CIRCULAR
SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/18 March 20, 2024
To
All Depositories
Dear Sir/ Madam,
Sub: Safeguards to address the concerns of the investors on transfer of
securities in dematerialized mode
1. Para 1.12 of SEBI Master circular for Depositories dated October 06, 2023
prescribed guidelines to address the concerns arising out of transfer of
securities from the Beneficial Owner (BO) Accounts without proper
authorization by the concerned investor.
2. To harmonize the classification of inactive/dormant accounts across Stock
Exchanges & Depositories and to strengthen the measures to prevent fraud /
misappropriation for inoperative demat accounts, based on consultation with
depositories and the recommendations of SMAC, it has been decided to amend
Para 1.12 as under:
1.12. Safeguards to address the concerns of the investors on transfer of
securities in dematerialized mode
Following safeguards shall be put in place to address the concerns of the
investors arising out of transfer of securities from the BO Accounts:
1.12.1. 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.
1.12.2. The DPs shall not accept pre-signed DIS with blank columns from the
BO(s).
1.12.3. If the DIS booklet is lost / stolen / not traceable by the BO, the same must
be intimated to the DP immediately by the BO in writing. On receipt of
such intimation, the DP shall cancel the unused DIS of the said booklet.
1.12.4. 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 Para 1.12.3 above.
Further, in case the request for issuance of the DIS booklet is received
in an inactive/dormant account, the DIS booklet shall be delivered at the
registered address of the BO as per the DP records. This shall help
ensure the genuineness of the BO’s request for issuance of DIS. Such
issuance of DIS shall be authorized by the Compliance Officer or any
other designated senior official of the DP.
Explanation:
1. An inactive/dormant account refers to an account where no
transaction has taken place for a continuous period of 12 months.
2. Further, a credit in the demat account through purchase of securities
and voluntary corporate action (such as subscribing to rights issues/
systematic investment plans (SIPs) of mutual funds, etc.) may be
considered as a transaction for assessing the dormancy. However,
any credit due to involuntary corporate action (such as bonus, split,
etc.) may not be considered as transaction for assessing the
dormancy.
1.12.5. The DPs shall not issue more than 10 loose DIS to one account holder
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.
1.12.6. The DPs shall put in place appropriate checks and balances with regard
to the verification of signatures of the BOs while processing the DIS.
1.12.7. The DPs shall cross check with the BOs under exceptional
circumstances before acting upon the DIS.
1.12.8. The DPs shall mandatorily verify with a BO before acting upon the DIS,
in case of an inactive/dormant account, whenever any security in such
account is transferred at a time. Such verification by DPs shall require a
recorded phone call on registered number of BO by the authorized official
of the DP and shall be additionally authorised by the Compliance officer
or any other designated senior official of the DP. 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/her signature.
However, in case of active accounts, such verification may be made
mandatory only if the BO account has 5 or more International Securities
Identification Number (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. Such
verifications shall be additionally authorized by the Compliance Officer
or any other designated senior official of the DP.
3. This Circular amends Para 1.12 of SEBI Master circular for Depositories dated
October 06, 2023.
4. The provisions of this circular shall come into effect from April 1, 2024.
5. The depositories are accordingly advised to:
a. make necessary amendments to the relevant bye-laws, rules and
regulations for the implementation of the above decision immediately, as
may be necessary/applicable.
b. bring the provisions of this circular to the notice of the DPs of the Depository
and to disseminate the same on their website as well as monitor compliance
by DPs.
c. communicate to SEBI the status of implementation of the provisions of this
circular in the Monthly Development Report.
6. This circular is being issued in exercise of powers conferred under Section 11
(1) of the Securities and Exchange Board of India Act, 1992 to protect the
interests of investors in securities market.
Yours faithfully,
Vishal Shukla
General Manager