond the
specified time period shall be identified based on the settlement number.
The clearing corporation/houses of the stock exchanges shall provide the
settlement-wise details of securities to the depositories and the
depositories shall maintain the settlement-wise records for the purpose.
iv. Further, stock exchanges shall execute direct delivery of securities to the
investors. Clearing corporation/clearing house (CC/CH) shall ascertain
from each clearing member, the beneficial account details of their
27 Reference Circular SMDRP/Policy/Cir-05/2001 dated February 1, 2001 & Circular
SEBI/MRD/Policy/AT/Cir-19/2004 dated April 21, 2004
12
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Securities and Exchange Board of India
respective clients due to receive pay out of securities. Based on this, the
CC/CH shall send pay out instructions to the depositories so that the
client receives pay out of securities directly to the extent of instructions
received from the respective clearing members. To the extent of
instruction not received, the securities shall be credited to the CM pool
account.
1.6 Printing of Grievances Redressal Mechanism on Delivery Instruction
Form Book 28
To promote investor awareness regarding mechanism for redressing
investor grievances, the information placed below shall be printed on the
inside back cover of the Delivery Instruction Form (DIF) Book issued by
all Depository Participants.
In case you have grievances against a listed company or intermediary registered
with SEBI, you should first approach the concerned company or intermediary
against whom you have grievance. If you are not satisfied with their response,
you may approach SEBI or other regulatory bodies. You can approach SEBI for
following type of grievances.
Listed Companies Brokers and stock exchanges
 Refund / Allotment/ Bonus/ Dividend/  Stock Brokers
Rights/ Redemption/ Interest  Sub brokers
 Prelisting offer documents (shares)  Portfolio managers
 Prelisting offer documents (debentures  Stock exchanges
and bonds)
 Delisting of Securities
 Buyback of Securities
 Takeover and Restructuring
 Corporate Governance and Listing
conditions
Registrar and Transfer Agents Other entities
Collective Investment Schemes
Mutual Funds Debenture Trustees
28 Reference Circular No. SEBI/MRD/DP/25/2012 dated September 21, 2012
13
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Securities and Exchange Board of India
Depository and Depository Participants Merchant Bankers
Bankers to Issue
Information to SEBI: Credit Rating Agencies
 Price Manipulation Custodian of Securities
 Insider trading Foreign Institutional Investors
Underwriters
Venture Capital Funds
KYC Registration Agency(KRA)
Alternative Investment Fund
You can file your complaints online at http://scores.gov.in or alternately send
your complaints to Office of Investor Assistance and Education of SEBI at
Mumbai or Regional Offices at the following addresses:
Address of SEBI Offices
 Office of Investor Assistance and Education, SEBI Bhavan,
Plot No.C4-A, 'G' Block, Bandra Kurla Complex, Bandra (E), Mumbai 400
051 Tel: 022-26449188 / 26449199 (http://scores.gov.in)
 SEBI, Northern Regional Office, 5th Floor, Bank of Baroda Building, 16,
Sansad Marg, New Delhi -110001 Tel: 011-23724001-05 (sebinro@sebi.gov.in)
 SEBI, Eastern Regional Office, L&T Chambers, 3rd Floor, 16, Camac Street,
Kolkata - 700 016 Tel: 033-23023000. (sebiero@sebi.gov.in)
 SEBI, Southern Regional Office, 7th Floor, Overseas Towers, 756-L, Anna
Salai Chennai 600 0102 Tel: 044-24674000/ 24674150 (sebisro@sebi.gov.in)
 SEBI, Ahmedabad Regional Office, Unit No: 002, Ground Floor, SAKAR I,
Near Gandhigram Railway Station, Opp. Nehru Bridge Ashram Road,
Ahmedabad - 380 009 Tel : 079-26583633-35 (sebiaro@sebi.gov.in)
For more information visit our website - http://scores.gov.in
14
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Securities and Exchange Board of India
1.7 Exemption to DPs from giving hard copies of transaction statements to
BOs 29
DPs are permitted to provide transaction statements and other documents
to the BOs under Digital signature, as governed under the Information
Technology Act, 2000, subject to the DP entering into a legally enforceable
arrangement with the BO for the said purpose. While such practice in the
aforesaid manner shall be deemed to be in compliance of the provisions of
the Regulation 43 of SEBI (Depositories & Participants) Regulations, 1996;
if the BO is still desirous of receiving statements in hard copy, DPs shall
be duty bound to provide the same.
1.8 Safeguards to address the concerns of the investors on transfer of securities
in dematerialized mode30
Following safeguards shall be put in place to address the concerns of the
investors arising out of transfer of securities from the BO Accounts:
i. The depositories shall give more emphasis on investor education
particularly with regard to careful preservation of Delivery Instruction
Slip (DIS) by the BOs. The Depositories may advise the BOs not to leave
“blank or signed” DIS with the Depository Participants (DPs) or any other
person/entity.
ii. The DPs shall not accept pre-signed DIS with blank columns from the
BO(s).
iii. If the DIS booklet is lost / stolen / not traceable by the BO, then the BO
shall immediately intimate the DP in writing about the loss. On receipt of
such intimation, the DP shall cancel the unused DIS of the said booklet.
iv. The DPs shall not issue more than 10 loose DIS to one accountholder in a
financial year (April to March). The loose DIS can be issued only if the
BO(s) come in person and sign the loose DIS in the presence of an
authorised DP official
29 Reference Circular MRD/DoP/Dep/Cir-27/2004 dated August 16, 2004
30 Reference Circular SEBI/MRD/Dep/Cir-03/2007 dated February 13, 2007 and Circular
SEBI/MRD/Dep/Cir-03/2008 dated February 28, 2008
15
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Securities and Exchange Board of India
v. The DP shall also ensure that a new DIS booklet is issued only on the
strength of the DIS instruction request slip (contained in the previous
booklet) duly complete in all respects, unless the request for fresh booklet
is due to loss, etc., as referred to in clause (c) above
vi. The DPs shall put in place appropriate checks and balances with regard to
verification of signatures of the BOs while processing the DIS.
vii. The DPs shall cross check with the BOs under exceptional circumstances
before acting upon the DIS.
viii. The DPs shall mandatorily verify with a BO before acting upon the DIS, in
case of an account which remained inactive i.e., where no debit
transaction had taken place for a continuous period of 6 months,
whenever all the ISIN balances in that account (irrespective of the number
of ISINs) are transferred at a time. However, in case of active accounts,
such verification may be made mandatory only if the BO account has 5 or
more ISINs and all such ISIN balances are transferred at a time. The
authorized official of the DP verifying such transactions with the BO, shall
record the details of the process, date, time, etc., of the verification on the
instruction slip under his signature.
16
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Securities and Exchange Board of India
SECTION 2: Issuer Related
2.1 Charges paid by Issuers 31,32
i. With effect from April 27, 2011 depositories may levy and collect the
charges towards custody from the issuers, on the basis of average no. of
folios (ISIN position) during the previous financial year, as per the
details given below:
ii. Issuers to pay @ Rs.8.00 (*) per folio (ISIN position) in the respective
depositories, subject to a minimum as mentioned below:
Nominal value of admitted Annual Custodial Fee
securities (Rs.) payable by a Issuer to each
Depository (Rs.) (*)
Upto 5 crore 6,000
Above 5 crore and upto 10 crore 15,000
Above 10 crore and upto 20 crore 30,000
Above 20 crore 50,000
* Plus service tax as applicable
iii. The average no. of folios (ISIN positions) for an Issuer may be arrived at
by dividing the total number of folios for the entire financial year by the
total number of working days in the said financial year.
iv. If the issuer fails to make the payment, Depositories may charge penal
interest subject to a maximum of 12% per annum.
