Here in this post, we will discuss about complete circulars as per the NSDL which will guide the reader to understand make a decisive part of its process within the compliance of SEBI and competitive authorities.
Subject:- Amendments to Bye Laws and Business Rules of NSDL – Operational Guidelines for Demat of securities received for processing investor service requests.
The attention of Issuers & R&T Agents is invited to SEBI Circular No.SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2022/8 on January 25, 2022, for the Operational Guidelines for dematerialization of securities obtained for processing investor’s service requests via the Issuer/RTA as shown below:
For the same concern, issuers, and R&T agents would be provided that the revision would be incurred in the Bye-Laws and Business Rules of NSDL to ease the acceptance via the Participant of letter of confirmation furnished via the Registrar and Transfer Agent in place of the original security certificates with respect to below:
Amendment to Bye-law 9.2 DEMATERIALISATION
Inserted new Business Rule 11.1.18 under rule 11 withdrawal and deposit of securities to/from the account of the client.
The revised NSDL Bye Laws and Business Rules are held as Annexure A and Annexure B in track change mode correspondingly.
All Issuers / R&T Agents seek to take learn the above information.
For and on behalf of National Securities Depository Limited.
Withdrawal and Deposit of Securities to/From a Client Account
11.1 Dematerialisation of Securities
11.1.1. Every client furnishes to the participant the securities for the dematerialization including the Dematerialisation Request Form (DRF). The specimen of the DRF is provided in Form 4.
11.1.2. No dematerialization request would be taken into account via participant excluding the registered holder of securities.
11.1.3. The participant must confirm that the certificates provided via its client for the dematerialization belong to the list of securities admitted via the depository as qualified for the dematerialization.
11.1.4. The participant must confirm, DRF submitted through its client would be filled completely and is being duly signed including the verification of the client’s signature with its records.
11.1.5. The Participant will forward the DRF to the Issuer or its Registrar & Transfer Agent only post-founding that the number of certificates annexed with the DRF tallies with the number of certificates cited on the DRF.
For the transposition/transmission/signature variation with the issuer’s records and dematerialization cases, the Participant would forward Form 31/32/42 according to the case may be, including the DRF to the Issuer or its Registrar & Transfer Agent.
11.1.6. The Participant reviews the Distinctive Numbers of certificates of securities submitted by its Client for dematerialization including the records of Distinctive Numbers made available via the depository and confirms that the relevant International Securities Identification Number [ISIN] is filled in DRF, as suitable.
11.1.7. Participant, will validate the information of the certificates provided for the dematerialization with the information furnished in the related DRF.
11.1.8. The participant will confirm the certificates provided for the dematerialization would be marked via the client with the words “Surrendered for Dematerialisation” which must be at least four inches in length and one inch in width.
11.1.9. The participant confirms the safety and security of the certificates provided for the dematerialization till the certificates would get forwarded to the issuer or its Registrar and Transfer Agent.
11.1.10. The participant would deny the security certificates by drawing two parallel lines across the certificate and then punching the two holes on the name of the company in the way laid down in Annexure A before forwarding the same to the Issuer or its Registrar and Transfer Agent.
11.1.11. The Participant confirms that a separate DRF would get filled via the Client for securities having distinct International Securities Identification Numbers [ISINs].
11.1.12. The Participant confirms that a separate DRF shall get filled in via the Client for locked-in and free securities having the same ISIN.
11.1.13. The Participant confirms that the Client provides a separate DRF for each of its accounts maintained through the Participant.
11.1.14. The Securities dematerialized will be credited to the accounts that the participant maintains merely when the pattern of holdings in the account of the client matches the pattern of holdings according to the security certificates.
Given that the case in which the names appear on the certificates matches with the names where the account would have been opened however are in a distinct order, the client could obtain the security certificates dematerialized via submitting the securities of the certificates including the Transposition Form under Form 31 and the Dematerialisation Request Form (DRF) to the Participant. The reason for the pattern of holding is provided in Annexure B.
