DEPUTY GENERAL MANAGER

Market Regulation Department

E-mail: sundaresanvs@sebi.gov.in

Tel : 2216 4465 Fax: 2216 4394

SEBI/MRD/Cir – 10/2004

February 10, 2004

1. The Managing Director

National Securities Depository Ltd.

Trade World, 4th Floor

Kamala Mills Compound

Senapati Bapat Marg, Lower Parel

Mumbai – 400013

2. The Executive Director

Central Depository Services(India) Ltd.

Phiroze Jeejeebhoy Towers

27-28th Floor, Dalal Street

Mumbai – 400 023

Dear Sir/s,

Sub: Transfer-cum-demat scheme

1. SEBI had introduced compulsory dematerialized trading in select shares for all investors with effect from January, 1999. Thereafter, an increasing number of shares were added to this list at regular intervals. During this phase, the companies/transfer agents were under tremendous pressure on account of the large number of physical shares being received by them for transfer and/or demat. Moreover, transfer and demat were two separate processes and the investors were required to submit the transferred shares to the share transfer agent, through their DPs, for dematerialization. This entire process involved anywhere from 1-3 months and the investors could not sell the shares during this period.

2. Accordingly, the transfer-cum-demat scheme was introduced by the depositories to counter the problems faced by the investors in the transition phase of moving from physical to demat trading mode, to decrease the time period involved in transfer and demat. However, as on date, a large number of stocks have already been dematerialized, almost 100% trading takes place in dematerialized form and hence, there is far less pressure on the companies/the share transfer agents.

3. In view of the above, it is felt that the facility of transfer-cum-demat is no longer relevant and can be withdrawn without causing any undue inconvenience and/or delays to the investors. It has accordingly been decided to withdraw the transfer-cum-demat scheme.

4. The depositories are accordingly advised to ;

4.1. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately.

4.2. bring the provisions of this circular to the notice of the DPs of the Depository and also to disseminate the same on the website.

4.3. communicate to SEBI the status of the implementation.

5. This circular is being issued in exercise of 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.

Yours faithfully,

V S SUNDARESAN

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