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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 ..... ng 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 securities markets 3.6 Activity schedule for depositories for T+2 rolling Settlement 3.7 Settlement of transactions in case of holidays 3.8 Supervisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 applicant's Photo, issued by a) Central/State Government and its Departments, b) Statutory/Regulatory Authorities, c) Public Sector Undertakings, d) Scheduled Commercial Banks, e) Public Financial Institutions, f) Colleges aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 MR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 Fees/Charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 depositories shall put in place necessary systems and procedures including formats, periodicity, etc. for collection of necessary data from the DPs and dissemination of the same on their website which would enable the investors to have a comparative analysis of the tariff/charge structure of various DPs. 1.4 Transfer of funds and securities from Clearing Member pool account to BO Account Reference Circular SMDRP/Policy/Cir-05/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. Type-III: Non-receipt of share certificates after transfer Type-IV: Debentures Type-V: Non-receipt of letter of offer for rights Type VI: Collective Investment Schemes Type VII: Mutual Funds/ Venture Capital Funds/ Foreign Venture Capital Investors/ Foreign Institutional Investors/ Portfolio Managers, Custodians Type VIII: Brokers/Debenture Trustees /Depository Participants/ Merchant Bankers /Registrars and Transfer Agents / Bankers to Issue/ Underwriters/ Credit Rating Agencies/ Securities lending Intermediaries Type IX: Exchanges/ Clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted 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 1.6 Exemption to DPs from giving 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 BOs under Digital signature, as governed under the Information Technology Act, 2000, subject to the DP entering into a legally enforceable arrangement with the BO for the said purpose. While such practice in the aforesaid manner shall be deemed to be in compliance of the provisions of the Regulation 43 of SEBI (Depositories & Participants) Regulations, 1996; if the BO is still desirous of receiving statements in hard copy, DPs shall be duty bound to provide the same. 1.7 Safeguards to address the concerns of the inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. SECTION 2: ISSUER RELATED 2.1 Charges paid by Issuers 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 Circular CIR/MRD/ DP/05/2011 dated April 27, 2011. With effect from April 27, 2011 depositories may levy and collect the charges towards custody from the issuers, on the basis of average no. of folios (ISIN position) during the previous financial year, as per the details given below: Issuers to pay @ ₹ 8.00 (*) per folio (ISIN position) in the respective depositories, subject to a minimum as mentioned below: Nominal value of admitted securities (Rs.) Annual Custodial Fee payable by a Issuer to each Depository (Rs.) (*) Upto 5 crore 6,000 Above 5 crore and upto 10 crore 15,000 Above 10 crore and upto 20 crore 30,000 Above 20 crore 50,000 * Plus service tax as applicable The average no. of folios (ISIN positions) for an Issuer may be arrived at by dividing the total number of folios for the entire financial year by the total number of working days in the said financial year. If the issuer fails to make the payment, Depositories may charge penal interest subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.5 American Depository Receipts (ADRs)/Global Depository Receipts (GDRs) 2.5.1 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 nonresident 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/GDR issue. 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. 2.5.2 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties have not filed for arbitration with the depository, or, ii. where the arbitration application was filed but was rejected solely on the ground of delay in filing within the earlier limitation period; and the limitation period (in terms of Limitation Act 1963) have not yet elapsed. 3.2 Designated e-mail ID for redressal of investor complaints Reference Circular MRD/DoP/Dep/SE/Cir-22/06 dated December 18, 2006. Depositories and registered DPs shall designate an exclusive e-mail ID for the grievance redressal division/compliance officer exclusively for registering investor complaints. The designated email ID and other relevant details shall be prominently displayed on the websites and in the various materials/pamphlets/advertisement campaigns initiated by the Depositories and DPs for creating investor awareness. 3.3 Approval of amendments to Bye Laws / Rules of Stock Exchanges and Depositories Reference Circular LGL/Cir-2/2003 dated February 19, 2003. Depositories and exchanges shall submit the following information while seeking SEBI approval for amendment to Bye Laws/ Rules/ Regulations and amendments thereto: i The objective/purpose of amendments. ii Whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n investment in respect of recognised Stock Exchanges shall be subject to 5% shareholding limit as prescribed under the Securities Contracts (Regulation) (Manner of Increasing and Maintaining Public Shareholding in Recognised Stock Exchanges) Regulations, 2006. 