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TMI BlogMaster Circular for DepositoriesX X X X Extracts X X X X X X X X Extracts X X X X ..... and clarifications relating to mandatory requirement of PAN 1.3 Simplification of demat account opening process (DP-BO Rights and Obligation Document) 1.4 Opening of demat account in case of HUF 1.5 Operation of minor‟s demat account 1.6 Facility for a Basic Services Demat Account (BSDA) 1.7 Change of Name in the Beneficial Owner (BO) Account 1.8 Fees/Charges to be paid by BO 1.9 Safeguards on transfer of securities in dematerialized mode 1.10 Delivery Instruction Slip (DIS) Issuance and Processing 1.11 Transmission of shares 1.12 SMS alerts for demat accounts operated by Power of Attorney 1.13 Exemption from sending quarterly statements of transactions by depository participants (DPs) to clients in respect of demat accounts with no transactions and no security balances 1.14 Discontinuation of sending transaction statements by depository participants to clients 1.15 Exemption to Depository Participants (DPs) from providing hard copies of transaction statements to BOs 1.16 Transfer of funds and securities from Clearing Member pool account to BO Account Section - 2: Depository Participants (DP) Related 2.1 Supervision of branche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 Activity of Demat of warehouse receipts 4.21 Voting rights in respect of securities held in pool account SCHEDULE List of Circulars Communications Section 1: Beneficial Owner (BO) Accounts 1.1 Opening of BO Account by non body corporates 1.1.1 Proof of Identity (PoI) i. Permanent Account Number (PAN) to be the sole identification number for all transactions in the securities market Reference circular MRD/DoP/Cir-5/2007 dated April 27, 2007 With effect from July 02, 2007, PAN is the sole identification number for all transactions in the securities market, irrespective of the amount of transaction. A copy of the PAN card with photograph may be accepted as Proof of Identity. In this regard, intermediaries shall:- a. Put necessary systems in place so that the databases of the clients and their transactions are linked to the PAN details of the client. b. Build necessary infrastructure to enable accessibility and query based on PAN thereby enabling retrieval of all the details of the clients. c. Collect copies of PAN cards issued to the existing as well as new clients by the Income Tax Department and maintain the same in their record afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court and Supreme Court judges, giving the new address in respect of their own accounts. e. Proof of address issued by any of the following: Bank Managers of Scheduled Commercial Banks/Scheduled Co-Operative Bank/Multinational Foreign Banks/Gazetted Officer/Notary public/ Elected representatives to the Legislative Assembly/Parliament/Documents issued by any Govt. or Statutory Authority. f. Identity card/document with address, issued by any of the following: Central/State Government and its Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, Public Financial Institutions, Colleges affiliated to Universities and Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members. g. For FII/sub account, Power of Attorney given by FII/sub-account to the Custodians (which are duly notarized and/or apostiled or consularised) that gives the registered address should be taken. h. The proof of address in the name of the spouse may be accepted. i. Aadhaar Letter issued by UIDAI shall be admissible as Proof of Address in addition to Proof of Identity. Reference Circular MIRSD/09/2012 dated August 13, 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liant demat accounts were also suspended for credit other than the credits arising out of automatic corporate actions. It was clarified that other credits including credits from IPO/FPO/Rights issue, off-market transactions or any secondary market transactions would not be allowed into such accounts. 1.2.2 Central and State Government and officials appointed by Courts Reference Circular MRD/DoP/Cir-20/2008 dated June 30, 2008 PAN card may not be insisted upon in case of transactions undertaken on behalf of Central Government and/or State Government and where transactions are conducted by officials appointed by Courts e.g. Official liquidator, Court receiver etc. Reference Rule 114C (1)(c) of Income Tax Rules However DPs, before implementing the above exemption, shall verify the veracity of the claim of the organizations by collecting sufficient documentary evidence in support of their claim for such an exemption. 1.2.3 Investors in Sikkim Reference Circular MRD/DoP/Dep/Cir-09/06 dated July 20, 2006 Investors residing in the state of Sikkim are exempted from the mandatory requirement of furnishing PAN card details for their demat accounts. Referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006 Citizens of India residing outside India, foreign citizens and other persons (like companies/ trusts/ firms) having no office of their own in India may obtain PAN card based on the copy of their passport as ID proof and a copy of passport/ bank account in the country of residence as address proof, based on the Directorate of Income Tax (Systems) guidelines. Reference Income Tax (Systems) PAN Circular No. 4 dated October 11, 2006 1.3 Simplification of demat account opening process Reference Circular SEBI/MIRSD/ 12/2013 dated December 04, 2013 i. SEBI has taken a number of steps in the recent past to simplify the Account opening and KYC process in the securities markets. In continuation of the efforts in the same direction, it has now been decided in consultation with both the Depositories and Associations of stock brokers and Depository Participants to further simplify and rationalize the demat account opening process. ii. The existing Beneficial Owner-Depository Participant Agreements shall be replaced with a common document Rights and Obligations of the Beneficial Owner and Depository Participant . The document annexed herewith shall be mandatory and bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall pay such charges to the DP for the purpose of holding and transfer of securities in dematerialized form and for availing depository services as may be agreed to from time to time between the DP and the Beneficial Owner as set out in the Tariff Sheet provided by the DP. It may be informed to the Beneficial Owner that no charges are payable for opening of demat accounts 6. In case of Basic Services Demat Accounts, the DP shall adhere to the charge structure as laid down under the relevant SEBI and/or Depository circulars/directions/notifications issued from time to time. 7. The DP shall not increase any charges/tariff agreed upon unless it has given a notice in writing of not less than thirty days to the Beneficial Owner regarding the same. Dematerialization 8. The Beneficial Owner shall have the right to get the securities, which have been admitted on the Depositories, dematerialized in the form and manner laid down under the Bye Laws, Business Rules and Operating Instructions of the depositories. Separate Accounts 9. The DP shall open separate accounts in the name of each of the beneficial owners and securities of each beneficial owner shall be segrega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Owner, for any reasons whatsoever, provided the DP has given a notice in writing of not less than thirty days to the Beneficial Owner as well as to the Depository. Similarly, the Beneficial Owner shall have the right to close his/her demat account held with the DP provided no charges are payable by him/her to the DP. In such an event, the Beneficial Owner shall specify whether the balances in their demat account should be transferred to another demat account of the Beneficial Owner held with another DP or to rematerialize the security balances held. 18. Based on the instructions of the Beneficial Owner, the DP shall initiate the procedure for transferring such security balances or rematerialize such security balances within a period of thirty days as per procedure specified from time to time by the depository. Provided further, closure of demat account shall not affect the rights, liabilities and obligations of either the Beneficial Owner or the DP and shall continue to bind the parties to their satisfactory completion. Default in payment of charges 19. In event of Beneficial Owner committing a default in the payment of any amount provided in Clause 5 6 within a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eficial Owner may have under the Rules, Bye Laws and Regulations of the respective Depository in which the demat account is opened and circulars/notices issued there under or Rules and Regulations of SEBI. 27. The provisions of this document shall always be subject to Government notification, any rules, regulations, guidelines and circulars/ notices issued by SEBI and Rules, Regulations and Bye-laws of the relevant Depository, where the Beneficial Owner maintains his/ her account, that may be in force from time to time. 28. The Beneficial Owner and the DP shall abide by the arbitration and conciliation procedure prescribed under the Bye-laws of the depository and that such procedure shall be applicable to any disputes between the DP and the Beneficial Owner. 29. Words and expressions which are used in this document but which are not defined herein shall unless the context otherwise requires, have the same meanings as assigned thereto in the Rules, Bye-laws and Regulations and circulars/notices issued there under by the depository and /or SEBI. 30. Any changes in the rights and obligations which are specified by SEBI/Depositories shall also be brought to the notice of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are sole or first holder. iii. The individual shall have only one BSDA in his/her name across all depositories. iv. Value of securities held in the demat account shall not exceed Rupees Two Lakhs at any point of time. 1.6.3 Option to open BSDA : The DP shall give option: i. To open BSDA to all eligible individuals who open a demat account after the date of applicability of this circular; ii. To all the existing eligible individuals to convert their demat account into BSDA on the date of the next billing cycle based on value of holding of securities in the account as on the last day of previous billing cycle. 1.6.4 Charges : i. The charge structure may be on a slab basis as indicated below: a. No Annual Maintenance Charges (AMC) shall be levied, if the value of holding is upto ₹ 50,000. b. For the value of holding from ₹ 50,001 to ₹ 200,000, AMC not exceeding ₹ 100 may be charged. ii. The value of holding shall be determined by the DPs on the basis of the daily closing price or NAV of the securities or units of mutual funds, as the case may be. Where such price is not available the last traded price may be taken into accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction statement as and when there is a transaction in the account. ii. Accounts which become zero balance during the year: For such accounts, no transaction statement may be sent for the duration when the balance remains nil. However, an annual statement of holding shall be sent to the BO. iii. Accounts with credit balance: For accounts with credit balance but no transactions during the year, one statement of holding for the year shall be sent to the BO. 1.7 Change of Name in the Beneficial Owner (BO) Account Reference Circular CIR/MRD/DP/27/2012 dated November 01, 2012 1.7.1 In order to simplify the procedure of change of name in individual Beneficial Owner‟s (BO) account, it has been decided that an individual BO may be allowed to change his/ her name, subject to the submission of following documents at the time of change of name of the individual in the BO account. i. In case of change in name on account of marriage following documents shall be submitted: a. Marriage Certificate or copy of Passport showing husband‟s name or publication of name change in official gazette. ii. In case of change in name on account of reasons other than