Centralized mechanism for reporting the demise of an investor through KRAs
Summary
This circular establishes a centralized mechanism for reporting and verifying the demise of investors through KYC Registration Agencies to streamline securities transmission. It mandates intermediaries to verify death certificates, update KRA records with specific statuses like 'Blocked Permanently' or 'On Hold', and block debit transactions upon confirmation. The document outlines procedural obligations for KRAs, intermediaries, and other entities regarding validation, intimation, and data reporting.
Text
It has been decided to introduce a centralized mechanism for reporting and verification in case of the demise of an investor and thereby smoothen the process of transmission in securities market.
Listed companies wanting to provide the beneficial access to such a centralized mechanism to their investors holding securities in physical form, are eligible to establish connectivity with KRA through their RTAs.
Upon receipt of intimation about the demise of an investor... the concerned intermediary shall obtain the death certificate along with the PAN from the notifier and carry out the following steps; a. Verify the death certificate (to be completed by the next working day of its receipt)
If the concerned intermediary... does not have access to or is not in a position to obtain the death certificate, then it shall carry out the following steps; a. Intimate the investor... that the KYC status of the investor has been flagged off as “On Hold”
After verification of the death certificate, the concerned intermediary shall (on the same day of verification): a. Submit a ‘KYC modification request’ to the KRA... and also upload the relevant documents b. Block all debit transactions in the account / folios of the deceased investor.
In case the death certificate is not received, the concerned intermediary shall (by the next working day of the intimation): a. Submit a ‘KYC modification request’ in the KRA system, “information on death of investor received; confirmation awaited”.
The KRA, upon receipt of ‘KYC modification’ request from the intermediary... shall carry out the following steps; a. Independent validation and verification by the next working day... b. Upon validation of the death certificate, the KRA, shall update the KYC record as “Blocked Permanently”
Upon receipt of notification from KRA as “Blocked Permanently”, all intermediaries shall: a. Immediately block all debit transactions... and b. Intimate the notifier / nominee, within 5 days about the procedure for transmission
If there is any transaction request received by any intermediary in the account / folio held by it, which is flagged off as “On Hold”... it shall allow the transaction only after conducting additional due diligence... which serves to establish that the investor is alive.
In case where the information about demise of the investor is proven to be incorrect... the intermediary shall submit a ‘KYC modification request’ in the KRA system as, “intimation of death of investor is false”... This shall be done on the same day
The KRA shall in turn, revert the status of the KYC to ‘Clear or Validated’ and issue this update to all linked intermediaries, all on the same day.
All intermediaries who have account or folios of investors whose status has been updated as deceased by the KRA, shall submit the data w.r.t. intimation of transmission as per paragraph 8 b. above, and its outcome thereof, to SEBI
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Source: SecMarx — Centralized mechanism for reporting the demise of an investor through KRAs. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.