Master Circular for Depositories

CIR/MRD/DP/10/2012 · 2012-04-13 · Securities and Exchange Board of India

Summary

This part of the document introduces the SEBI Master Circular for Depositories, compiling circulars issued up to March 31, 2012. It provides a table of contents outlining four main sections covering Beneficial Owner accounts, Issuer-related matters, Depository/DP regulations, and other communications. The substantive text begins with Section 1, detailing requirements for opening BO accounts, specifically focusing on Proof of Identity and Proof of Address. This section mandates due diligence for third-party correspondence addresses and outlines exemptions from mandatory PAN requirements for specific entities. It prohibits the levying of charges for account opening, custody, credit, closure, and inter-depository transfers. Additionally, it establishes rules for refunding upfront maintenance fees upon account closure or transfer. Section 1.3.6 mandates Depository Participants to submit tariff structures annually for dissemination by depositories on their websites. Section 1.4 requires clearing members to transfer funds and securities from pool accounts to beneficiary accounts within one working day, imposing penalties for delays. Sections 1.5 through 1.7 detail grievance redressal mec

Text

This Master Circular is a compilation of the circulars/communications issued by SEBI up to March 31, 2012 and shall come into force from the date of its issue.

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.

Put necessary systems in place so that the databases of the clients and their transactions are linked to the PAN details of the client.

Build necessary infrastructure to enable accessibility and query based on PAN thereby enabling retrieval of all the details of the clients.

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.

Cross-check the aforesaid details collected from their clients with the details on the website of the Income Tax Department.

For individuals falling under the category exempted from the mandatory requirement of PAN, a copy of any one of the following may be accepted as Proof of Identity: Passport, Voter ID Card, Driving license, PAN card with photograph, or Identity card/document issued by specified authorities.

A copy of any one of the following documents may be accepted as proof of address: Ration Card, Passport, Voter ID Card, Driving license, Bank Passbook, verified utility bills, lease agreements, self-declaration by judges, or identity cards issued by specified entities.

DP shall ensure that all documents pertaining to proof of identity and proof of address are collected from all the account holders. Submission of the aforesaid documents is the minimum requirement for opening a BO Account. DPs must verify the copy of the aforementioned documents with the original before accepting the same as valid.

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. 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. However, the above provision shall not apply in case of PMS (Portfolio Management Services) clients.

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.

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. 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.

Source: SecMarx — Master Circular for Depositories. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.