marr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been paid by the BO and if the BO closes/shifts his account in the first quarter, he shall be refunded the amount of the balance 3 quarters i.e. 3/4th of the AMC. Likewise, if a BO closes/shifts his account in the third quarter, he shall be refunded the amount for the balance one quarter i.e. 1/4th of the AMC. ii. For the purpose of the above requirement the year shall begin from the date of opening of the account in quarterly rests. iii. The above requirements shall be applicable to all existing and new accounts held with DPs which collect annual/half yearly upfront AMC. It is clarified that the above requirements shall not be applicable to those DPs who collect quarterly/ monthly AMC. 1.8.6 Dissemination of tariff/charge structure of DPs on the website of depositories Reference Circular MRD/Dep/Cir- 20/06 dated December 11, 2006 i. DPs shall submit to their depository the tariff/charge structure every year, latest by 30th April, and also inform the depository the changes in their tariff/charge structure as and when they are effected with a view to enabling the BOs to have a comparative analysis of the tariff/charge structure of various DPs. ii. For this pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred at a time. However, in case of active accounts, such verification may be mandatory only if the BO account has 5 or more ISINs and all such ISIN balances are transferred at a time. The authorized official of the DP verifying such transactions with the BO, shall record the details of the process, date, time, etc., of the verification on the instruction slip under his signature. 1.10 Delivery Instruction Slip (DIS) Issuance and Processing Circular SEBI/MRD/DOP/01/2014 dated January 07, 2014 Standardization of DIS i. Depositories shall ensure that the DIS is standardized across all DPs in terms of: a. Serial Numbering of Delivery Instruction Slips so as to enable system level checks by the depositories. b. Layout and size of DIS so as to facilitate scanning and easy retrievability of records ii. The DIS must bear a pre-printed serial number, DP ID, and a pre-printed/pre stamped Beneficial Owner (BO) ID. The depositories shall prescribe a standard method of serial numbering and ensure that serial numbers issued by a DP are unique within the DP-ID. iii. DPs shall ensure that a. same DIS shall not be used for giving both market and off-market instruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urity holder, where the shareholding in the BO account of the deceased member, as calculated on the date of application for transmission, is within the threshold limit of Rupees Five lakh in value, the DPs shall not insist on additional documents other than any one or more of the documents mentioned below. i. Affidavit to the effect of the claim of legal ownership of the shares ii. Deed of indemnity indemnifying the depository and DP iii. NOC from other legal heir(s), wherever applicable, along with the Claim Form/TRF and copy of death certificate duly notarized/ attested by a Gazetted officer or Family Settlement Deed as an alternate to the NOC duly executed by all the legal heirs of the deceased Beneficial Owner, provided that: a. The Family Settlement Deed clearly vests the securities in favour of the person seeking transmission in his/ her name. b. Vesting of securities in favour of the person seeking transmission in his/ her name is not contingent upon any other onerous conditions in such Family Settlement Deed. Note: If the division of shares as per the Family Settlement Deed is amongst more than one person, then the Family Settlement Deed can be conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sical mode 1 For securities held in single name with a nominee: i. Duly signed transmission request form by the nominee. ii. Original or Copy of death certificate duly attested by a Notary Public or by a Gazetted Officer. iii. Self attested copy of PAN card of the nominee. (Copy of PAN card may be substituted with ID proof in case of residents of Sikkim after collecting address proof) 2 For securities held in single name without a nominee, following additional documents may be sought: i. Affidavit made on appropriate non judicial stamp paper to the effect of identification and claim of legal ownership to the securities ii. For value of securities upto ` 2,00,000 (Rupees Two lakh only) per issuer company as on date of application, one or more of the following documents: a. No objection certificate [NOC] from all legal heir(s) who do not object to such transmission (or) copy of Family Settlement Deed duly notarized or attested by a Gazetted Officer and executed by all the legal heirs of the deceased holder. b. Indemnity made on appropriate non judicial stamp paper indemnifying the STA/Issuer Company. iii. For value of securities more than ` 2,00,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that the transaction statements were returned undelivered. iii. The transaction statements were returned undelivered for the reasons which clearly establish that the client no longer resides at the given address (i.e. party shifted, etc.) and not for other reasons (i.e. residence/office closed, address incorrect, address incomplete, etc.). iv. The DP informs such clients through alternative means (such as outbound call, SMS or email) that their transaction statements are returned undelivered and they need to communicate the proper (new) address. v. The DP ensures that on receipt of request for address modification from the client as per the stipulated procedure, the dispatch of transaction statements is immediately started. Further, the DP ensures that transaction statements that were not delivered and dispatched due to discontinuation are also dispatched immediately without any additional cost to the clients. 