Strengthening the Guidelines and Raising Industry standards for RTA, Issuer Companies and Banker to an Issue
Summary
This circular establishes strengthened guidelines for RTAs, Issuer Companies, and Bankers to Issue regarding dividend payments and record maintenance. It mandates strict compliance with annexed procedures for handling securities transfers, transmissions, and error corrections. The document requires specific internal controls, such as the Maker-Checker concept and system logs, to ensure data accuracy and audit trails. This section mandates the maintenance of registers for debenture holders, security certificates, and destroyed records by Issuer Companies and RTAs. It outlines strict procedures for collecting PAN and bank details from physical security holders and exercising enhanced due diligence on specific account types. Additionally, it establishes a framework for compulsory annual internal audits of RTAs by independent professionals.
Text
SEBI constituted a Committee on “Strengthening the Guidelines and Raising Industry Standards for RTAs”... The objective of the Committee was to suggest guidelines to streamline and strengthen the procedures and processes...
Based on recommendation of Committee, the guidelines as annexed to this Circular are being issued. These guidelines cover the following broad areas: i. Provisions with respect to Payment of Dividend/interest/redemption/ redemption ii. Provisions with respect to Transfer/Transmission/ Correction of errors etc. iii. Compulsory internal audit of RTAs
Unless otherwise indicated in the annexure, , the records /documents described in annexure shall be maintained for period not less than eight years after completion of the relevant transactions by Bankers to issue, Issuer Companies, and/or by RTAs on behalf of Issuer Companies
RTAs, BTIs and Issuer Companies shall strictly comply with guidelines (annexed). Issuer companies shall strictly monitor the activities of their RTAs and ensure compliance of provision of this circular. It is clarified that where share transfer agent activities are carried out in-house by issuer companies, the issuer companies shall ensure that their in-house share transfer activities comply with the relevant norms as applicable to them.
RTAs, Bankers to issue, and the Issuer Companies can put in place more stringent internal checks and controls if they so desire.
These guidelines issued through this circular shall be effective with immediate effect except where a timeframe has been prescribed in the guidelines itself.
Stock Exchanges are advised to bring the contents of this circular to entities listed on their respective Exchange.
This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
The Issuer Company, RTA and the dividend/interest/redemption processing Bank shall ensure that the Dividend/Interest/redemption Master file... shall include Company Name, Folio No., DPID/Client ID, Name of the first securities holder... The said file shall be shared with the Banker through a secured process/procedure...
In cases where bank account details of the securities holder is not available with RTA or there is change in bank account details, RTA shall obtain account details along with cancelled cheque to update the securities holder’s data... The unpaid dividend shall be paid via electronic bank transfer.
The dividend/interest/redemption processing Bank shall ensure that any dividend/interest/redemption instrument... lying unpaid beyond the validity period of the instrument shall be cancelled and the dividend/interest/redemption amount transferred earlier by issuer in the said account shall be credited back immediately to the relevant bank account of the Issuer Company.
Revalidation/Re-issue requests to the dividend/interest/redemption processing bank by the RTA should contain at least Name of the Company, DPID/Client ID/Folio No.... RTA shall maintain records of the revalidation/re-issue requests.
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Source: SecMarx — Strengthening the Guidelines and Raising Industry standards for RTA, Issuer Companies and Banker to an Issue. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.