11.1.15. In the case of securities that have been submitted for the purpose of dematerialization for which any objection memo has been obtained through the Issuer or its Registrar and Transfer Agent, the Participant would ease the modification of these kinds of objections from time to time.
11.1.16. Public or rights issues related to security would have been admitted to the depository which is to be contained in the dematerialized form, the Issuer or its Registrar and Transfer furnishes the clients with the utility to show their option between the electronic and physical holdings in the share application form in the form and mode provided in Form 5.
11.1.17. For the case of the same issue in the electronic form as mentioned above the account of the client maintained with the participants would be credited with the same securities issues merely if the holding pattern of these accounts corresponds with the pattern of the client’s application in the above-mentioned form. The pattern of this kind of holding would be elaborated in Annexure B.
9.2.1. Into the Depository Credit of securities would be made either on the basis of the dematerialization of physical securities or on the fresh issuing of the securities in the dematerialized form.
9.2.2. A Client may convert his physical holdings of securities into dematerialized form by making an application to the Participant in a Dematerialisation Request Form (hereinafter referred to as DRF) in the form prescribed under the Business Rules along with the relevant security certificates.
9.2.3. The obtained DRF shall get forwarded by the participant including the security certificates or the letter of confirmation (under the case specified), to the Issuer or its Registrar and Share Transfer Agent after registering electronically the request with the Depository. The Participant forwarded the DRFs not later than 7 days post their acceptance through its Client.
9.2.4. The intimation shall get sent by the Depository electronically, on a daily basis, all dematerialization requests to the individual Issuer or its Registrar & Transfer Agent.
9.2.5. The Issuer or its Registrar & Transfer Agent shall verify the validity of the security certificates or the Letter of Confirmation (as the case may be) as well as the fact that the DRF has been made by the person recorded as a member in its Register of Members.
9.2.6. Post the mentioned verification, the issuer or its Registrar & Transfer Agent would be told to the Depository authorizing an electronic credit for that security in the client’s favor. On the receipt of these types of intimation, the depository would cause the needed credit entries to get incurred in the clients’ account.
9.2.7. The clients do not obtain a credit of any securities to their accounts until the Depository obtained an intimation via the Issuer or its Registrar & Transfer Agent or its agents as set out in Bye-Law 9.2.6 above.
9.2.8. In which the Issuer or its Registrar & Transfer Agent denies any dematerialization request, the same would electronically intimate the Depository for these types of rejection within the duration of 15 days.
9.2.9. On the Issuer or its Registrar & Transfer Agent intimating to the Depository through the way as mentioned in Bye-Law 9.2.8 above, the Issuer or its Registrar & Transfer Agent returns the DRF including the appropriate security certificates or letter of confirmation (under the particular case) unless the reasons for the same rejections would be:
9.2.10. Towards the intimation obtained via depository via issuer or Registrar & Share Transfer Agent for crediting the securities to the client account that doesn’t matches with the information of the client, the balance would get carried in a suspense account and shall be reconciled as provided in 9.7.1.
9.2.11. For the case of any individual doing a claim to the securities which would get maintained in the client’s name with the depository post its registration, the claim should get settled in the participants, clients, and issuers or its Registrar & Transfer Agent.
9.2.12. An intimation shall get furnished by the Issuer or its RTA Agent which was mentioned in Bye-Law 9.2.6 above, shows and warrants to the Depository, these securities exist and are validly issued and is entitled/or has full authority to transfer the same securities with the Depository in the client’s name.
9.2.13. The process mentioned in the Business Rules could be followed for the dematerialization of the securities like the client’s name that appears on the security certificates match with the names in which the account has been opened but are in a distinct order.
9.2.14. If a client wants the name(s) of the deceased joint holder(s) terminated from the security certificate(s) and gets them dematerialized, it might do so by complying with the process laid down in the Business Rules.