1.15 Exemption to Depository Participants (DPs) from providing hard copies of transaction statements to BOs Reference Circular MRD/DoP/Dep/Cir-27/2004 dated August 16, 2004 DPs are permitted to provide transaction statements and other documents to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... embers. To the extent of instruction not received, the securities shall be credited to the CM pool account. Section 2: Depository Participants Related 2.1 Supervision of branches of DPs Reference Circular MIRSD/DPS-III/Cir-9/07 dated July 3, 2007 i. To ensure compliance with Regulation 46 of the SEBI (Depositories and Participants) Regulations, 1996, and Clause 19 of the Code of Conduct for Participants contained in the Third Schedule to the Regulations the DP shall ensure that it has satisfactory internal control procedure in place, inclusive of their branch offices. DPs are therefore required in terms of these provisions to put in place appropriate mechanisms to ensure that their branches are carrying on the operations in compliance with the applicable regulations, bye-laws, etc. DPs are also required to put in place suitable internal control systems to ensure that all branches exercise due diligence in opening accounts, complying with KYC requirements, in ensuring systems safety in complying with client instructions, manner of uploading client instructions, in verifying signatures and maintaining client records, etc. DPs shall also ensure that the branches are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... send your complaints to Office of Investor Assistance and Education of SEBI at Mumbai or Regional Offices at the following addresses: Address of SEBI Offices Office of Investor Assistance and Education, SEBI Bhavan, Plot No.C4-A, 'G' Block, Bandra Kurla Complex, Bandra (E), Mumbai 400 051 Tel: 022-26449188 / 26449199 ( http://scores.gov.in ) SEBI, Northern Regional Office, 5th Floor, Bank of Baroda Building, 16, Sansad Marg, New Delhi -110001 Tel: 011-23724001-05 ( [email protected] ) SEBI, Eastern Regional Office, L T Chambers, 3rd Floor, 16, Camac Street, Kolkata - 700 016 Tel: 033-23023000. ( [email protected] ) SEBI, Southern Regional Office, 7th Floor, Overseas Towers, 756-L, Anna Salai Chennai 600 0102 Tel: 044-24674000/ 24674150 ([email protected]) SEBI, Ahmedabad Regional Office, Unit No: 002, Ground Floor, SAKAR I, Near Gandhigram Railway Station, Opp. Nehru Bridge Ashram Road, Ahmedabad - 380 009 Tel : 079-26583633-35 ( [email protected] ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24/2012 dated September 11, 2012 iii. In order to achieve the above, the Depositories are advised to allot such additional shares/securities under a new temporary ISIN which shall be kept frozen. Upon receipt of the final listing/ trading permission from the exchange for such additional shares/ securities, the shares/securities credited in the new temporary ISIN shall be debited and the same would get credited in the preexisting ISIN for the said security. Thereafter, the additional securities shall be available for trading. iv. The stock exchanges are advised to provide the details to the depositories whenever final listing / trading permission is given to securities. Further, in case of issuance of equity shares by a company, listed on multiple stock exchanges, the concerned stock exchanges shall synchronize their effective dates of listing / trading approvals and intimate the same to depositories in advance. Reference Circular SEBI/MRD/Dep/Cir-03/2007 dated February 13, 2007 and Circular SEBI/MRD/Dep/Cir-03/2008 dated February 28, 2008 3.3 Registrar and Share Transfer Agent 3.3.1 Appointment of a single agency for share registry work Reference Circular D CC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) 3.5.1 Delivery of underlying shares of GDRs/ADRs in dematerialised form Reference Circular SMDRP/Policy/Cir-9/99 dated May 6, 1999 Underlying shares of GDRs/ADRs shall be compulsorily delivered in dematerialised form. Pursuant to RBI directions in this regard, a non-resident holder of ADRs/GDRs issued by a company registered in India, on surrender of such ADRs/GDRs, can acquire the underlying shares when such shares are released by the Indian Custodian of the ADR/GDRissue. Further, the company whose shares are so released, or a Depository shall enter in the register or books, wherein such securities are registered or inscribed, an address outside India of the non-resident holder of shares. 3.5.2 Tracking of underlying shares of GDRs/ADRs Reference Circular D CC/FITTC/Cir-09/2002 dated July 4, 2002 and Circular D CC/FITTC/Cir-10/2002 dated September 25, 2002 To ensure easy tracking of the underlying shares released on conversion of the depositories receipts all such shares shall be credited to a separate Depository Receipts (DRs) account of the respective investor. In this regard, Depositories shall ensure that the following information is provided to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of electronic payment modes for making cash payments to the investors59 i. For making cash payments to the investors, companies whose securities are listed on the stock exchanges shall use, either directly or through their Registrars to an Issue and Share Transfer Agent (RTI STA), any RBI (Reserve Bank of India) approved electronic mode of payment such as Electronic Clearing Services (ECS) [LECS (Local ECS) / RECS (Regional ECS) / NECS (National ECS)], National Electronic Fund Transfer (NEFT), etc. ii. In order to enable usage of electronic payment instruments, companies whose securities are listed on the stock exchanges (or their RTI STA) shall maintain requisite bank details of their investors - a. For investors that hold securities in demat mode, companies or their RTI STA shall seek relevant bank details from the depositories. To this end, vide circular SEBI/MRD/DEP/Cir-3/06 dated February 21, 2006 and letter MRD/DEP/PP/123624/2008 dated April 23, 2008, depositories have been advised to ensure that correct account particulars of investors are available in the database of depositories. b. For investors that hold physical share / debenture certificates, compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trade Day 2 T+1 By 1.00 pm Completion of custodial confirmation of trades to CC/CH. (There is no separate extended time limit