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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 ..... id by BO 1.4 Transfer of funds and securities from Clearing Member pool account to BO Account 1.5 Printing of Grievances Redressal Mechanism on Delivery Instruction Form Book 1.6 Exemption to Depository Participants (DPs) from providing hard copies of transaction statements to BOs 1.7 Safeguards on transfer of securities in dematerialized mode Section-2 - Issuer related 2.1 Charges to be paid by Issuers 2.2 Activation of International Securities Identification Number (ISIN) in case of IPO 2.3 Registrar and Transfer Agents 2.4 Mandatory admission of debt instruments on both the Depositories 2.5 American Depository Receipts (ADRs)/Global Depository Receipts (GDRs) 2.6 Electronic Clearing System (ECS) facility 2.6.1 Dividend Distribution 2.6.2 Refund in public/rights issues Section-3 Depositories/ Depository Participant (DP) Related 3.1 Limitation period for filing an arbitration reference 3.2 Designated e-mail ID for redressal of investor complaints 3.3 Approval of amendments to Bye Laws / Rules of Stock Exchanges and Depositories 3.4 Preservation of Records 3.5 Foreign investments in infrastructure companies in securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall:- I. Put necessary systems in place so that the databases of the clients and their transactions are linked to the PAN details of the client. II. Build necessary infrastructure to enable accessibility and query based on PAN thereby enabling retrieval of all the details of the clients. III. 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 after verifying with the original. IV. Cross-check the aforesaid details collected from their clients with the details on the website of the Income Tax Department i.e. http://incometaxindiaefiling.gov.in/challan/enterpanforchallan.jsp IT Department since changed the link for verification: http://incometaxindiaefiling.gov.in/portal/knowpan.do . 1.1.1.2 For individuals falling under the category exempted from the mandatory requirement of PAN (Para 1.2), a copy of any one of the following may be accepted as Proof of Identity Reference Circular MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004 and circular I. Passport II. Voter ID Card III. Driving license IV. PAN card with photograph V. Identity card/document with applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... address, provided that the Depository Participant (DP) ensures that all prescribed Know Your Client norms are fulfilled for the third party also. The DP shall obtain proof of identity and proof of address for the third party. The DP shall also ensure that customer due diligence norms as specified in Rule 9 of Prevention of Money Laundering Rules, 2005 are complied with in respect of the third party. The depository participant should further ensure that the statement of transactions and holding are sent to the BO s permanent address at least once in a year. However, the above provision shall not apply in case of PMS (Portfolio Management Services) clients. 1.2 Exemptions from and clarifications relating to mandatory requirement of PAN 1.2.1 Mandatory requirement of Permanent Account Number (PAN) Reference Circular MRD/DP/22/2010 dated July 29, 2010. The demat accounts for which PAN details have not been verified are suspended for debit until the same is verified with the Depository Participant (DP). With effect from August 16, 2010 such PAN noncompliant demat accounts were also suspended for credit other than the credits arising out of automatic corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Financial Institution as defined under section 4A of the Companies Act, 1956. 1.2.6 HUF, Association of Persons (AoP), Partnership Firm, unregistered Trust, Registered Trust, Corporate Bodies, minors, etc. Reference Circular MRD/DoP/Dep/Cir-09/06 dated July 20, 2006. The BO account shall be in the name of natural persons, PAN card details of the respective HUF, AoP, Partnership Firm, Unregistered Trust, etc shall be obtained. The PAN number of Registered Trust, Corporate Bodies and minors shall be obtained when accounts are opened in their respective names. 1.2.7 Difference in maiden name and current name of investors. Reference Circular MRD/DoP/Dep/Cir-09/06 dated July 20, 2006. DPs can collect the PAN card proof as submitted by the account holder subject to the DPs verifying the veracity of the claim of such investors by collecting sufficient documentary evidence in support of the identity of the investors . Reference Circular MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004. 1.2.8 NRI/PIOs Reference Circular MRD/DoP/Dep/SE/Cir-17/06 dated October 27, 2006. Citizens of India residing outside India, foreign citizens and other persons (like com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l AMC 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. For the purpose of the above requirement the year shall begin from the date of opening of the account in quarterly rests. 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. 1.3.6 Dissemination of tariff/charge structure of DPs on the website of depositories Reference Circular MRD/Dep/Cir- 20/06 dated December 11, 2006. 