2.2 Activation of ISIN in case of IPO and additional issue of shares/
securities
i. Depositories shall activate the ISINs only on the date of commencement of
trading on the stock exchanges in case of IPOs for both the equity and
debt securities.33
31 Reference Circular MRD/DoP/SE/Dep/Cir-2/2009 dated February 10, 2009 and Circular
SEBI/MRD/SE/DEP/Cir-4/2005 dated January 28, 2005
32 Reference Circular CIR/MRD/ DP/05/2011 dated April 27, 2011
33 Reference Circular SEBI/MRD/DEP/Cir-2/06 dated January 19, 2006 and Circular
CIR/MRD/DP/ 21 /2012 dated August 02, 2012
17
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Securities and Exchange Board of India
ii. Further, in order to curtail the transfer of additional issue of shares/
securities including by way of further public offerings, rights issue,
preferential allotment, bonus issue etc of the listed company, prior to
receipt of final listing / trading approval, the depositories shall devise a
mechanism so that such new securities created shall be frozen till the time
34
final listing/ trading permission is granted by the exchange.
iii. In order to achieve the above, the Depositories are advised to allot such
additional shares/securities under a new temporary ISIN which shall be
kept frozen. Upon receipt of the final listing/ trading permission from the
exchange for such additional shares/ securities, the shares/securities
credited in the new temporary ISIN shall be debited and the same would
get credited in the preexisting ISIN for the said security. Thereafter, the
additional securities shall be available for trading.
iv. The stock exchanges are advised to provide the details to the depositories
whenever final listing / trading permission is given to securities. Further,
in case of issuance of equity shares by a company, listed on multiple stock
exchanges, the concerned stock exchanges shall synchronize their effective
dates of listing / trading approvals and intimate the same to depositories
in advance.34
2.3 Registrar and Share Transfer Agent
2.3.1 Appointment of a single agency for share registry work35
All work related to share registry pertaining in terms of both physical and
electronic shares shall be maintained at a single point i.e. either in-house
by the company or by a SEBI registered Registrar and Transfer Agent.
2.3.2 Inter-Depository transfers36
In case of inter-Depository transfers of securities, the Registrars shall
communicate the confirmation of such transfers within two hours, failing
which such transfers shall be deemed to have been confirmed. The
Registrars shall not reject inter-Depository transfers except where
34 Reference Circular CIR/MRD/DP/24/2012 dated September 11, 2012
35 Reference Circular D&CC/FITTC/Cir-15/2002 dated December 27, 2002
36 Reference Circular no. SMDRP/Policy/Cir-28/99 dated August 23, 1999
18
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Securities and Exchange Board of India
i. A Depository does not have adequate balance of securities in its account
or
ii. there is mismatch of transfer requests from the Depositories.
2.3.2 Common Registrars and Share Transfer agents37
Every company shall appoint the same Registrars and Share Transfer
agents for both the depositories.
2.3.3 Dematerialisation requests37, 72
Registrars and Share Transfer agents shall accept partial dematerialisation
requests and will not reject or return the entire dematerialization request
where only a part of the request had to be rejected. In cases where a DP
has already sent information about dematerialisation electronically to a
Registrar but physical shares have not yet been delivered, the Registrar
shall accept the demat request and carry out dematerialization on an
indemnity given by the DP and proof of dispatch of document given by
DP.
2.4 Mandatory admission of debt instruments on both the Depositories38
Debt instruments shall necessarily be admitted on both the Depositories.
2.5 American Depository Receipts (ADRs)/Global Depository Receipts
(GDRs)
2.5.1 Delivery of underlying shares of GDRs/ADRs in dematerialised form39
Underlying shares of GDRs/ADRs shall be compulsorily delivered in
dematerialised form. Pursuant to RBI directions in this regard, a non-
resident holder of ADRs/GDRs issued by a company registered in India,
on surrender of such ADRs/GDRs, can acquire the underlying shares
when such shares are released by the Indian Custodian of the ADR/GDR
issue. Further, the company whose shares are so released, or a Depository
37 Reference Circular SMDRP/Policy/Cir-28/99 dated August 23, 1999
38 Reference Circular D&CC/FITTC/Cir-13/2002 dated November 1, 2002 and Circular
MRD/DoP/SE/Dep/Cir-36/04 dated October 27, 2004
39 Reference Circular SMDRP/Policy/Cir-9/99 dated May 6, 1999
19
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Securities and Exchange Board of India
shall enter in the register or books, wherein such securities are registered
or inscribed, an address outside India of the non-resident holder of shares.
2.5.2 Tracking of underlying shares of GDRs/ADRs40
To ensure easy tracking of the underlying shares released on conversion of
the “depositories receipts” all such shares shall be credited to a separate
Depository Receipts (DRs) account of the respective investor. In this
regard, Depositories shall ensure that the following information is
provided to the domestic custodian holding the underlying shares on a
regular basis:
i. Total number of shares at the beginning of the month
ii. Number of shares transferred into the account (credited) during the
month
iii. Number of shares transferred out of the account (debited) during the
month.
iv. Balance at the end of the month.
This service can be availed of only by foreign investors other than the
OCBs.
2.6 Electronic Clearing System (ECS) facility
2.6.1 Use of ECS for refund in public/ rights issues.41&67
For locations where facility of refund through ECS is available details of
applicants shall be taken directly from the database of the depositories in
respect of issues made completely in dematerialised form. Accordingly,
DPs shall maintain and update on real time basis the MICR (Magnetic Ink
Character Recognition) code of Bank branch of BOs and other bank details
of the applicants in the database of depositories. This is to ensure that the
refunds through ECS are made in a smooth manner and that there are no
failed/wrong credits.
40 Reference Circular D&CC/FITTC/Cir-09/2002 dated July 4, 2002 and Circular
D&CC/FITTC/Cir-10/2002 dated September 25, 2002
41 Reference Circular SEBI/MRD/DEP/Cir-3/06 dated February 21, 2006 and circular
SEBI/CFD/DIL/DIP/29/2008/01/02 dated February 1, 2008 and Letter no.
MRD/DEP/PP/123624/08 dated April 23, 2008
20
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Securities and Exchange Board of India
2.6.2 Usage of electronic payment modes for making cash payments to the
investors42
i. For making cash payments to the investors, companies whose securities
are listed on the stock exchanges shall use, either directly or through their
Registrars to an Issue and Share Transfer Agent (RTI & STA), any RBI
(Reserve Bank of India) approved electronic mode of payment such as
Electronic Clearing Services (ECS) [LECS (Local ECS) / RECS (Regional
ECS) / NECS (National ECS)], National Electronic Fund Transfer (NEFT),
etc.
ii. In order to enable usage of electronic payment instruments, companies
whose securities are listed on the stock exchanges (or their RTI & STA)
shall maintain requisite bank details of their investors -
a. For investors that hold securities in demat mode, companies or their
RTI & STA shall seek relevant bank details from the depositories. To
this end, vide circular SEBI/MRD/DEP/Cir-3/06 dated February 21,
2006 and letter MRD/DEP/PP/123624/2008 dated April 23, 2008,
depositories have been advised to ensure that correct account
particulars of investors are available in the database of depositories.
b. For investors that hold physical share / debenture certificates,
companies or their RTI & STA shall take necessary steps to maintain
updated bank details of the investors at its end.
iii. In cases where either the bank details such as MICR (Magnetic Ink
Character Recognition), IFSC (Indian Financial System Code), etc. that are
required for making electronic payment are not available or the electronic
payment instructions have failed or have been rejected by the bank,
companies or their RTI & STA may use physical payment instruments for
making cash payments to the investors. Companies shall mandatorily
print the bank account details of the investors on such payment
instruments.
iv. Depositories are directed to provide to companies (or to their RTI & STA)
updated bank details of their investors.
42 Reference Circular CIR/MRD/DP/10/2013 dated March 21, 2013
21
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Securities and Exchange Board of India
SECTION-3: Depositories/ Depository Participant (DP) Related
3.1 Facility for a Basic Services Demat Account (BSDA)43
3.1.1 All depository participants (DPs) shall make available a "Basic Services
Demat Account" (BSDA) with limited services as per terms specified
herein.
3.1.2 Eligibility: Individuals shall be eligible to opt for BSDA subject to the
following conditions-
i. All the individuals who have or propose to have only one demat
account where they are the sole or first holder.
ii. Individuals having any other demat account/s where they are not the
first holder shall be eligible for BSDA in respect of the single demat
account where they are sole or first holder.
iii. The individual shall have only one BSDA in his/her name across all
depositories.
iv. Value of securities held in the demat account shall not exceed Rupees
Two Lakhs at any point of time.