for late confirmations). By 2.30 pm Completion of process and download obligation files to brokers/ custodians by the CC/CH. 3 T+2 By 11.00 am Pay-in of securities and funds. By 1.30 pm Pay-out of securities and funds. ii. All Depositories shall adhere to the aforementioned activity schedule to implement T+2 rolling settlement. DPs shall adhere to the designated activities within the prescribed time limits as under: b. DPs shall accept instructions for pay-in of securities from clients in the physical form atleast upto 4 p.m. and in electronic form atleast upto 6 p.m. on T+1. c. DPs shall complete execution of pay-in instructions latest by 10:30 a. m. on T+2. d. Depositories shall download the processed pay-in files to the Exchange / Clearing House / Clearing Corporation latest by 11:00 a.m. on T+2. e. Pay-out of securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents, thereby enabling the availability of the funds/securities at the client level by the end of the same day. 4.3 Deadline time for accepting non pay-in related instructions Reference: MRD/VSS/ARR/ 12255/2004 dated June 10, 2004 i. The depositories are advised that any overrun of the time specified for 'spot delivery contract' in the SCRA would result in the contract becoming illegal under section 16 of the SCRA (unless it is put through the stock exchange). The DP-BO agreement cannot add anything to or subtract anything from this position. However, it should be the responsibility of the DP to ensure that the client's contract is not rendered illegal on account of delayed execution of the delivery instruction. ii. Keeping the hardships to change all the existing DP-BO agreements to enforce the above into consideration, it is advised that suitable bye laws can be made under section 26(2)(e) and (d) of Depositories Act, 1996 for imposing such obligation on the DPs. Therefore, it is advised to amend/insert bye laws which should expressly provide that the DPs shall execute the non pay-in related instructions on the same day or on the next day of the instru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly enumerate the manner of creating pledge. It is felt that there is a need to communicate to the BOs that any procedure followed other than as specified under the aforesaid provisions of law shall not be treated as pledge. ii. In order to clarify the same, the depositories are advised to issue a communiqu to the DPs advising them to inform BOs about the procedure for pledging of shares held in demat form as enumerated in the relevant sections of the Depositories Act and SEBI (Depositories and Participants) Regulations, 1996. Depositories may also advise DPs that an off-market transfer of shares leads to change in ownership and cannot be treated as pledge. Further, this issue may also be taken up in the investor awareness programs wherein the manner of creation of pledge can be effectively communicated to the BOs directly. 4.7 Foreign investments in infrastructure companies in securities markets Reference Circular MRD/DSA/SE/Dep/Cust/Cir-23/06 dated December 22, 2006 i. Pursuant to Government of India Policy, foreign investments in infrastructure companies in the securities markets, namely Stock Exchanges, Depositories and Clearing Corporations shall be as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . indicate a contact person in case of SCORES, who is an employee heading the complaint services division/cell/department. Contact detail (i.e. phone no., email id, postal address) of the said contact person be made widely available for e.g. on the websites of Depositories. b. address/redress the complaints within a period of 15 days upon receipt of complaint on SCORES. In case additional information is required from the complainant, the same shall be sought within 7 days of receipt on SCORES. In such case, the period of 15 days will be counted upon the receipt of additional information. c. maintain a monthly record of the complaints which are not addressed/redressed within 15 days from the date of receipt of the complaint/information, alongwith the reason for such pendency. d. Upload/update the ATR on the SCORES. Failure to do so shall be considered as non-redressal of the complaint and the complaint shall be shown as pending. 4.11 Limitation period for filing an arbitration reference Reference Circular CIR/MRD/DP/4/2011 dated April 7, 2011 i. It is decided that the limitation period for filing an arbitration reference shall be governed by the law of limitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date of Arbitration Award 1 2 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mm dd yyyy (to be updated every quarter) (In excel sheet) Sl. No. Name of the DP Status of DP (active/ inactive/ in process of termination /withdrawal) No. of BOs accounts at the beginning of the year No. of Complaints received against the DP * Of the Complaints received during 2008-09 No. of Complaints Resolved through the Depository Non actionable** Arbitration Advised Pending for redressal with Depository No. of Arbitration filed by BOs Decided by the Arbitrators Decided by Arbitrators in favour of the BOs Pending for Redressal with Arbitrators 1 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name of Arbitrator No. of Awards Passed No. of Awards in favor of BOs No. of Awards appealed No. of Awards Implemented No. of cases pending for redressal at the end of period Filed by DP Filed by BO Pending For more than 6 months For more than 3 months, but less than 6 months 1 2 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Participants (DPs) during 2008-09: Updated on mmm dd yyyy (to be updated every quarter) (in excel sheet) Sl. No. Name of DP Registration No. No. of Complaints received Action against DP, its authorized person and employees together No. of Penal Orders issued Monetary Penalties levied (Rs. lakh) No. of Arbitration Awards issued against DP For complaints For others For complaints For others 1 2 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Report 3B: Penal Actions against Depository Participants (DPs) during 