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. For this purpose dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference Circular No. SEBI/MRD/DOP/Cir-22/2004 dated July 14, 2004. To promote investor awareness regarding mechanism for redressing investor grievances, the information placed below shall be printed on the inside back cover of the Delivery Instruction Form (DIF) Book issued by all Depository Participants. There will be occasions when you have grievances against a listed company/ intermediary registered with SEBI. In the event of such grievance you should first approach the concerned company/ intermediary against whom you have a grievance. However, you may not be satisfied with their response. Therefore you should know whom you should turn to get your grievance redressed. SEBI takes up grievances related to issue and transfer of securities and non-payment of dividend with listed Companies. In addition, SEBI also takes up grievances against the various intermediaries registered with it and related issues. Given below are types of grievances for which you could approach SEBI. Nature of grievance Regarding Type-I : Refund order/ Allotment Advice Type-II : Non-receipt of dividend. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... With the Stock Exchange: At the Investor Information Centre of all the recognised Stock Exchanges Related to securities traded/listed with the exchanges Trades effected on the exchange w.r.t the companies listed on it or by the members of exchange With the Department Of Company Affairs (DCA/ concerned Registrar of Companies (ROC) Against unlisted companies For non-receipt of annual report, AGM Notice Fixed deposit in manufacturing companies Forfeiture of shares With the Reserve Bank of India Fixed deposits in Banks Fixed deposits in Non Banking Finance Companies For more information visit our website - http\\:investor.sebi.gov.in The following types of grievances should be taken up with: With the Stock Exchange: At the Investor Information Centre of all the recognised Stock Exchanges Related to securities traded/listed with the exchanges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d DIS of the said booklet. d. The DPs shall not issue more than 10 loose DIS to one accountholder in a financial year (April to March). The loose DIS can be issued only if the BO(s) come in person and sign the loose DIS in the presence of an authorised DP official e. The DP shall also ensure that a new DIS booklet is issued only on the strength of the DIS instruction request slip (contained in the previous booklet) duly complete in all respects, unless the request for fresh booklet is due to loss, etc., as referred to in clause (c) above f. The DPs shall put in place appropriate checks and balances with regard to verification of signatures of the BOs while processing the DIS. g. The DPs shall cross check with the BOs under exceptional circumstances before acting upon the DIS. h. The DPs shall mandatorily verify with a BO before acting upon the DIS, in case of an account which remained inactive i.e., where no debit transaction had taken place for a continuous period of 6 months, whenever all the ISIN balances in that account (irrespective of the number of ISINs) are transferred at a time. However, in case of active accounts, such verification may be made mandatory onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory transfers Reference Circular no. SMDRP/Policy/Cir-28/99 dated August 23, 1999. In case of inter-Depository transfers of securities, the Registrars shall communicate the confirmation of such transfers within two hours, failing which such transfers shall be deemed to have been confirmed. The Registrars shall not reject inter-Depository transfers except where a. A Depository does not have adequate balance of securities in its account or b. There is mismatch of transfer requests from the Depositories. 2.3.3 Common Registrars and Share Transfer agents Reference Circular SMDRP/Policy/Cir-28/99 dated August 23, 1999. Every company shall appoint the same Registrars and Share Transfer agents for both the depositories. 2.3.4 Dematerialisation requests Reference Circular MRD/DoP/SE/Dep/Cir-2/2009 dated February 10, 2009 and Circular SEBI/MRD/SE/DEP/Cir-4/2005 dated January 28, 2005., Reference: D CC/ 1099 / 2002 dated November 01, 2002 Registrars and Share Transfer agents shall accept partial dematerialisation requests and will not reject or return the entire dematerialization request where only a part of the request had to be rejected. In cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d October 15, 2001 and Circular D CC/FITTC/Cir- 04/2001 dated November 13, 2001. Companies shall use ECS facility for distribution of dividends and other cash benefits to the investors. If ECS facility is not available, companies may use warrants for distribution of dividends. In order to avoid fraudulent encashment of dividend and other cash benefits, all companies shall print the bank account details, furnished by the Depositories, on the payment instruments. 2.6.2 Use of ECS for refund in public/rights issues. Reference Circular SEBI/MRD/DEP/Cir-3/06 dated February 21, 2006 and circular SEBI/CFD/DILDIP/29/2008/01/02 dated February 1, 2008 and Letter no. MRD/DEP/PP/123624/08 dated April 23, 2008. Reference: MRD/DEP/PP/123624 /2008 dated April 23, 2008 For locations where facility of refund through ECS is available details of applicants shall be taken directly from the database of the depositories in respect of issues made completely in dematerialised form. Accordingly, DPs shall maintain and update on real time basis the MICR (Magnetic Ink Character Recognition) code of Bank branch of BOs and other bank details of the applicants in the database of depositorie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame to SEBI, indicating whether it forms a part of any Bye Law/ Rule/ Regulation. Further, all Exchanges shall ensure that requests for dispensation of the requirement of pre-publication shall be accompanied with proper justification and indicate how the public interest or interest of trade shall be served by such dispensation of pre-publication. 