SEBI vide its circular No. SEBI/HO/MIRSD/PoD-1/0W/P/2022/64923 Dated 30.12.2012 issued Guidelines with respect to procedural aspects of Suspense Escrow Demat Account and directed listed entities to process all service requests in Demat form.
SEBI had also provided a procedure vide which company will be sending a ‘Letter of Confirmation (‘LOC’) as against issue of physical duplicate, physical split share certificate etc. This LOC is valid for 120 days. The investor in whose name it is sent shall produce LOC to the depository participant and then the Depository participant shall credit shares as against this LOC.
But there might be a situation where the investor is unable to produce the LOC to the depository participant and get his entitlement (shares) credited to his Demat account due to some reason. In that case SEBI had stated that such shares shall be credited to ‘Suspense Escrow Demat Account’.
But there was no clarity on how and when to open this Suspense Escrow Demat account? Whether opening of this account is mandatory? Registrar and Share Transfer Agents (RTAs) have been following consistently with SEBI for guidance on this. Now SEBI has provided guidance in this regard as follows:
A. Opening of Suspense Escrow Demat Account:
1. Companies are required to open a separate Demat account with the nomenclature “Suspense Escrow Demat Account” for the purpose of this circular
2. Companies which have not yet opened a “Suspense Escrow Demat Account” and are currently using a “Suspense Escrow Demat Account/unclaimed Suspense Account” as provided under Schedule VI of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the purpose of Letter of Confirmation cases, shall move securities pertaining to Letter of Confirmation cases to newly opened “Suspense Escrow Demat Account” latest by January 31, 2023.
B. Process to credit shares to Suspense Escrow Demat Account:
1. In cases where the securities holder/claimant fails to submit the Demat request to the depository participant within the period of 120 days from the date of issuance of the letter of confirmation, RTA shall move the said securities to a physical folio “Suspense Escrow Demat Account” and issue a consolidated letter of confirmation to the Company for the said securities in the “Suspense Escrow Demat Account” on monthly basis.
2. Thereafter, the listed entity shall dematerialise these securities in the “Suspense Escrow Demat Account” with one of the depository participants within seven days of receipt of such LOC from RTA.
3. The listed entity shall maintain details of the security holding of each individual securities holder(s) whose securities are credited to such “Suspense Escrow Demat Account”
4. “Suspense Escrow Demat Account” shall be held by the listed entity purely on behalf of the securities holders who are entitled to the securities and the securities held in such account shall not be transferred in any manner whatsoever except for the purpose of moving the securities from “Suspense Escrow Demat Account” to the security holder’s claimant’s Demat account as and when the security holder/claimant approaches the listed entity
C. Process for claiming securities from Suspense Escrow Demat Account
1. Securities which have been moved to ‘Suspense Escrow Demat Account’ may be claimed by the security holder/claimant on submission of the following documents to RTA:
a. Duly filled in and signed form ISR-4
b. Client master list (‘CML’) of the Demat account for crediting the securities to the security holder’s / claimant’s account provided the details in the CML should match with the details recorded with the RTA / issuer company.
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Full Text of the SEBI Guidelines with respect to procedural aspects of Suspense Escrow Demat Account is as follows:-
Deputy General
Market Intermediaries Regulation and
Supervision Department
SEBI/HO/MIRSD/PoD-1/0W/P/2022/64923
December 30, 2022
To
All the Registrars and Share Transfer Agents (RTAs)
Registrar Association of India (RAIN)
Madam/ Sir,
Sub: Guidelines with respect to procedural aspects of Suspense Escrow Demat Account
1. Vide SEBI Circular SEBI/HO/MIRSD/MIRSD RTAMB/P/CIR/2022/8 dated January 25, 2022 (“the Circular”), listed entities were directed to issue the securities in dematerialized form only while processing various investor service requests.
2. In this regard, para 3.c of the circular provides that in case the securities holder/claimant fails to submit the demat request within 120 days from the date of issuance of letter of confirmation, RTA/ Issuer Companies shall credit the securities to the Suspense Escrow Demat Account of the company.
3. In this regard, below-mentioned process shall be followed with regard to Suspense Escrow Demat Account:
A. Opening of Suspense Escrow Demat Account
3.1.Companies are required to open a separate demat account with the nomenclature “Suspense Escrow Demat Account” for the purpose of the circular.
3.2. Companies which have not yet opened “Suspense Escrow Demat Account” and are currently using “Demat Suspense Account/ Unclaimed Suspense Account” as provided under schedule VI of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the purpose of Letter of Confirmation cases, shall move securities pertaining to Letter of Confirmation cases to newly opened “Suspense Escrow Demat Account” latest by January 31, 2023.
B. Process to credit shares to Suspense Escrow Demat Account
3.3. In cases where the securities holder/claimant fails to submit the demat request to the Depository Participant within the period of 120 days from the date of issuance of letter of confirmation, RTA shall move the said securities to a physical folio “Suspense Escrow Account” and issue a consolidated letter of confirmation to the Company for the said securities in the Suspense Escrow Account on a monthly basis.
3.4. Thereafter, the listed entity shall dematerialize these securities in “Suspense Escrow Demat Account ” with one of the Depository Participants within 7 days of receipt of such Letter of Confirmation from RTA.
3.5. The listed entity shall maintain details of security holding of each individual securities holder(s) whose securities are credited to such Suspense Escrow Demat Account.
3.6. Suspense Escrow Demat Account shall be held by the listed entity purely on behalf of the securities holders who are entitled to the securities and the securities held in such account shall not be transferred in any manner whatsoever except for the purpose of moving the securities from Suspense Escrow Demat Account to the security holder’s/ claimant’s demat account as and when the security holder/ claimant approaches the listed entity.
C. Process for claiming securities from Suspense Escrow Demat Account
3.7. Securities which have been moved to Suspense Escrow Demat Account may be claimed by the security holder/ claimant on submission of following documents to RTA:
- Duly filled in and signed Form ISR – 4.
- Client master list (“CML”) of the demat account for crediting the securities to the security holder’s / claimant’s account provided the details in the CML should match with the details recorded with the RTA / issuer company.
4. RTAs shall disseminate this advisory to all the listed companies availing their services and also bring the requirements to be complied with by holders of physical securities of all listed companies on their respective websites.
Yours faithfully,
Aradhana Verma
Download SEBI Guidelines on procedural aspects of Suspense Escrow Demat Account
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Good and useful information