[Opinion] Streamlining Investor Affairs | SEBI’s Progressive Measures in Securities Transmission and Reporting

CS Vallabh M Joshi & CS Hasti Vora – [2023] 156 taxmann.com 540 (Article)

In the intricate world of investments, regulatory bodies play a pivotal role in ensuring transparency, efficiency, and investor protection. The Securities and Exchange Board of India (SEBI), in its ongoing commitment to enhancing investor ease, bought two significant circulars1 aimed at simplifying procedures and ensuring smoother transitions in cases of investor demise and transmission of securities.

It has been actively engaged in streamlining and enhancing the processes within the securities market. Two significant circulars issued by SEBI, namely “Centralized Reporting of Investor Demise through KRAs” and “Simplification and Standardization of Securities Transmission Documents,” hold paramount importance in shaping the landscape of investor protection and ease of operations within the financial market.

Centralized Reporting of Investor Demise through KRAs

SEBI’s directive focuses on streamlining the process of reporting an investor’s demise through KYC Registration Agencies (KRAs). The Centralized Reporting of Investor Demise through KRAs (KYC Registration Agencies) focuses on establishing a robust mechanism to report investor demises efficiently. It is imperative to understand this circular within the broader context of safeguarding investor interests and ensuring the seamless transmission of securities post an investor’s demise. This move holds great significance as it impacts the seamless transfer of investments to rightful heirs or beneficiaries.

The circular necessitates KRAs to set up a robust system capable of receiving and processing information related to an investor’s demise. By creating this centralized reporting mechanism, SEBI aims to ensure that critical information reaches all financial entities and intermediaries where the deceased investor held investments. This pivotal step intends to expedite the transfer process, facilitating a smoother transition of assets during an emotionally challenging time for the investor’s family or beneficiaries.

Simplification and Standardization of Securities Transmission Documents

Complementing the endeavour to streamline investor affairs, SEBI’s circular dated 18th May 2022 (Simplification of procedure and standardization of formats of documents for transmission of securities)addresses the simplification and standardization of documents required for the transmission of securities. This initiative aims to harmonize and standardize the documentation involved in the transfer of securities due to various events, including death, transmission, nomination, and more.

By standardizing these documents, SEBI endeavours to minimize complexities and discrepancies that often arise during the transmission process. The objective is to establish uniformity in the documentation required, thereby facilitating a more efficient and expedited transfer of securities to the legal heirs or beneficiaries.

Upon a deeper examination, it becomes apparent that the Centralized Reporting of Investor Demise through KRAs is an extension of the principles outlined in the standardization circular. By integrating the mechanisms of centralized reporting into the standardized transmission documents, SEBI intends to create a comprehensive framework that not only simplifies the transmission process but also ensures prompt and accurate reporting of investor demises.

The amalgamation of these two circulars reflects SEBI’s commitment to fortifying the investor protection framework by addressing crucial aspects related to transmission and reporting procedures in the event of an investor’s demise. Let’s delve into each circular to grasp the nuances and how they intertwine to create a more cohesive regulatory framework.

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