3.4 Preservation of Records Reference Circular SEBI/MRD/DEP/Cir-24/05 dated December 22, 2005, circular SEBI/MRD/SE/Cir-16/2005 dated August 04, 2005 and circular MRD/DoP/DEP/Cir- 20 /2009 dated December 9, 2009. i. Depositories and Depository Participants are required to preserve the records and documents for a minimum period of 5 year. ii. Depositories and DPs shall preserve respective original forms of documents either in physical form or an electronic record, copies of which have been taken by CBI, Police or any other enforcement agency during the course of their investigation till the trial is completed. 3.5 Foreign investments in infrastructure companies in securities markets Reference Circular MRD/DSA/SE/Dep/Cust/Cir-23/06 dated December 22, 2006. Pursuant to Government of India Policy, foreign investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by 10:30 a. m. on T+2. 3. Depositories shall download the processed pay-in files to the Exchange / Clearing House / Clearing Corporation latest by 11:00 a.m. on T+2. 4. Pay-out of securities by the Exchange / Clearing House / Clearing Corporation to the Depositories shall be executed by 1:30 p.m. on T+2. 5. Pay-out of securities shall be completed by the Depositories by 2:00 p.m. on T+2. All instructions received by the DPs shall have an execution date, which may be either a current date or a future date. Instructions shall be valid till the pay-in deadline or till 'end of day' (EOD) of the execution date, whichever is earlier. DPs shall ensure that the validity period of instructions is brought to the notice of the client while accepting the instructions. In case the client account does not have sufficient balance before pay-in deadline or till EOD, such instructions shall fail. 3.7 Settlement of transactions in case of holidays Reference Circular SEBI/MRD/Policy/AT/Cir- 19/2004 dated April 21, 2004 Due to lack of uniformity of holidays and force majeure conditions which necessitate sudden closure of one or more Stock Exchanges and banks in a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uploading client instructions, in verifying signatures and maintaining client records, etc. DPs shall also ensure that the branches are suitably integrated. Depositories shall examine the adequacy of the above mechanisms during their inspections of DPs. The Depositories shall also carry out surprise inspections/ checks of the DP branches apart from the regular inspection of the DPs. Depositories shall also put in place appropriate mechanisms for monitoring opening of branches by DPs. 3.9 Designated e-mail ID for regulatory communication with SEBI Reference Circular MIRSD/DPS- III/Cir-23/08 dated July 25, 2008. Depositories shall create a designated e-mail id for regulatory communication and inform it to SEBI. This e-mail id shall be exclusive and shall not be personcentric. 3.10 Disclosure of investor complaints and arbitration details on Depository website Reference Circular SEBI/MRD/ OIAE/ Dep/ Cir- 4/2010 dated January 29, 2010. Depositories shall disclose the details of complaints lodged by Beneficiary Owners (BO s)/ investors against Depository Participants (DPs) in their website. The aforesaid disclosure shall also include details pertaining to arbi ..... 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 ..... No. of Arbitrati on filed by BOs Decide d by the Arbitrat ors Decided by Arbitrator s in favour of the BOs Pending for Redressal with Arbitrators 1 2 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N Total *including against its authorized persons, employees, etc. ** Non actionable means the complaint that are incomplete / outside the scope of Depository (Arrange the DPs in descending number of complaints filed against them during the period) ..... 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 ..... in descending number of awards passed by them during the period) Report 2B: Details of Arbitration Proceedings (where BO is a party) during 2009-10: Updated on mmm dd yyyy (to be updated every quarter) (In excel sheet) Sl. No. 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 ..... N Total (In case of panel of arbitrators, the cases / awards would appear against every member of the panel) (Arrange the arbitrators in descending number of awards passed by them during the period) Report 3A: Penal Actions against Depository 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 Action against DP, its authorized person and employees together Monetary Penalties levied (Rs. Lakh) No. of Arbitration Awards issued against DP For complaints For others ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N 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 Action against DP, its authorized person and employees together Monetary Penalties l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N * Non actionable means the complaint that are incomplete / outside the scope of Depository (Arrange the companies in descending number of complaints filed against them during the period) Report 4A: Redressal of Complaints lodged by investors against Listed Companies during 2008 -09: Updated on mmm dd yyyy (to be update ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N Total *Non actionable means the complaint that are incomplete / outside the scope of Depository (Arrange the companies in descending number of complaints filed against them during the period) Report 4B: Redressal of Complaints lodged by investors 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-Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the complaints that are incomplete / outside the