Introduction: The Securities and Exchange Board of India (SEBI) has issued Circular No. SEBI/HO/MIRSD/POD-1/P/CIR/2023/158 on September 26, 2023, addressing the extension of timelines for various aspects related to demat and trading accounts, as well as physical security holders. This circular aims to provide relief to market participants and investors in complying with certain requirements mandated by SEBI.
Detailed Analysis:
Nomination in Demat Accounts: SEBI had previously set a deadline of September 30, 2023, for the nomination process in demat accounts. However, considering the feedback received from stakeholders, SEBI has decided to extend the last date for submission of the “choice of nomination” for demat accounts to December 31, 2023. This extension allows investors more time to complete the nomination process for their demat holdings.
Voluntary Nomination for Trading Accounts: The circular introduces a significant change regarding trading accounts. The submission of the “choice of nomination” for trading accounts has been made voluntary. This step is in line with SEBI’s efforts to promote ease of doing business and reduce regulatory burden for market participants.
Extension for Physical Security Holders: In a related matter, SEBI had earlier set a deadline of September 30, 2023, for physical security holders to submit their PAN, nomination, contact details, bank account details, and specimen signature. However, based on representations and feedback, SEBI has decided to extend the last date for these submissions to December 31, 2023. This extension provides physical security holders with additional time to fulfill these requirements without their folios being frozen.
Compliance and Implementation: SEBI has advised all stock exchanges, depositories, Registrars to an Issue and Share Transfer Agents (RTAs), and listed companies to take necessary steps to implement the provisions of this circular. This includes amending relevant bye-laws, business rules, regulations, or operational instructions. Additionally, they are instructed to communicate these changes to their constituents, disseminate the circular on their websites, report the status of implementation to SEBI, and monitor compliance.
Immediate Effect: The circular comes into effect immediately and supersedes relevant provisions contained in various circulars issued by SEBI, including Master Circulars issued for Stock Brokers and Registrars to an Issue and Share Transfer Agents dated May 17, 2023.
Conclusion: SEBI’s Circular No. SEBI/HO/MIRSD/POD-1/P/CIR/2023/158 brings relief to market participants and investors by extending key deadlines related to demat and trading accounts, as well as physical security holdings. The move to make the nomination process voluntary for trading accounts aligns with SEBI’s commitment to ease of doing business. Investors and market entities are encouraged to take note of these extensions and ensure compliance with the new timelines set by SEBI. This circular reaffirms SEBI’s dedication to investor protection and the development of the securities market in India.
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Securities and Exchange Board of India
Circular No. SEBI/HO/MIRSD/POD-1/P/CIR/2023/158 Dated: September 26, 2023
To
All Recognized Stock Exchanges
All Recognized Depositories
Stock Brokers (Trading Members) through Recognized Stock Exchanges
Depository Participants through Depositories
All registered Registrars to an Issue and Share Transfer Agents (RTAs)
All Listed Companies through Recognized Stock Exchanges
Dear Sir / Madam,
Subject: Extension of timelines (i) for nomination in eligible demat accounts and (ii) for submission of PAN, Nomination and KYC details by physical security holders; and voluntary nomination for trading accounts
For trading and demat accounts
1. SEBI, vide circular no. SEBI/HO/MIRSD/RTAMB/CIR/P/2021/601 dated July 23, 2021, stipulates that trading accounts and demat account which do not have ‘choice of nomination’ by September 30, 20231 shall be frozen.
2. In this respect, based on the representations received from the Exchanges, Depositories, Brokers’ Associations and various other stakeholders, the following has been decided:
2.1. Submission of ‘choice of nomination’ for trading accounts has been made voluntary as a step towards ease of doing business;
2.2. With respect to demat accounts, it has been decided to extend the last date for submission of ‘choice of nomination’ to December 31, 2023.
For physical security holders
3. As regards physical securities, SEBI, vide circular no. SEBI/HO/MIRSD/MIRSD- PoD-1/P/CIR/2023/37 dated March 16, 2023, stipulated that folios shall be frozen if PAN, Nomination, Contact details, Bank A/c details and Specimen signature are not submitted by the holders by September 30, 2023.
4. Based on the representations received from investors, Registrars Association of India and various other stakeholders, it has been decided to extend the last date for submission of PAN, Nomination, Contact details, Bank A/c details and Specimen signature for their corresponding folio numbers to December 31, 2023.
5. Stock Exchanges, Depositories, RTAs and Listed Companies are advised to:
a) take necessary steps to implement the provisions of this circular, including making necessary amendment to the relevant bye-laws / business rules / regulations / operational instructions, as the case may be;
b) bring the provisions of this circular to the notice of their respective constituents and also disseminate this circular on their websites;
c) communicate to SEBI, the status of the implementation of the provisions of this circular; and
d) monitor the compliance of this circular.
6. This circular shall come into effect immediately in supersession of relevant provisions contained in various circulars issued by SEBI including Master Circulars issued for Stock Brokers and Registrars to an Issue and Share Transfer Agents dated May 17, 2023.
7. This circular is issued in exercise of powers conferred by Section 11(1) of the Securities and Exchange Board of India Act, 1992, and Section 19 of the Depositories Act, 1996 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
8. This circular is available on SEBI website at www.sebi.gov.in under the categories “Legal Framework -> Circulars”.
Yours faithfully,
Aradhana Verma
General Manager
Market Intermediaries Regulation and Supervision Department
Tel. No. 022-2644 9633
Email id – aradhanad@sebi.gov.in
Notes
1 The aforesaid timeline of September 30, 2023 was prescribed by SEBI circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/42 dated March 27, 2023.