3.6 Activity schedule for depositories for T+2 rolling Settlement Reference Circular DCC/FITTC/Cir-19/2003 dated March 4, 2003 and Circular MRD/DoP/SE/Dep/Cir-18/2005 dated September 2, 2005. The activity schedule for T+2 Rolling Settlement is as under: Sr. No. Day Time Description of activity 1 T 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. 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: 1. DPs shall accept instructions for pay-in of securities from clients i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to ensure that the settlements are completed on the same day. * The Clearing Corporation/Clearing House of the Stock Exchanges shall execute Auto DO facility for all the settlements together, so as to make the funds and the securities available with the member on the same day for all the settlements, thereby enabling the availability of the funds/securities at the client level by the end of the same day. 3.8 Supervision of branches of DPs Reference Circular MIRSD/DPS-III/Cir-9/07 dated July 3, 2007. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... * SEBI Ref. No. (if applicable Name of DP Status** Status Date## Date of Filing Arbitration Name of Arbitrator(s) Date of Arbitration Award 1 2 3 N # including against its authorized persons, employees, etc. ## Status date is the date of resolution/reference to arbitration/finding it non-actionable. If under process, it is the date of updation of this sheet. */** As per Table 1A Report 1B: Redressal of Complaints received against Depository Participants (DPs) during 2008-09: Updated on mmm 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 Complai nts received against the DP * Of the Complaints received during 2008-09 No. of Complaints Resolved through the Depository Non actiona ble** Arbitrat ion Advise d Pending for redressal with Depository 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 N Total *including against its authorized persons, employees, etc. **Non actionable means the complaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 For complaints For others 1 2 3 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 levied (Rs. Lakh) No. of Arbitration Awards issued against DP For complaints For others For complaints For others 1 2 3 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VII a Non closure/ delay in closure of account VII b Closure of a/c without intimation by DP Type VIII Manipulation/ Unauthorised Action VIII a Unauthorised Transaction in account VIII b Manipulation VIII c Unauthorised changes in account (address/ signatories/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 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. Section 4: Other Communications to Depositories 4.1. Amendment in DP-BO Agreement Reference MRD/DP/SG-OW/2010/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin 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 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 considered as an NOC for transmission of shares to each legal heirs applying for transmission. However, if DPs still have problems in comprehending the contents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch 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 depository Ref: MRD/DoP/NSDL/VM/ 162378 /2009 dated May 06, 2009 As regards voluntary withdrawal by issuers from the depository, it is informed that listed companies may not be allowed to withdraw from the depository system unless they delist their securities from the stock exchanges. As regards companies under liquidation are concerned, it is informed that deactivation of the ISIN may be only done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 for remittance through National Electronic Funds Transfer (NEFT). * It is advised that necessary action be taken in this matter to ensure that correct account particulars of investors are available in the database of depositories. 4.12. Establishment of connectivity by Clearing House / Clearing Corporation (CH/CC) with the Depository - Clarification Reference: MRD/DoP/ Dep/82334 /2006 dated December 14, 2006 * On examinatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 instruction. Further, pending such amendment, suitable instructions may be issued to DPs to adhere to such time limit. 4.14.3. The above clause may be suitably incorporated in the DP-BO agreement while opening new accounts. 4.15. Clarification on our circular no. SMDRP/Policy/Cir-28/99 dated August 23, 1999 Reference: D&CC/ 1099 / 2002 dated November 01, 2002. Please refer to para 4 of the captioned circular which is reproduced below :- "In ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 * MRD/DoP/SE/Dep/Cir-18/2005 dated September 2, 2005 * MRD/DoP/Dep/SE/Cir-22/06 dated December 18, 2006 * MRD/DSA/SE/Dep/Cust/Cir-23/06 dated December 22, 2006 * SEBI/MRD/DEP/Cir-3/06 dated February 21, 2006 * SEBI/MRD/DEP/Cir-2/06 dated January 19, 2006 * MRD/Dep/Cir- 20/06 dated December 11, 2006 * MRD/DoP/Dep/Cir-09/06 dated July 20, 2006 * MRD/DoP/Dep/SE/Cir-17/06 dated October 27, 2006 * MRD/DoP/Dep/SE/Cir-13/06 dated September 26, 2006 * MRD/DoP/Dep/Cir-0 ..... 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