Delay in transfer of shares by companies
Summary
This circular mandates specific procedures for stock exchanges and companies to resolve delays in share transfers, handle company objections, and issue duplicate certificates. It establishes timelines for transferring shares when transfer deeds are held by companies or investors, particularly regarding signature discrepancies and lost documents. The document also imposes liability on companies for compensating opportunity losses caused by delayed objections or failure to communicate valid objections within stipulated periods.
Text
Companies shall effect the transfer of shares on obtaining from the transferee the proof of purchases duly acknowledged by the stock exchange/broker... Before effecting transfer, the company shall within 10 days... send letters... asking for their confirmations/no-objection... If the confirmation is received /no-objection is not received within 15 days... the transfer would be effected immediately thereafter.
In respect of complaints... where the original transfer deeds have been lost... companies shall transfer the shares as per the first proviso to sub-section (1) of Section 108 of the Companies Act on obtaining from the transferee the proof of purchases duly acknowledged by the stock exchange/broker on an indemnity bond from the transferee.
Shares shall be tranferred by the company to the investor/IM, as applicable, provided no objection certificate of the buyer/buying broker is provided.
In such cases the company would be liable to compensate the aggrieved party for the opportunity losses during the intervening period.
Before effecting transfer, the company shall within 10 days of receipt of shares from the transferee, send letters under registered post AD/ Speed Post AD to the transferor(s) asking for their confirmations/no-objection... If the confirmation is received/no objection is not received within 15 days, the transfer would be effected immediately thereafter.
In such cases the company would be liable to compensate the opportunity losses occurred to the investor(buyer). In addition, the company shall transfer the shares immediately and... provide all benefits (i.e. bonus shares, dividend) which accrued to the investor during the intervening period on account of such delay.
Once a share certificate is returned by a transfer agent as a 'company Objection'... all benefits must be held in abeyance by the company till such time the transfer actually takes place or a valid no objection is received from the Transferee on his receiving replacement.
Every time an introducing broker replaces a bad delivery share or pays for the share... a No Objection Certificate to transfer the shares in the name of introducing member from the receiving broker/buyer investor shall be given to the introducing member broker/seller investor, as applicable, through the Bad Delivery Cell mechanism.
Where the investor has complained about issuing of duplicate share certificate(s)... by the company on the basis of allegedly forged/stolen documents... the company shall verify and satisfy itself of the claim of the investor, within 15 days of receipt of the claim and take steps including invoking of indemnity bond to issue shares and corresponding benefits to the rightful owner...
Source: SecMarx — Delay in transfer of shares by companies. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.