2009-10: Updated on mmm dd yyyy (to be updated every quarter) (in excel sheet) Sl. No. Name of DP Registration No. No. of Complaints received Action against DP, its authorized person and employees together No. of Penal Orders issued Monetary Penalties levied (Rs. lakh) No. of Arbitration Awards issued against DP For complaints For others For complaints For others 1 2 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N Report 4A: Redressal of Complaints lodged by investors against Listed Companies during 2008 -09: Updated on mmm dd yyyy (to be updated every quarter) (In excel format) Sl. No. Name of the Company No. of Complaints Received Redressed through Depository Non-Actionable* Pending for Redressal with Depository 1 2 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestors against Listed Companies during 2009 -10: Updated on mmm dd yyyy (to be updated every quarter) (In excel format) Sl. No. Name of the Company No. of Complaints Received Redressed through Depository Non-Actionable* Pending for Redressal with Depository 1 2 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II a Delay in Dematerialisation request processing II b Delay in Rematerialisation request processing II c Delay in/ Non-Receipt of Original certificate after demat rejection II d Non Acceptance of demat/remat request Type III Transaction Statement Related III a Delay in/ Non-Receipt of Statements from DP III b Discrepancy in Transaction statement Type IV Improper Service Related IV a Insistence on Power of Attorney in its favour IV b Deactivation/ Freezing/ Suspension related IV c Defreezing related IV d Transmission Related IV e Pledge Related I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolved III Under Process IV Referred to Arbitration V Forwarded to Company/RTA for appropriate action. 4.13 Disclosure of regulatory orders and arbitration awards on Depository website Reference Circular SEBI/MRD/ DP/ 19/2010 dated June 10, 2010 Depositories shall post all their regulatory orders and arbitration awards issued since April 1, 2007. Further, all regulatory orders and arbitration awards as and when issued shall be posted on their website immediately. 4.14 Establishment of connectivity by Clearing House / Clearing Corporation (CH/CC) with the Depository Clarification Reference: MRD/DoP/ Dep/82334 /2006 dated December 14, 2006 i. On examination of the provisions of Regulations 19(a) and 31 of the SEBI (Depositories and Participants) Regulations, 1996, it is advised that registration of a CC/CH of a stock exchange as a DP with SEBI is not mandatory and a pre-requisite for it to obtain connectivity with the depositories. However, if the CC/CH of a stock exchange desires to function as any other D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led through depository mechanism and therefore RGESS compliant. b. AMCs shall disclose that the concerned RGESS eligible Exchange Traded Funds and Mutual Fund schemes is in compliance with the provisions of RGESS guidelines notified by Ministry of Finance vide notification no. 51/2012 F. No. 142/35/2012-TPL dated November 23, 2012, in Scheme Information Document (SID), in case of new fund offer, or by way of addendum, in case of existing RGESS eligible Exchange Traded Funds and Mutual Fund schemes. c. Section 6(c) of the notification states that the eligible securities brought into the demat account will automatically be subject to lock-in during the first year, unless the new investor specifies otherwise and for such specifications, the new retail investors shall submit a declaration in Form B indicating that such securities are not to be included within the above limit of investment. It is clarified that such declaration shall be submitted by an investor to its Depository Participant within a period of one month from the date of transaction. d. For transactions undertaken by investors through their RGESS designated demat account, Depositories may seek necessary transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Consolidation of Shares Involuntary 8 Conversion of Partly Paid up Involuntary 9 Dividend [Final/ Interim/ Special] Involuntary 10 Exchange of Share Certificate [Name change] Involuntary 11 Rights Issue Voluntary 12 Conversion (compulsory)* Involuntary 13 Conversion (optionally)* Involuntary 14 Redemption Involuntary (voluntary, if there is option to continue with revised terms) 15 Dividend on Mutual Fund Involuntary 16 Redemption of Mutual Fund Involuntary on maturity (voluntary, if there is option to shift between different scheme(s) or on account of exit option due to change in fundamental attributes of scheme) * Considering any conversion into equities (e.g.: Conversio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for providing clearing, settlement and recording of monetary and other financial transactions. The principles are international standards set forth to a. Enhance safety and efficiency in payment, clearing, settlement, and recording arrangements, b. Reduce systemic risk. c. Foster transparency and financial stability and d. Promote protection of participants and investors. v. Financial Market Infrastructure (FMI) are critically important institutions responsible for providing clearing, settlement and recording of monetary and other financial transactions. The different categories of FMIs, as identified under PFMIs, are listed below - Payment Systems (PSS) A payment system is a set of instruments, procedures, and rules for the transfer of funds between or among participants. The system includes the participants and the entity operating the arrangement. Payment systems are typically based on an agreement between or among participants and the operator of the arrangement, and the transfer of funds is effected using an agreed-upon operational infrastructure. Central Securities Depositories (CSD) Central securities depository provides securities accounts, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I and have recently grown in importance, particularly in the OTC derivatives market. By centralising the collection, storage, and