scope of Depository (Arrange the companies in descending number of complaints filed against them during the period) Table 1 A Type Details Type I Account Opening Related I a Denial in opening an account I b Account opened in another name than as requested I c Non receipt of Account Opening Kit I d Delay in activation/ opening of account I e Non Receipt of copy of DP Client Agreement/Schedule A of Charges Type II Demat/Remat Related 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tories/bank details/PAN etc.) Type IX Company/ RTA related IX a Action Cash IX b Action Non Cash IX c Initial Public Offer/ Follow-on Public Offer Related Type X Others ** Status Type Description I I a I b I c Non actionable Complaint incomplete Outside the scope of Depository Pertains to non-responding company. II Resolved III Under Process IV Referred to Arbitration V Forwarded to Company/RTA for appropriate action. 3.8 Disclosure of regulatory orders and arbitration awards on Depository website Reference Circular SEBI/MRD/ DP/ 19/2010 dated June 10, 2010. Depositories shall post ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smission of shares Reference: MRD/DoP/Dep/VM/182963/2009 dated November 12, 2009 Depositories are advised to ensure compliance with the following: 1. In cases of transmission of shares of a deceased security 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 One 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: The Family Settlement Deed clearly vest the securities in favour of the person seeking transmission in his/ her name. Vesting of securities in favour of the person seeking transmission in his/ her name is not contingent upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated July 07, 2009and MRD/CDSL/VM/168989 /2009 dated July 07, 2009 SEBI has provided exemption to Depository Participants from sending quarterly transaction statements to the clients in respect of demat accounts with no transactions and no security balances subject to the following conditions: Client is informed in advance that it will not be receiving Transaction Statements for such accounts till there are any transactions or security holdings in the demat account. KYC and PAN requirement in respect of all such depository accounts are complied. No Annual Maintenance Charges are levied for such an account. Information which is required to be disseminated by Participants by way of a note in the Transaction Statements will be required to be communicated to such Clients separately. The Internal Auditor of the Participant shall comment in its internal audit report on compliance of the aforesaid requirements. Further, depository may like to consider whether, DPs should send a consolidated Transaction Statements for the entire financial year in case of the BOs to whom quarterly Transaction Statements are not sent. 4.8. Withdrawal by issuers from the depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ISIN may be allotted to differentiate such shares from ordinary shares. 4.11. Updation of bank accounts details, MICR code and IFSC of bank branches by Depository Participants (DPs) Reference: MRD/DEP/PP/123624 /2008 dated April 23, 2008 Please refer to SEBI Circular No. SEBI/MRD/DEP/Cir- 3/06 dated February 21, 200639 whereby depositories were advised to instruct Depository Participants (DPs) to update the MICR code and bank details of the client in database of depositories. It has been informed by RBI that they have been receiving complaints from managers to the issues that the funds routed through the electronic mode are getting returned by destination banks because of incorrect or old account numbers provided by beneficiary account holders. RBI has stated that Investors will have to ensure through their DPs that bank account particulars are updated in master record periodically, to ensure that their refunds, dividend payments etc. reach the correct account, without loss of time. RBI has also suggested incorporation of Indian Financial System Code (IFSC) of customer's bank branches apart from 9 digit MICR code; since IFSC of bank's branches is used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s with its SBDPs on an end of the day basis.] Reference:MRD/DRK/SU/16034/2003 dated August 22, 2003 4.14. Deadline time for accepting non pay-in related instructions Reference: MRD/VSS/ARR/ 12255/2004 dated June 10, 2004 4.14.1. 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. 4.14.2. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated by a natural guardian without any order from the court though the same is neither expressly permitted nor prohibited. SCHEDULE CIRCULARS SMDRP/Policy/Cir-28/99 dated August 23, 1999 SMDRP/POLICY/Cir-36/2000 dated August 4, 2000 D CC/FITTC/CIR-3/2001 dated October 15, 2001 D CC/FITTC/Cir- 04/2001 dated November 13, 2001 SMDRP/Policy/Cir-05/2001 dated February 1, 2001 D CC/FITTC/Cir-13/2002 dated November 1, 2002 D CC/FITTC/Cir-09/2002 dated July 4, 2002 D CC/FITTC/Cir-10/2002 dated September 25, 2002 D CC/FITTC/Cir-15/2002 dated December 27, 2002 D CC/FITTC/CIR - 12/2002 dated October 30, 2002 DCC/FITTC/Cir-19/2003 dated March 4, 2003 LGL/Cir-2/2003 dated February 19, 2003 MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004 MRD/DoP/Dep/Cir-27/2004 dated August 16, 2004 MRD/DoP/SE/Dep/Cir-36/04 dated October 27, 2004 SEBI/MRD/DOP/Cir-22/2004 dated July 14, 2004 SEBI/MRD/Policy/AT/Cir-19/2004 dated April 21, 2004 SEBI/MRD/SE/DEP/Cir-4/2005 dated January 28, 2005 SEBI/MRD/DEP/Cir-24/05 dated December 22, 2005 SEBI/MRD/SE/Cir-16/2005 dated August 04, 2005 MRD/DoP/Dep/Cir-22 /05 dated November 09, 2005 MR ..... 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