3.1.3 Option to open BSDA: The DP shall give option:
i. To open BSDA to all eligible individuals who open a demat account
after the date of applicability of this circular;
ii. To all the existing eligible individuals to convert their demat account
into BSDA on the date of the next billing cycle based on value of
holding of securities in the account as on the last day of previous
billing cycle.
3.1.4 Charges:
i. The charge structure may be on a slab basis as indicated below:
a. No Annual Maintenance Charges (AMC) shall be levied, if the
value of holding is upto Rs. 50,000.
b. For the value of holding from Rs 50,001 to Rs 200,000, AMC not
exceeding Rs 100 may be charged.
ii. The value of holding shall be determined by the DPs on the basis of the
daily closing price or NAV of the securities or units of mutual funds,
as the case may be. Where such price is not available the last traded
43 Reference Circular CIR/MRD/DP/22/2012 dated August 27, 2012
22
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Securities and Exchange Board of India
price may be taken into account and for unlisted securities other than
units of mutual funds, face value may be taken in to account.
iii. If the value of holding in such BSDA exceeds the prescribed criteria at
any date, the DPs may levy charges as applicable to regular accounts
(non BSDA) from that date onwards.
iv. The DPs shall reassess the eligibility of the BOs at the end of every
billing cycle and give option to the BOs who are eligible to opt for
BSDA.
3.1.5 Services for Basic Services Demat Accounts:
i. Transaction statements:
a. Transaction statements shall be sent to the BO at the end of each
quarter. If there are no transactions in any quarter, no transaction
statement may be sent for that quarter.
b. If there are no transactions and no security balance in an account,
then no further transaction statement needs to be provided.
c. Transaction statement shall be required to be provided for the
quarter in which the account became a zero balance account.
ii. Holding Statement:
a. One annual physical statement of holding shall be sent to the stated
address of the BO in respect of accounts with no transaction and nil
balance.
b. One annual statement of holding shall be sent in respect of
remaining accounts in physical or electronic form as opted for by
the BO.
iii. Charges for statements: Electronic statements shall be provided free of
cost. In case of physical statements, the DP shall provide at least two
statements free of cost during the billing cycle. Additional physical
statement may be charged at a fee not exceeding Rs.25/- per statement.
iv. All BOs opting for the facility of BSDA, shall register their mobile
number for availing the SMS alert facility for debit transactions.
v. At least Two Delivery Instruction Slips (DIS) shall be issued at the time
of account opening.
23
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Securities and Exchange Board of India
vi. All other conditions as applicable to regular demat accounts, other
than the ones mentioned in this circular shall continue to apply to basic
services demat account.
3.1.6 Rationalisation of services with respect to regular accounts.
In partial modification of the earlier directions, the following
rationalisation measures shall be available for regular demat accounts:
a. Accounts with zero balance and nil transactions during the year: The
DPs shall send one physical statement of holding annually to such BOs
and shall resume sending the transaction statement as and when there
is a transaction in the account.
b. Accounts which become zero balance during the year: For such
accounts, no transaction statement may be sent for the duration when
the balance remains nil. However, an annual statement of holding shall
be sent to the BO.
c. Accounts with credit balance: For accounts with credit balance but no
transactions during the year, one statement of holding for the year
shall be sent to the BO.
3.2 Rajiv Gandhi Equity Savings Scheme, 2012 (RGESS)44
i. Vide notification 51/2012 dated November 23, 2012, Department of
Revenue, Ministry of Finance (MoF) has notified the Rajiv Gandhi Equity
Savings Scheme (RGESS), 2012. The notification is available on the website
of Income Tax Department under section “Notifications”.
ii. With regard to implementation of the MoF notification, the following is
clarified:
a. For RGESS eligible close-ended Mutual Funds schemes, advice given
by AMCs to the depository for extinguishment of units of close ended
schemes upon maturity of the scheme shall be considered as settled
through depository mechanism and therefore RGESS compliant.
b. AMCs shall disclose that the concerned RGESS eligible Exchange
Traded Funds and Mutual Fund schemes is in compliance with the
44 Reference Circular CIR/MRD/DP/32/201 dated December 06, 2012
24
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Securities and Exchange Board of India
provisions of RGESS guidelines notified by Ministry of Finance vide
notification no. 51/2012 F. No. 142/35/2012-TPL dated November 23,
2012, in Scheme Information Document (SID), in case of new fund
offer, or by way of addendum, in case of existing RGESS eligible
Exchange Traded Funds and Mutual Fund schemes.
c. Section 6(c) of the notification states that the eligible securities brought
into the demat account will automatically be subject to lock-in during
the first year, unless the new investor specifies otherwise and for such
specifications, the new retail investors shall submit a declaration in
Form B indicating that such securities are not to be included within the
above limit of investment. It is clarified that such declaration shall be
submitted by an investor to its Depository Participant within a period
of one month from the date of transaction.
d. For transactions undertaken by investors through their RGESS
designated demat account, Depositories may seek necessary
transactional details from stock exchanges viz. Actual Trade value,
Trading date, Settlement number, etc, for the purpose of enforcing
lock-in and for generating reports mandated vide MoF notification on
RGESS. On receipt of such request from depositories, stock exchanges
shall provide the details to depositories on an immediate basis. It shall
also be ensured that a uniform file structure is used by stock exchanges
and depositories for such intimation of transaction details.
e. With regard to point 3(ix) (a) & (b) of RGESS notification, depositories
may seek confirmation, as applicable, from stock exchanges.
f. With regard to the securities held in the RGESS designated account,
treatment of the corporate actions shall be as given at Annexure A.
iii. Stock exchanges shall furnish list of RGESS eligible stocks / ETFs / MF
schemes on their website. Further, the list shall also be forwarded to the
depositories at monthly intervals and whenever there is any change in the
said list. For this purpose, Mutual Funds / AMCs shall communicate list
of RGESS eligible MF schemes / ETFs to the stock exchanges.
25
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Securities and Exchange Board of India
Annexure A
Treatment of corporate actions
(i) Involuntary corporate actions: In case of corporate actions where investors has
no choice in the matter, for example: demerger of companies, etc, the compliance
status of RGESS demat account shall not change.
(ii) Voluntary corporate actions: In case of corporate actions where investors has
the option to exercise his choice and thereby result in debit of securities, for
example: buy-back, etc, the same shall be considered as a sale transaction for the
purpose of the scheme.
Consolidated list of ‘corporate actions’
Sr. Corporate Action Classification (Involuntary or
No. Voluntary)
1 Amalgamation Involuntary
2 Scheme of Arrangement Involuntary
3 Reduction of Capital Involuntary
4 Bonus issue Involuntary
5 Buy Back of Shares Voluntary (Involuntary in case
of court intervention)
6 Stock Split Involuntary
7 Consolidation of Shares Involuntary
8 Conversion of Partly Paid up Involuntary
9 Dividend [Final/ Interim/ Special] Involuntary
10 Exchange of Share Certificate Involuntary
[Name change]
11 Rights Issue Voluntary
12 Conversion (compulsory)* Involuntary
13 Conversion (optionally)* Involuntary
14 Redemption Involuntary (voluntary, if there
is option to continue with
revised terms)
15 Dividend on Mutual Fund Involuntary
16 Redemption of Mutual Fund Involuntary on maturity
(voluntary, if there is option to
shift between different
scheme(s) or on account of exit
26
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Securities and Exchange Board of India
option due to change in
fundamental attributes of
scheme)
* Considering any conversion into equities (e.g.: Conversion of warrants into
equities)
27
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Securities and Exchange Board of India
Annexure B – Illustration of lock-in period in RGESS
I. RGESS lock-in period if investments are brought in at once
28
¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
Annexure B – Illustration of lock-in period in RGESS
I. RGESS lock-in period if investments are brought are in installment
Period of Flexible lock-in
Period of Fixed lock-in
Fixed lock-in One year of Flexible Second year of
ends lock-in ends Flexible lock-in ends
March 11, 2013
Third set of
Rs. 10,000;
Securities 1 year
RGESS portfolio may
January 15, 2013
change during this period
Second set
of Securities
Rs. 30,000; 1 year 1 months
24days
November 23, 2012
First set of
Securities
Rs. 10,000; 1 year 3 months 16 days
March 10, March 10, March 10,
2014 2015 2016
Applicable finaaanacaiaa l year for
compliance will be 2014-15
ApApplpicliacbalbel efi nfiannacnicaila fl oyre ar for
cocmomplpialinacnec ew willi lbl eb e2 021051-51-61 6
29
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Securities and Exchange Board of India
3.3 Limitation period for filing an arbitration reference45
i. It is decided that the limitation period for filing an arbitration reference
shall be governed by the law of limitation, i.e., The Limitation Act, 1963.
