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TMI BlogStrengthening the Guidelines and Raising Industry standards for RTA, Issuer Companies and Banker to an IssueX X X X Extracts X X X X X X X X Extracts X X X X ..... . Based on recommendation of Committee, the guidelines as annexed to this Circular are being issued. These guidelines cover the following broad areas: i. Provisions with respect to Payment of Dividend/interest/redemption/ redemption ii. Provisions with respect to Transfer/Transmission/ Correction of errors etc. iii. Compulsory internal audit of RTAs 3. Unless otherwise indicated in the annexure, , the records /documents described in annexure shall be maintained for period not less than eight years after completion of the relevant transactions by Bankers to issue, Issuer Companies, and/or by RTAs on behalf of Issuer Companies 4. RTAs, BTIs and Issuer Companies shall strictly comply with guidelines (annexed). Issuer companies shall strictly monitor the activities of their RTAs and ensure compliance of provision of this circular. It is clarified that where share transfer agent activities are carried out in-house by issuer companies, the issuer companies shall ensure that their in-house share transfer activities comply with the relevant norms as applicable to them. 5. RTAs, Bankers to issue, and the Issuer Companies can put in place more stringent internal checks and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Character Recognition), IFSC (Indian Financial System Code), etc. that are required for making electronic payment are not available or the electronic payment instructions have failed or have been rejected by the bank, the issuer companies or their RTA may ask the banker to make payment though physical instrument such as banker s cheque or demand draft to such securities holder incorporating his bank account details. 3. The dividend/interest/redemption processing Bank shall ensure that any dividend/interest/redemption instrument (such as demand drafts, dividend/interest/redemption warrants etc.) lying unpaid beyond the validity period of the instrument shall be cancelled and the dividend/interest/redemption amount transferred earlier by issuer in the said account shall be credited back immediately to the relevant bank account of the Issuer Company. Banks should also provide the unpaid instrument details when reconciliation data is shared with Issuer Company / RTAs. This provision will come into effect after 30 days from the date of this circular. 4. Revalidation/Re-issue requests to the dividend/interest/redemption processing bank by the RTA should contain at least Name of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articular folio for easy retrieval. 3. RTAs shall follow the Maker-Checker concept in all of its activities to ensure that accuracy of data and a mechanism to check unauthorised transaction and record shall be maintained. 4. RTAs and Issuer Companies shall ensure that all updation in the folio records shall be enabled only through front end modules. No back-end entry/updation /correction should be permitted. RTAs and Issuer Companies shall ensure that System Log having complete details for any change (viz. nature of change, user access history, user identification, date/time of change etc.) must be maintained. This provision will come into effect after 90 days from the date of this circular. 5. For any correction of errors, RTAs must take prior approval from the Company similar to cases of transfers, transmissions etc. 6. RTAs shall provide to the Issuer Company a soft copy of Members data (having details inter alia Name, Address, Folio No, Number of Shares, Distinctive numbers, Certificate numbers, etc.) under due certification at the end of each quarter of a financial year. This data should also contain transaction in the physical folio during the period. The copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the security holder is holding physical securities, RTAs, Issuer Companies and Depositories shall ensure that the Bonus securities against these folios shall mandatorily be issued in physical mode only. In other words, Bonus securities cannot be allotted in demat form with respect to folios where physical securities certificates are maintained. 12. Issuer Companies through their RTAs shall take special efforts to collect copy of PAN, and bank account details of all securities holders holding securities in physical form as mentioned below. While collecting details, RTAs shall ensure that i. They preserve a verifiable record as on the date of this circular regarding the folios which do not have PAN/bank account details. ii. They send a letter under registered/Speed post seeking PAN and bank details (a copy of the PAN card and original cancelled cheque leaf /attested bank passbook showing name of account holder) within 90 days of the circular and two reminders thereof after the gap of 30 days. All the 3 letters will have 21 days notice period to provide the details. iii. In case of residents of Sikkim, the requirement of PAN Card be substituted with a valid Identity proo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of destruction. The authenticity of the register shall be verified during internal audit. The register shall be maintained till perpetuity. III. Compulsory internal audit of RTAs 1. All RTAs are required to carry out internal audit on annual basis by independent qualified Chartered Accountants or Company Secretaries or Cost and Management Accountants and Certified Information Systems Auditor (CISA) who don t have any conflict of interest. 2. Eligibility of auditors for conducting the Internal Audit of the RTA i. The audit firm shall have a minimum experience of three years in the financial sector. ii. An auditor shall be appointed for a maximum term of five years, with a cooling-off period of two years. 3. The audit shall cover all aspects of RTA operations including investor grievance redressal mechanism and compliance with the requirements stipulated in the SEBI Act, Rules and Regulations made thereunder, and guidelines/circulars issued by SEBI from time to time. The scope of the audit shall cover all issues concerning the functioning of RTAs. 4. The report shall state the methodology adopted, deficiencies observed, and consideration of response of the mana ..... X X X X Extracts X X X X X X X X Extracts X X X X
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