SEBI Puts in Place Safeguards to Address Concerns of Investors Transferring Securities in a Dematerialised Mode
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- Last Updated on 23 March, 2024
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Circular No. SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/18; Dated: 20.03.2024
SEBI has issued safeguards to address the investors’ concerns arising from the transfer of securities from the Beneficial Owner (BO) account. These safeguards aim to harmonize the classification of inactive/dormant accounts across stock exchanges and depositories and to strengthen the measures to prevent fraud and misappropriation of inoperative demat accounts.
It states that depositories must give more emphasis on investor education, particularly regarding the 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.
Further, DPs are instructed not to accept pre-signed DIS with blank columns from the BOs. The DPs must not issue more than 10 loose DISs to one account holder in a financial year (April to March). The loose DIS can be issued only if the BOs come in person and sign the loose DIS in the presence of an authorised DP official.
The DP must also ensure that a new DIS booklet is issued only on the strength of the DIS instruction request slip duly complete in all respects unless the request for a fresh booklet is due to loss, etc.
In case, the request for issuance of the DIS booklet is received in an inactive/dormant account, the DIS booklet must be delivered at the registered address of the BO as per the DP records. This helps to ensure the genuineness of the BO’s request for the issuance of DIS. Such issuance of DIS must be authorized by the compliance officer or any other designated senior official of the DP.
Also, the DPs must put in place appropriate checks and balances for the verification of the signatures of the BOs while processing the DIS. The DPs must cross-check with the BOs under exceptional circumstances before acting upon the DIS. The provisions of this circular shall come into effect from April 1, 2024.
Click Here To Read The Full Circular
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