The modified limitation period shall also be applicable to cover inter alia
the following cases:
a. where the limitation period (in terms of Limitation Act 1963) have not
yet elapsed and the parties have not filed for arbitration with the
depository,
or,
b. where the arbitration application was filed but was rejected solely on
the ground of delay in filing within the earlier limitation period; and
the limitation period (in terms of Limitation Act 1963) have not yet
elapsed.
3.4 Designated e-mail ID for redressal of investor complaints
46
ii. Depositories and registered DPs shall designate an exclusive e-mail ID for
the grievance redressal division/compliance officer exclusively for
registering investor complaints.
iii. The designated email ID and other relevant details shall be prominently
displayed on the websites and in the various
materials/pamphlets/advertisement campaigns initiated by the
Depositories and DPs for creating investor awareness.
3.5 Redressal of complaints against Stock Exchanges (SEs) and Depositories
through SEBI Complaints Redress System (SCORES).47
i. The complaints received by SEBI against SEs and Depositories shall be
electronically sent through SCORES. Depositories are advised to view the
pending complaints at http://scores.gov.in/admin and submit the Action
Taken Report (ATR) along with supporting documents electronically in
45 Reference Circular CIR/MRD/DP/4/2011 dated April 7, 2011
46 Reference Circular MRD/DoP/Dep/SE/Cir-22/06 dated December 18, 2006
47 Reference Circular CIR/MRD/ICC/16/2012 dated June 15, 2012
30
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Securities and Exchange Board of India
SCORES. Updation of action taken shall not be possible with physical
ATRs. Hence, submission of physical ATR shall not be accepted for
complaints lodged in SCORES.
ii. The SEs and Depositories shall do the following:
a. indicate a contact person in case of SCORES, who is an employee
heading the complaint services division/cell/department. Contact
detail (i.e. phone no., email id, postal address) of the said contact
person be made widely available for e.g. on the websites of
Depositories.
b. address/redress the complaints within a period of 15 days upon
receipt of complaint on SCORES. In case additional information is
required from the complainant, the same shall be sought within 7 days
of receipt on SCORES. In such case, the period of 15 days will be
counted upon the receipt of additional information.
c. maintain a monthly record of the complaints which are not
addressed/redressed within 15 days from the date of receipt of the
complaint/information, alongwith the reason for such pendency.
d. Upload/update the ATR on the SCORES. Failure to do so shall be
considered as non-redressal of the complaint and the complaint shall
be shown as pending.
3.6 Approval of amendments to Bye Laws / Rules of Stock Exchanges and
Depositories48
i. Depositories and exchanges shall submit the following information while
seeking SEBI approval for amendment to Bye Laws/ Rules/ Regulations
and amendments thereto:
a. The objective/purpose of amendments.
b. Whether the amendment is consequential to any directive/circulars/
guidelines from SEBI/ Government and the details thereof.
c. Whether such amendments necessitate any consequential amendments
to any other Bye Laws/ Rules/ Regulations.
48 Reference Circular LGL/Cir-2/2003 dated February 19, 2003
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Securities and Exchange Board of India
d. The proceedings of the Governing Board or Governing Council, as the
case may be, wherein these proposed amendments were approved by
the Exchanges/ Depositories.
e. If documents other than Bye Laws/ Rules/ Regulations are sent for
approval, the justification and need for forwarding the same to SEBI,
indicating whether it forms a part of any Bye Law/ Rule/ Regulation.
ii. Further, all Exchanges shall ensure that requests for dispensation of the
requirement of pre-publication shall be accompanied with proper
justification and indicate how the public interest or interest of trade shall
be served by such dispensation of pre-publication.
3.7 Preservation of Records49
i. Depositories and Depository Participants are required to preserve the
records and documents for a minimum period of 5 year.
ii. Depositories and DPs shall preserve respective original forms of
documents either in physical form or an electronic record, copies of which
have been taken by CBI, Police or any other enforcement agency during
the course of their investigation till the trial is completed.
3.8 Foreign investments in infrastructure companies in securities markets50
i. Pursuant to Government of India Policy, foreign investments in
infrastructure companies in the securities markets, namely Stock
Exchanges, Depositories and Clearing Corporations shall be as under:
a. Foreign investment shall be allowed in such companies up to 49% with
a separate Foreign Direct Investment (FDI) cap of 26% and Foreign
Institutional Investment (FII) cap of 23%;
b. FDI shall be allowed with specific prior approval of FIPB;
c. FII shall be allowed only through purchases in the secondary market;
d. FII shall not seek and will not get representation on the Board of
Directors;
49 Reference Circular SEBI/MRD/DEP/Cir-24/05 dated December 22, 2005, circular
SEBI/MRD/SE/Cir-16/2005 dated August 04, 2005 and circular MRD/DoP/DEP/Cir-20/2009
dated December 9, 2009
50 Reference Circular MRD/DSA/SE/Dep/Cust/Cir-23/06 dated December 22, 2006
32
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Securities and Exchange Board of India
e. No foreign investor, including persons acting in concert, will hold
more than 5% of the equity in these companies.
ii. The aforesaid limits for foreign investment in respect of recognised Stock
Exchanges shall be subject to 5% shareholding limit as prescribed under
the Securities Contracts (Regulation) (Manner of Increasing and
Maintaining Public Shareholding in Recognised Stock Exchanges)
Regulations, 2006.
3.9 Activity schedule for depositories for T+2 rolling Settlement51
i. The activity schedule for T+2 Rolling Settlement is as under:
Sr. Day Time Description of activity
No.
1 T Trade Day
By 1.00 pm Completion of custodial confirmation of
trades to CC/CH. (There is no separate
extended time limit for late confirmations).
2 T+1
By 2.30 pm Completion of process and download
obligation files to brokers/ custodians by the
CC/CH.
By 11.00 am Pay-in of securities and funds.
3 T+2
By 1.30 pm Pay-out of securities and funds.
ii. All Depositories shall adhere to the aforementioned activity schedule to
implement T+2 rolling settlement. DPs shall adhere to the designated
activities within the prescribed time limits as under:
a. DPs shall accept instructions for pay-in of securities from clients in the
physical form atleast upto 4 p.m. and in electronic form atleast upto 6
p.m. on T+1.
b. DPs shall complete execution of pay-in instructions latest by 10:30 a.
m. on T+2.
c. Depositories shall download the processed pay-in files to the Exchange
/ Clearing House / Clearing Corporation latest by 11:00 a.m. on T+2.
d. Pay-out of securities by the Exchange / Clearing House / Clearing
Corporation to the Depositories shall be executed by 1:30 p.m. on T+2.
51 Reference Circular DCC/FITTC/Cir-19/2003 dated March 4, 2003 and Circular
MRD/DoP/SE/Dep/Cir-18/2005 dated September 2, 2005
33
¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
e. Pay-out of securities shall be completed by the Depositories by 2:00
p.m. on T+2.
iii. All instructions received by the DPs shall have an execution date, which
may be either a current date or a future date. Instructions shall be valid till
the pay-in deadline or till 'end of day' (EOD) of the execution date,
whichever is earlier. DPs shall ensure that the validity period of
instructions is brought to the notice of the client while accepting the
instructions. In case the client account does not have sufficient balance
before pay-in deadline or till EOD, such instructions shall fail.