dissemination of data, a well designed TR that operates with effective risk controls can serve an important role in enhancing the transparency of transaction information to relevant authorities and the public, promoting financial stability, and supporting the detection and prevention of market abuse. An important function of a TR is to provide information that supports risk reduction, operational efficiency and effectiveness, and cost savings for both individual entities and the market as a whole. Such entities may include the principals to a trade, their agents, CCPs, and other service providers offering complementary services, including central settlement of payment obligations, electronic novation and affirmation, portfolio compression and reconciliation, and collateral. Adoption of Principles of Financial Market Infrastructures vi. All CPSS and IOSCO members are required to strive to adopt the PFMIs and implement them in their respective jurisdictions. vii. SEBI as a member of IOSCO is committed to the adoption and implementation of the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould maintain additional financial resources sufficient to cover a wide range of potential stress scenarios that should include, but not be limited to, the default of the participant and its affiliates that would potentially cause the largest aggregate credit exposure to the CCP in extreme but plausible market conditions. Principle 5: Collateral An FMI that requires collateral to manage its or its participants‟ credit exposure should accept collateral with low credit, liquidity, and market risks. An FMI should also set and enforce appropriately conservative haircuts and concentration limits. Principle 6: Margin A CCP should cover its credit exposures to its participants for all products through an effective margin system that is risk-based and regularly reviewed. Principle 7: Liquidity risk An FMI should effectively measure, monitor, and manage its liquidity risk. An FMI should maintain sufficient liquid resources in all relevant currencies to effect same- day and, where appropriate, intraday and multiday settlement of payment obligations with a high degree of confidence under a wide range of potential stress scenarios that should include, but not be limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inciple 15: General business risk An FMI should identify, monitor, and manage its general business risk and hold sufficient liquid net assets funded by equity to cover potential general business losses so that it can continue operations and services as a going concern if those losses materialise. Further, liquid net assets should at all times be sufficient to ensure a recovery or orderly wind-down of critical operations and services. Principle 16: Custody and investment risks An FMI should safeguard its own and its participants‟ assets and minimise the risk of loss on and delay in access to these assets. An FMI‟s investments should be in instruments with minimal credit, market, and liquidity risks. Principle 17: Operational risk An FMI should identify the plausible sources of operational risk, both internal and external, and mitigate their impact through the use of appropriate systems, policies, procedures, and controls. Systems should be designed to ensure a high degree of security and operational reliability and should have adequate, scalable capacity. Business continuity management should aim for timely recovery of operations and fulfillment of the FMI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n IT strategy committee at the Board level of depository to provide insight and advice to the Board in various areas that may include: a. Developments in IT from a business perspective. b. The alignment of IT with the business direction. c. The availability of IT resources to meet strategic objectives. d. Competitive aspects of IT Investments. e. Alignment of the IT architecture to the organization needs and its approval. f. Setting priorities and milestones. iii. Depositories shall formulate an executive level IT Steering Committee to assist the IT Strategy Committee in Implementation of IT strategy. The IT steering committee shall comprise of representatives from IT, Human Resources (HR), Legal and various business functions as felt appropriate. iv. The Depositories shall formulate an IT strategy document and an Information Security policy which should be approved by the Board and reviewed annually. v. The Depositories shall create an Office of Information Security and designate a senior official as Chief Information Security Officer (CISO) whose work would be to assess, identify and reduce information technology (IT) risks, respond to incidents, establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e violations 5. IT Security and BCP 6. Complaints received and redressed b. Quantitative Score Calculation: Depositories shall arrive at a Quantitative Risk Score for each inspection area by multiplying percentage of non-compliance to the sample size with the corresponding assigned risk weight. c. Qualitative Score Calculation: Depositories shall arrive at a Qualitative Risk Score for each qualitative area by multiplying the score assigned by inspection team to DP with corresponding assigned risk weight. d. Total DP Risk Score shall be the summation of quantitative and qualitative scores assigned to the DP. e. Depositories shall suitably normalize the scales of the qualitative and quantitative scores in arriving at the Total DP risk score. vii. Depositories shall categorize their DPs as 'High Risk', 'Medium to High Risk', 'Medium Risk', and 'Low Risk' DPs based on the percentile of risk score. DP Risk Rating / Categorization Percentile of Risk Score High 80 Medium-High 46-79 Medium ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for CDM C.2. Any other area as may be specified by the depository D. Demat / Remat / Conversion /Reconversion request D.1. Procedure for receiving/processing requests pertaining to Demat / Remat / Conversion /Reconversion request D.2. Procedure for forwarding requests