3.10 Settlement of transactions in case of holidays52
Due to lack of uniformity of holidays and force majeure conditions which
necessitate sudden closure of one or more Stock Exchanges and banks in a
particular state, result in situations where multiple settlements have to be
completed by the Stock Exchanges on the working day immediately
following the day(s) of the closure of the banks. Accordingly the Stock
Exchanges/Depositories are advised to follow the guidelines and adhere
to the time line.
i. The Stock Exchanges shall clear and settle the trades on a sequential basis
i.e., the pay-in and the pay-out of the first settlement shall be completed
before the commencement of the pay-in and pay-out of the subsequent
settlement/s.
ii. The cash/Securities pay out from the first settlement shall be made
available to the member for meeting his pay-in obligations for the
subsequent settlement/s.
iii. Further, in-order to meet his pay-in obligations for the subsequent
settlement, the member may need to move securities from one depository
to another. The Depositories shall, therefore, facilitate the inter-depository
transfers within one hour and before pay-in for the subsequent settlement
begins.
iv. The Stock Exchanges/Depositories shall follow a strict time schedule to
ensure that the settlements are completed on the same day.
v. The Clearing Corporation/Clearing House of the Stock Exchanges shall
execute Auto DO facility for all the settlements together, so as to make the
funds and the securities available with the member on the same day for all
the settlements, thereby enabling the availability of the funds/securities at
52 Reference Circular SEBI/MRD/Policy/AT/Cir- 19/2004 dated April 21, 2004
34
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Securities and Exchange Board of India
the client level by the end of the same day.
3.11 Supervision of branches of DPs53
i. To ensure compliance with Regulation 46 of the SEBI (Depositories and
Participants) Regulations, 1996, and Clause 19 of the Code of Conduct for
Participants contained in the Third Schedule to the Regulations the DP
shall ensure that it has satisfactory internal control procedure in place,
inclusive of their branch offices. DPs are therefore required in terms of
these provisions to put in place appropriate mechanisms to ensure that
their branches are carrying on the operations in compliance with the
applicable regulations, bye-laws, etc. DPs are also required to put in place
suitable internal control systems to ensure that all branches exercise due
diligence in opening accounts, complying with KYC requirements, in
ensuring systems safety in complying with client instructions, manner of
uploading client instructions, in verifying signatures and maintaining
client records, etc. DPs shall also ensure that the branches are suitably
integrated.
ii. Depositories shall examine the adequacy of the above mechanisms during
their inspections of DPs. The Depositories shall also carry out surprise
inspections/ checks of the DP branches apart from the regular inspection
of the DPs. Depositories shall also put in place appropriate mechanisms
for monitoring opening of branches by DPs.
3.12 Designated e-mail ID for regulatory communication with SEBI54
Depositories shall create a designated e-mail id for regulatory
communication and inform it to SEBI. This e-mail id shall be exclusive and
shall not be person-centric.
3.13 Disclosure of investor complaints and arbitration details on Depository
website 55
Depositories shall disclose the details of complaints lodged by Beneficiary
Owners (BO’s)/ investors against Depository Participants (DPs) in their
53 Reference Circular MIRSD/DPS-III/Cir-9/07 dated July 3, 2007
54 Reference Circular MIRSD/DPS- III/Cir-23/08 dated July 25, 2008
55 Reference Circular SEBI/MRD/ OIAE/ Dep/ Cir- 4/2010 dated January 29, 2010
35
¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
website. The aforesaid disclosure shall also include details pertaining to
arbitration and penal action against the DPs.
The format for the reports for the aforesaid disclosure consists of the
following reports:
i. Report 1A: Complaints received against DPs during 2009-10
ii. Report 1B: Redressal of Complaints received against DPS during 2008-09
iii. Report 1C: Redressal of Complaints received against DPs during 2009-10
iv. Report 2A: Details of Arbitration Proceedings (where Investor is a party)
during 2008-09:
v. Report 2B: Details of Arbitration Proceedings (where Investor is a party)
during 2009-10
vi. Report 3A: Penal Actions against DPs during 2008-09
vii. Report 3B: Penal Actions against DPs during 2009-10
viii. Report 4A: Redressal of Complaints lodged by investors against Listed
Companies during 2008 -09
ix. Report 4B: Redressal of Complaints lodged by investors against Listed
Companies during 2009 -10
36
¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
Report 1A: Complaints received against Depository Participants (DPs)# during 2009-10: Updated on mmm
dd yyyy (to be updated weekly) (In excel sheet)
Sl. Details of Complaint Status of Complaint
No. Date of Name of Type of SEBI Ref. Name of Status** Status Date of Name of Date of
Receipt Complainant Complaint* No. (if DP Date## Filing Arbitrator(s) Arbitration
applicable Arbitration Award
1
2
3
N
# including against its authorized persons, employees, etc.
## Status date is the date of resolution/reference to arbitration/finding it non-actionable. If under process, it is the date
of updation of this sheet.
37
¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
*/** As per Table 1
38
¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
Report 1B: Redressal of Complaints received against Depository Participants (DPs) during 2008-09:
Updated on mmm dd yyyy (to be updated every quarter) (In excel sheet)
Sl. Nam Status of No. of No. of Of the Complaints received during 2008-09
No e of DP BOs Compla No. of Complaints
. the (active/ accounts ints Resolved Non Arbitra Pending No. of Decide Decided Pending
DP inactive/ in at the receive through action tion for Arbitrati d by by for
process of beginnin d the able** Advise redressal on filed the Arbitrato Redressal
termination g of the against Depositor d with by BOs Arbitra rs in with
/withdrawa year the DP y Depositor tors favour of Arbitrator
l) * y the BOs s
1
2
3
39
¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
N
Total
*including against its authorized persons, employees, etc.
**Non actionable means the complaint that are incomplete / outside the scope of Depository
(Arrange the DPs in descending number of complaints filed against them during the period)
40
¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
Report 1C: Redressal of Complaints received against Depository Participants (DPs) during 2009-10: Updated on
mmm dd yyyy (to be updated every quarter) (In excel sheet)
Sl. Nam Status of No. of No. of Of the Complaints received during 2008-09
No e of DP BOs Complai No. of Complaints
. the (active/ account nts Resolved Non Arbitra Pending No. of Decide Decided Pending
DP inactive/ in s at the receive through action tion for Arbitrati d by by for
process of beginni d the able** Advise redressal on filed the Arbitrato Redressal
termination ng of against Depositor d with by BOs Arbitra rs in with
/withdrawal the the DP y Depositor tors favour of Arbitrator
) year * y the BOs s
1
2
3
N
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¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
*including against authorized persons, employees, etc.
**Non actionable means the complaint that are incomplete / outside the scope of Depository
(Arrange the DPs in descending number of complaints filed against them during the period)
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¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
Report 2A: Details of Arbitration Proceedings (where BO is a party) during 2008-09: Updated on mmm dd yyyy (to be
updated every quarter) (In excel sheet)
Sl. Name of No. of No. of Awards in No. of No. of No. of cases pending for redressal at the end
No. Arbitrato Awards favor of BOs Awards Awards of period
r Passed appealed Implemente
d
Filed by Filed by Pending For more For more than
DP BO than 6 3 months, but
months less than 6
months
1
2
3
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¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
N
Tota
l
(In case of panel of arbitrators, the cases / awards would appear against every member of the panel)
(Arrange the arbitrators in descending number of awards passed by them during the period)
Report 2B: Details of Arbitration Proceedings (where BO is a party) during 2009-10: Updated on mmm dd yyyy (to be
updated every quarter) (In excel sheet)
Sl. Name of No. of No. of Awards No. of No. of Awards No. of cases pending for redressal at the end of
No. Arbitrator Awards in favor of Awards Implemented period
Passed BOs appealed
Filed Filed Pending For more than For more than 3
by by 6 months months, but less
DP BO than 6 months
1
2
3
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¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
N
Total
(In case of panel of arbitrators, the cases / awards would appear against every member of the panel)
(Arrange the arbitrators in descending number of awards passed by them during the period)
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¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
Report 3A: Penal Actions against Depository Participants (DPs) during 2008-09: Updated on mmm dd yyyy (to be
updated every quarter) (in excel sheet)
Sl. Name Registration No. of Complaints Action against DP, its authorized person and employees together
No. of DP No. received No. of Penal Orders issued Monetary Penalties No. of Arbitration
levied (Rs. lakh) Awards issued against
For complaints For others For For DP
complaints others
1
2
3
N
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¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
- 47 -
¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
Report 3B: Penal Actions against Depository Participants (DPs) during 2009-10: Updated on mmm dd yyyy (to be
updated every quarter) (in excel sheet)
Sl. Name Registration No. of Complaints Action against DP, its authorized person and employees together
No. of DP No. received No. of Penal Orders issued Monetary Penalties No. of Arbitration
levied (Rs. lakh) Awards issued against
For complaints For others For For DP
complaints others
1
2
3
N
- 48 -
¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
- 49 -
¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
Report 4A: Redressal of Complaints lodged by investors against Listed Companies during 2008 -09: Updated on
mmm dd yyyy (to be updated every quarter) (In excel format)
Sl. No. Name of the Company No. of Complaints
Received Redressed through Non-Actionable* Pending for Redressal with Depository
Depository
1
2
3
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¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
N
Total
*Non actionable means the complaint that are incomplete / outside the scope of Depository
(Arrange the companies in descending number of complaints filed against them during the period)
Report 4B: Redressal of Complaints lodged by investors against Listed Companies during 2009 -10: Updated on
mmm dd yyyy (to be updated every quarter) (In excel format)
Sl. No. Name of the Company No. of Complaints
Received Redressed through Non-Actionable* Pending for Redressal with Depository
Depository
1
2
3
- 51 -
¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
N
Total
*Non actionable means the complaints that are incomplete / outside the scope of Depository
(Arrange the companies in descending number of complaints filed against them during the period)
- 52 -
¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
Table 1 A
Type Details
Type I Account Opening Related
I a Denial in opening an account
I b Account opened in another name than as requested
I c Non receipt of Account Opening Kit
I d Delay in activation/ opening of account
I e Non Receipt of copy of DP Client Agreement/Schedule A of
Charges
Type II Demat/Remat Related
II a Delay in Dematerialisation request processing
II b Delay in Rematerialisation request processing
II c Delay in/ Non-Receipt of Original certificate after demat
rejection
II d Non Acceptance of demat/remat request
Type III Transaction Statement Related
III a Delay in/ Non-Receipt of Statements from DP
III b Discrepancy in Transaction statement
Type IV Improper Service Related
IV a Insistence on Power of Attorney in its favour
IV b Deactivation/ Freezing/ Suspension related
IV c Defreezing related
IV d Transmission Related
IV e Pledge Related
IV f SMS Related
IV g Non-updation of changes in account (address/ signatories/bank
details/ PAN/ Nomination etc.)
Type V Charges Related
V a Wrong/ Excess Charges
V b Charges paid but not credited
V c Charges for Opening/closure of Account
Type VI Delivery Instruction Related (DIS )
VI a Non acceptance of DIS for transfer
VI b Delay in/ non Execution of DIS
VI c Delay in Issuance / Reissuance of DIS Booklet
Type VII Closure
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¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
VII a Non closure/ delay in closure of account
VII b Closure of a/c without intimation by DP
Type VIII Manipulation/ Unauthorised Action
VIII a Unauthorised Transaction in account
VIII b Manipulation
VIII c Unauthorised changes in account (address/ signatories/bank
details/PAN etc.)
Type IX Company/ RTA related
IX a Action – Cash
IX b Action – Non–Cash
IX c Initial Public Offer/ Follow-on Public Offer Related
Type X Others
** Status
Type Description
I Non actionable
I a Complaint incomplete
I b Outside the scope of Depository
I c Pertains to non-responding company.
II Resolved
III Under Process
IV Referred to Arbitration
V Forwarded to Company/RTA for appropriate action.
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¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
3.14 Disclosure of regulatory orders and arbitration awards on Depository
website 56
Depositories shall post all their regulatory orders and arbitration awards
issued since April 1, 2007. Further, all regulatory orders and arbitration
awards as and when issued shall be posted on their website immediately.
56 Reference Circular SEBI/MRD/ DP/ 19/2010 dated June 10, 2010
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¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
Section 4: Other Communications to Depositories having Policy Implications
4.1. Amendment in DP-BO Agreement57
i. It is observed that one of the clause of the captioned agreement mentions that
in case the client fails to make the payment of any amount as provided in the
agreement, the DP has the right to discontinue the depository services till
such time he makes the payment along with interest.
ii. It is felt that continuity of depository services (like sending of account
statements etc.) may facilitate in payment of dues by BO to DP.
iii. Depositories are therefore advised to modify all the relevant clauses including
the aforementioned clause of the said agreement to state that DP after giving
two days notice shall have a right to stop processing of instructions of BOs till
such time he makes the payment along with the interest.
iv. This modification shall also be made applicable to all the DP-BO agreement
already signed.
4.2. Activity of Demat of warehouse receipts58
The aforesaid activity is not in compliance with Regulation 28 of SEBI (D&P)
Regulations, 1996 and therefore depositories cannot carry out this activity.
Depositories are therefore advised to take suitable steps in this regard, either
to hive-off or to discontinue the activity.
4.3. Pledge of Shares through depository system59
i. Section 12 of the Depositories Act and Regulation 58 of the SEBI (Depositories
and Participants) Regulations, 1996 along with the relevant Bye Laws of the
Depositories clearly enumerate the manner of creating pledge. It is felt that
there is a need to communicate to the BOs that any procedure followed other
than as specified under the aforesaid provisions of law shall not be treated as
pledge.
ii. In order to clarify the same, the depositories are advised to issue a
communiqué to the DPs advising them to inform BOs about the procedure for
pledging of shares held in demat form as enumerated in the relevant sections
of the Depositories Act and SEBI (Depositories and Participants) Regulations,
1996. Depositories may also advise DPs that an off-market transfer of shares
leads to change in ownership and cannot be treated as pledge. Further, this
issue may also be taken up in the investor awareness programs wherein the
57 Reference: MRD/DP/SG-OW/2010/2012 dated January 20, 2012
58 Reference: MRD/DP/SG-OW/202/2012 and MRD/DP/SG-OW/203/2012 dated January 4, 2012
59 Reference: MRD/DoP/MAS – OW/16723/2010 dated August 17, 2010
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¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
manner of creation of pledge can be effectively communicated to the BOs
directly.
4.4. Transmission of shares60
Pursuant to the discussions with the depositories on the recommendations of
the Committee on “Transmission of Shares”, Depositories were advised to
ensure compliance with the following:
4.4.1 In cases of transmission of shares of a deceased security holder, where the
shareholding in the BO account of the deceased member, as calculated on the
date of application for transmission, is within the threshold limit of Rupees
One lakh in value, the DPs shall not insist on additional documents other than
any one or more of the documents mentioned below.
i. Affidavit – to the effect of the claim of legal ownership of the shares
ii. Deed of indemnity – indemnifying the depository and DP
iii. NOC from other legal heir(s), wherever applicable, along with the Claim
Form/TRF and copy of death certificate duly notarized/ attested by a
Gazetted officer or Family Settlement Deed as an alternate to the NOC duly
executed by all the legal heirs of the deceased Beneficial Owner, provided
that:
a. The Family Settlement Deed clearly vests the securities in favour of the
person seeking transmission in his/ her name.
b. Vesting of securities in favour of the person seeking transmission in his/
her name is not contingent upon any other onerous conditions in such
Family Settlement Deed.
Note: If the division of shares as per the Family Settlement Deed is
amongst more than one person, then the Family Settlement Deed can be
considered as an NOC for transmission of shares to each legal heirs
applying for transmission. However, if DPs still have problems in
comprehending the contents of the Family Settlement Deed, they should
refer the matter to Depositories for necessary advice on case-to-case basis.
4.4.2 DP(s) shall automatically open new account in the name of the surviving
members(s), in the same order as in the original account, on an application by
the surviving member(s) based on existing documents required as per the
KYC norms. Submission of new account opening form shall not be insisted
upon.
60 Reference: MRD/DoP/Dep/VM/182963/2009 dated November 12, 2009
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¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
4.4.3 A uniform time frame of 7 days, after receipt of all requisite documents, shall
be prescribed for processing of Transmission requests.
4.4.4 In case of multiple successors, NOC of non-applicants shall be recorded on
the TRF of the applicant instead of insisting separate TRF from each of the
successors.
4.4.5 Nomination facility shall be encouraged by the Depositories specifically
targeting BOs who have not opted for nomination. As regards new accounts,
it shall be provided for at the account opening stage itself. In case the person
(both an existing and new account holder) is not interested to nominate, then
such person would have to give a positive declaration to that effect.