pertaining to Demat / Remat / Conversion /Reconversion request to RTA / issuer D.3. Arrangement for Safekeeping of Security / Share Certificates D.4. Tracking of demat requests D.5. Rejection of above requests attributable to DPs D.6. Checks pertaining to processing of Demat / Remat / Conversion / Reconversion request D.7. Any other area as may be specified by the depository E. Delivery Instruction Slip (DIS) E.1. Issuance of DIS E.2. Inventory Control of DIS E.3. First Instruction Slip Booklet E.4. Requisition Slip E.5. Procedure for Loose DIS E.6. Depository specific areas E.7. Verification of DIS E.8. Procedure for accepting DIS E.9. Time Stamping and related Areas E.10. Accepting DIS by Fax E.11. Accepting DIS in form of Annexure E.12. Completeness of DIS E.13. Accepting DIS in electronic form E.14. Procedure for Verification of DIS E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Account Transfer N.1. Procedure followed for account transfer N.2. Checks pertaining to Account transfer N.3. Waiver claimed for inter depository transfer N.4. Any other area as may be specified by the depository O. Transmission O.1. Procedure followed for transmission O.2. Checks pertaining to Transmission O.3. Waiver Claimed for inter depository transfer O.4. Any other area as may be specified by the depository P. Pledge / Unpledge P.1. Procedure followed for Pledge / Unpledge P.2. Checks pertaining to Pledge / Unpledge P.3. Any other area as may be specified by the depository Q. Freeze / Unfreeze Q.1. Freeze facility Q.2. Procedure followed for Freeze Q.3. Checks pertaining to freeze Q.4. Any other area as may be specified by the depository R. Miscellaneous areas R.1. Investor Grievance R.2. Forms for various activities R.3. Execution of any supplementary agreement/ Letter of Confirmation R.4. Submission of Internal Audit / Concurrent Audit / Net worth Certificate R.5. Submission of Annual Financial Statement R.6. Outsourcing of Activities R.7. Closure / transfer of Balances R.8. Submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High risk 3 Medium High risk 2 Medium risk 1.5 Low risk 1 Out of total intra depository instructions to be verified, the percentage of on and off market instructions would be in the ratio of 1/3 and 2/3. DIS issuance sample size shall be 5% of the total samples verified for DIS. 3. Sample Sizes for inspection areas of 'Demat / Remat request' and 'Pledge / Unpledge' 5% of Demat / Remat request processed or 100 requests whichever is higher with a maximum cap of 500 such requests. 5% of Pledge / Unpledge request processed or 100 requests whichever is higher with a maximum cap of 500 such requests. 4. Sample Size for inspection area of 'Client Data Modification', 'Miscellaneous areas' and 'Other depository specific requirements' Base Sample Size Address change = 50 Samples from Urban, Semi Urban and Rural Areas shall be equally represented if available. Nomination Change = 25 Signature change = 100 Addition / Deletion / Modificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Inspection Sub Area B 1 B.3. Inspection Sub Area B 3 Total Score for Inspection Area 2 Depositories shall include all inspection areas and sub areas, as per Annexure I (List of Inspection Areas) of this circular, in the above model to arrive at the Quantitative Score for a DP. Table: Indicative Table for calculation of Quantitative Score for Complaints Received Sr No Type and Nature of Complaint Weight (A) (Number of Complaints redressed) / Number of Complaints received) Inspection Score IS = A*B T Complaints T.1 Complaint Sub Area 1 T.2 Complaint Sub Area 2 Total Score for Complaints Quantitative Score = ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trength. 6. Compliance level of previous inspection observations/ directions of regulatory bodies (c) IT security and Business Continuity 1. High Availability. 2. Appropriate Interconnected Architecture. 3. Appropriate Recovery Time Objective (RTO) and Recovery Point Objective (RPO) and near Zero Data Loss . 4. Periodic drills that simulate the real life disaster scenarios on a regular basis. 5. Technological glitches in the past period and remedies taken. 6. Information security. 7. Upgradation of technology (d) Financial Status / profitability of DPs 1. The net-worth of the DPs (whether reducing or increasing from previous years) 2. Net Profits of DPs operations. (e) Complaints redressal 1. Complaint redressal system 2. Percentage of complaints pending and resolved. (f) Other adverse findings 1. Actions taken by Stock exchange and SEBI / RBI with respect to other activities 2. Actions taken by other depository. III. Total Score = Qualitative Score + Quantitative Score 4.20 Activity of Demat of warehouse receipts Reference: MRD/DP/SG-OW/202/2012 and MRD/DP/SG-OW/203/2012 dated January 4, 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007. 31. MIRSD/DPS- III/Cir-23/08 dated July 25, 2008. 32. SEBI/MRD/Dep/Cir-03/2008 dated February 28, 2008. 33. MRD/DoP/Cir-20/2008 dated June 30, 2008. 34. MRD/DoP/SE/Dep/Cir-2/2009 dated February 10, 2009. 35. CIR/MRD/DP/19/2010 dated June 10, 2010. 36. CIR/MRD/DP/20/2010 dated July 1, 2010. 37. CIR/MRD/DP/22/2010 dated July 29, 2010. 38. CIR/MRD/DO/37/2010 dated December 14, 2010. 39. CIR/MRD/DP/04/2011 dated April 07, 2011. 40. CIR/MRD/DP/05/2011 dated April 27, 2011. 41. MIRSD/SE/Cir-21/2011 dated October 5, 2011. 42. CIR/MRD/ICC/16/2012 dated June 15, 2012. 43. CIR/MRD/DP/21/2012 dated August 02, 2012. 44. CIR/MIRSD/09/2012 dated August 13, 2012. 45. CIR/MRD/DP/22/2012 dated August 27, 2012. 46. CIR/MRD/DP/24/2012 dated September 11, 2012. 47. CIR/MRD/DP/DA/25/2012 dated September 21, 2012. 48. CIR/MRD/DP/27/2012 dated November 01, 2012. 49. CIR/MRD/DP/32/2012 dated December 06, 2012. 50. CIR SEBI/MIRSD/01/2013 dated January 04, 2013 51. CIR/MRD/DP/10/2013 dated March 21, 2013. 52. CIR SEBI/MRD/DRMNP/26/2013 dated September 04, 2013 53. CIR SEBI/MIRSD/09/2013 dated October 08, 2013 54. CIR/MIRSD/10/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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