4.5. SMS alerts for demat accounts operated by Power of Attorney61
Subscription to SMS Alert facility for depository accounts operated through
Power of Attorney (POA) would be mandatory except in case of accounts
held by non-individuals, foreign nationals, and NRIs.
4.6. Opening of demat account in case of HUF62
It is noted that as per law, in case of HUF, shares can be held in the name of
Existing Karta on behalf of HUF. Therefore, HUF demat accounts can be
opened in the name of Existing Karta but not in the name of Deceased Karta
and HUF entity.
4.7. Exemption from sending quarterly statements of transactions by depository
participants (DPs) to clients in respect of demat accounts with no
transactions and no security balances63
i. SEBI has provided exemption to Depository Participants from sending
quarterly transaction statements to the clients in respect of demat accounts
with no transactions and no security balances subject to the following
conditions:
a. Client is informed in advance that it will not be receiving Transaction
Statements for such accounts till there are any transactions or security
holdings in the demat account.
61 Reference: SEBI/MRD/DEP/VM/169784 /09 dated July 15, 2009
62 Reference: SEBI/ MRD/CDSL/ 149156 /2009 dated January 01, 2009
63 Reference: MRD/CDSL/VM/155773/2009 dated February 27, 2009,
MRD/DoP/NSDL/VM/168994 /2009 dated July 07, 2009 and MRD/CDSL/VM/168989 /2009 dated
July 07, 2009
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¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
b. KYC and PAN requirement in respect of all such depository accounts are
complied.
c. No Annual Maintenance Charges are levied for such an account.
d. Information which is required to be disseminated by Participants by way
of a note in the Transaction Statements will be required to be
communicated to such Clients separately.
e. The Internal Auditor of the Participant shall comment in its internal
audit report on compliance of the aforesaid requirements.
ii. Further, depository may like to consider whether, DPs should send a
consolidated Transaction Statements for the entire financial year in case of the
BOs to whom quarterly Transaction Statements are not sent.
4.8. Withdrawal by issuers from the depository64
i. As regards voluntary withdrawal by issuers from the depository, it is
informed that listed companies may not be allowed to withdraw from the
depository system unless they delist their securities from the stock exchanges.
ii. As regards companies under liquidation are concerned, it is informed that
deactivation of the ISIN may be only done in cases where companies have
been liquidated. In other cases where companies are being liquidated,
deactivation of ISIN resulting in total freezing may not be desirable as it will
disallow investors to hold shares in dematerialized form
4.9. Discontinuation of sending transaction statements by depository
participants to clients65
SEBI allowed discontinuation of sending transaction statements by depository
participants to clients subject to the following conditions:
i. Transaction statements were returned undelivered on three consecutive
occasions.
ii. The depository participant (DP) maintains proof that the transaction
statements were returned undelivered.
iii. The transaction statements were returned undelivered for the reasons which
clearly establish that the client no longer resides at the given address (i.e.
party shifted, etc.) and not for other reasons (i.e. residence/office closed,
address incorrect, address incomplete, etc.).
64 Reference: MRD/DoP/NSDL/VM/ 162378 /2009 dated May 06, 2009
65 Reference: MRD/NSDL/VM/158886 /2009 dated March 30, 2009
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¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã
Securities and Exchange Board of India
iv. The DP informs such clients through alternative means (such as outbound
call, SMS or email) that their transaction statements are returned undelivered
and they need to communicate the proper (new) address.
v. The DP ensures that on receipt of request for address modification from the
client as per the stipulated procedure, the dispatch of transaction statements
is immediately started. Further, the DP ensures that transaction statements
that were not delivered and dispatched due to discontinuation are also
dispatched immediately without any additional cost to the clients.
4.10. Further issue of shares under Section 86 of Companies Act and Companies
(Issue of Share capital with Differential Voting Rights) Rules, 200166
In all cases of shares issued by companies under Section 86(a) (ii) of
Companies Act and Companies (Issue of Share Capital with Differential
Voting Rights) Rules, 2001, separate ISIN may be allotted to differentiate
such shares from ordinary shares.
4.11. Updation of bank accounts details, MICR code and IFSC of bank branches by
Depository Participants (DPs)67
i. Please refer to SEBI Circular No. SEBI/MRD/DEP/Cir- 3/06 dated
February 21, 200641 whereby depositories were advised to instruct
Depository Participants (DPs) to update the MICR code and bank details of
the client in database of depositories.
ii. It has been informed by RBI that they have been receiving complaints from
managers to the issues that the funds routed through the electronic mode are
getting returned by destination banks because of incorrect or old account
numbers provided by beneficiary account holders.
iii. RBI has stated that Investors will have to ensure through their DPs that
bank account particulars are updated in master record periodically, to
ensure that their refunds, dividend payments etc. reach the correct
account, without loss of time. RBI has also suggested incorporation of
Indian Financial System Code (IFSC) of customer's bank branches apart from
9 digit MICR code; since IFSC of bank's branches is used for remittance
through National Electronic Funds Transfer (NEFT).
iv. It is advised that necessary action be taken in this matter to ensure that correct
account particulars of investors are available in the database of
depositories.
66 Reference: MRD/DoP/MC/141442 /2008 dated October 17, 2008
67 Reference: MRD/DEP/PP/123624 /2008 dated April 23, 2008
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Securities and Exchange Board of India
4.12. Establishment of connectivity by Clearing House / Clearing Corporation
(CH/CC) with the Depository – Clarification68
i. On examination of the provisions of Regulations 19(a) and 31 of the SEBI
(Depositories and Participants) Regulations, 1996, it is advised that
registration of a CC/CH of a stock exchange as a DP with SEBI is not
mandatory and a pre-requisite for it to obtain connectivity with the
depositories. However, if the CC/CH of a stock exchange desires to function
as any other "Depository Participant", i.e. to open BO accounts for investors or
clearing member account, registration as DP with SEBI is mandatory.
ii. In view of the above, Depositories are advised to provide continuous
electronic means of communication / connectivity to the CH/CC of the
Exchanges without insisting for a mandatory registration as DP with SEBI
with a condition that such entities would not be permitted to open BO
accounts for investors or clearing member account.
4.13. Computing and monitoring of the Aggregate Value of Portfolio of Securities
(AVPS) of the BOs held in dematerialised form by Stock Broker DPs
i. For the purpose of computing the AVPS of the beneficial owners held in
dematerialised form under Regulation 19(a)(viii) of SEBI (Depositories and
Participant) Regulations, 1996, the securities held by bank and financial
institutions as well as promoters holdings of a company held in
dematerialised form, may be excluded69.
ii. In view of the potential risk to the system and also to maintain the integrity of
the market, the depositories are advised to develop an appropriate systemic
alert in the depository system, so as to enable the system to generate and
convey automatic alerts to those SBDPs that reach a pre-determined level of
exposure. These alerts would serve as forewarnings to the SBDPs to the fact
that they are approaching their respective maximum exposure limits. [Note:
For this purpose, the depositories may monitor the value of securities with its
SBDPs on an "end of the day" basis.]70
4.14. Deadline time for accepting non pay-in related instructions71
i. The depositories are advised that any overrun of the time specified for 'spot
delivery contract' in the SCRA would result in the contract becoming illegal
68 Reference: MRD/DoP/ Dep/82334 /2006 dated December 14, 2006
69 Reference: SMDRP/RKD /NSDL/2494 /98 dated November 18, 1998, SMDRP/CDSL / 18300
/2000 dated November 16, 2000
70 Reference: MRD/DRK/SU/16034/2003 dated August 22, 2003
71 Reference: MRD/VSS/ARR/ 12255/2004 dated June 10, 2004
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Securities and Exchange Board of India
under section 16 of the SCRA (unless it is put through the stock exchange).
The DP-BO agreement cannot add anything to or subtract anything from this
position. However, it should be the responsibility of the DP to ensure that the
client's contract is not rendered illegal on account of delayed execution of the
delivery instruction.
ii. Keeping the hardships to change all the existing DP-BO agreements to enforce
the above into consideration, it is advised that suitable bye laws can be made
under section 26(2)(e) and (d) of Depositories Act, 1996 for imposing such
obligation on the DPs. Therefore, it is advised to amend/insert bye laws
which should expressly provide that the DPs shall execute the non pay-in
related instructions on the same day or on the next day of the instruction.
Further, pending such amendment, suitable instructions may be issued to DPs
to adhere to such time limit.
iii. The above clause may be suitably incorporated in the DP-BO agreement
while opening new accounts.
4.15. Clarification on our circular no. SMDRP/Policy/Cir-28/99 dated August 23,
199972.
i. Please refer to para 4 of the captioned circular which is reproduced below:-
"In cases where a DP has already sent information about dematerialisation
electronically to a Registrar but physical shares have not been received, the registrar
will accept the demat request and carry out dematerialization on the indemnity given
by the DP and proof of dispatch of document given by DP."
ii. It is clarified that the above provision shall be applicable to all the securities
like scrips, bonds, debentures, debenture stock or other marketable securities
eligible to be held in dematerialised form in a depository as defined in
Regulation 28 of the SEBl (Depository and Participants) Regulations, 1996.
4.16. Voting rights in respect of securities held in pool account73
It was informed that the corporate benefits availed by the clearing member,
clearing corporation and intermediaries shall be held in trust on behalf of
beneficiary owners. Therefore, the clearing member, clearing corporation as
well as the intermediaries cannot have voting rights in respect of securities
held in the pool account.
72 Reference: D&CC/ 1099 / 2002 dated November 01, 2002
73 Reference: SMDRP/NSDL/26563/2001 dated April 10, 2001
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Securities and Exchange Board of India
4.17. Operation of minor’s demat account74
Under [The] Hindu Minority and Guardianship Act, 1956, permission of
Court is required in the case of transfer by a natural guardian of immovable
property of a minor. However, shares are not immovable properly. Section
2(7) of Sale of Goods Act, 1930 includes shares within the definition of
"goods''. Neither the Indian Contract Act nor the Sale of Goods Act provide
for transfer by sale or otherwise by guardian /natural guardian of
goods/movable property in the name of minor to the effect that permission of
court is required in the matter of such transfer. In the case of accounts of
minor in banks also, the guardian is entitled to open, operate and even close
the account also. The DP account can, therefore, be operated by a natural
guardian without any order from the court though the same is neither
expressly permitted nor prohibited.
74 Reference: SMDRP/NSDL/4615 /2000 dated March 13, 2000
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Securities and Exchange Board of India
SCHEDULE
CIRCULARS
1. SMDRP/Policy/Cir-28/99 dated August 23, 1999.
2. SMDRP/Policy/Cir-05/2001 dated February 1, 2001.
3. D&CC/FITTC/Cir-13/2002 dated November 1, 2002.
4. D&CC/FITTC/Cir-09/2002 dated July 4, 2002.
5. D&CC/FITTC/Cir-10/2002 dated September 25, 2002.
6. D&CC/FITTC/Cir-15/2002 dated December 27, 2002.
7. D&CC/FITTC/CIR - 12/2002 dated October 30, 2002.
8. DCC/FITTC/Cir-19/2003 dated March 4, 2003
9. LGL/Cir-2/2003 dated February 19, 2003.
10. MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004.
11. MRD/DoP/Dep/Cir-27/2004 dated August 16, 2004.
12. MRD/DoP/SE/Dep/Cir-36/04 dated October 27, 2004.
13. SEBI/MRD/Policy/AT/Cir-19/2004 dated April 21, 2004.
14. SEBI/MRD/SE/DEP/Cir-4/2005 dated January 28, 2005.
15. SEBI/MRD/DEP/Cir-24/05 dated December 22, 2005.
16. SEBI/MRD/SE/Cir-16/2005 dated August 04, 2005.
17. MRD/DoP/Dep/Cir-22 /05 dated November 09, 2005.
18. MRD/DoP/SE/Dep/Cir-18/2005 dated September 2, 2005.
19. MRD/DoP/Dep/SE/Cir-22/06 dated December 18, 2006.
20. MRD/DSA/SE/Dep/Cust/Cir-23/06 dated December 22, 2006.
21. SEBI/MRD/DEP/Cir-3/06 dated February 21, 2006.
22. SEBI/MRD/DEP/Cir-2/06 dated January 19, 2006.
23. MRD/Dep/Cir- 20/06 dated December 11, 2006.
24. MRD/DoP/Dep/Cir-09/06 dated July 20, 2006.
25. MRD/DoP/Dep/SE/Cir-17/06 dated October 27, 2006.
26. MRD/DoP/Dep/SE/Cir-13/06 dated September 26, 2006.
27. MRD/DoP/Dep/Cir-09/06 dated July 20, 2006.
28. MRD/DoP/Cir- 5/2007 dated April 27, 2007.
29. MIRSD/DPS-III/Cir-9/07 dated July 3, 2007.
30. SEBI/MRD/Dep/Cir-03/2007 dated February 13, 2007.
31. SEBI/CFD/DILDIP/29/2008/01/02 dated February 1, 2008.
32. MIRSD/DPS- III/Cir-23/08 dated July 25, 2008.
33. SEBI/MRD/Dep/Cir-03/2008 dated February 28, 2008.
34. MRD/DoP/Cir-20/2008 dated June 30, 2008.
35. MRD/DoP/SE/Dep/Cir-2/2009 dated February 10, 2009.
36. CIR/MRD/DP/19/2010 dated June 10, 2010.
37. CIR/MRD/DP/20/2010 dated July 1, 2010.
38. CIR/MRD/DP/22/2010 dated July 29, 2010.
39. CIR/MRD/DO/37/2010 dated December 14, 2010.
40. CIR/MRD/DP/04/2011 dated April 07, 2011.
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Securities and Exchange Board of India
41. CIR/MRD/DP/05/2011 dated April 27, 2011.
42. MIRSD/SE/Cir-21/2011 dated October 5, 2011.
43. CIR/MRD/ICC/16/2012 dated June 15, 2012.
44. CIR/MRD/DP/21/2012 dated August 02, 2012.
45. CIR/MIRSD/09/2012 dated August 13, 2012.
46. CIR/MRD/DP/22/2012 dated August 27, 2012.
47. CIR/MRD/DP/24/2012 dated September 11, 2012.
48. CIR/MRD/DP/DA/25/2012 dated September 21, 2012.
49. CIR/MRD/DP/27/2012 dated November 01, 2012.
50. CIR/MRD/DP/32/2012 dated December 06, 2012.
51. CIR/MRD/DP/10/2013 dated March 21, 2013.
COMMUNICATIONS
1. SMDRP/NSDL / 3055 /1998 dated August 11, 1998.
2. SMDRP/RKD /NSDL/2494 /98 dated November 18, 1998.
3. SMDRP/NSDL/4615 /2000 dated March 13, 2000.
4. SMDRP/CDSL / 18300 /2000 dated November 16, 2000.
5. SMDRP/NSDL/26563/2001 dated April 10, 2001.
6. D&CC/ 1099 / 2002 dated November 01, 2002.
7. MRD/DRK/SU/16034/2003 dated August 22, 2003.
8. MRD/VSS/ARR/ 12255/2004 dated June 10, 2004.
9. MRD/DoP/ Dep/82334 /2006 dated December 14, 2006.
10. MRD/DEP/PP/123624 /2008 dated April 23, 2008.
11. MRD/DoP/MC/141442 /2008 dated October 17, 2008.
12. SEBI/ MRD/CDSL/ 149156 /2009 dated January 01, 2009.
13. MRD/CDSL/VM/ 155773 /2009 dated February 27, 2009.
14. MRD/NSDL/VM/158886 /2009 dated March 30, 2009.
15. MRD/DoP/NSDL/VM/ 162378 /2009 dated May 06, 2009.
16. MRD/DoP/NSDL/VM/168994 /2009 dated July 07, 2009.
17. MRD/CDSL/VM/168989 /2009 dated July 07, 2009.
18. SEBI/MRD/DEP/VM/169784 /09 dated July 15, 2009.
19. MRD/DoP/Dep/VM/182963/2009 dated November 12, 2009.
20. MRD/DoP/MAS – OW/16723/2010 dated August 17, 2010.
21. MRD/DP/SG-OW/202/2012 and MRD/DP/SG-OW/203/2012 dated
January 4, 2012.
22. MRD/DP/SG-OW/2010/2012 dated January 20, 2012.
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