TaxTMI 
TaxTMI 
TaxTMI 
Master Circular for Depositories
X X X X Extracts X X X X
X X X X Extracts X X X X
....ss (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 1.17 Consolidated Account Statement (CAS) for all securities assets Section - 2: Depository Participants (DP) Related 2.1 Supervision of branches of depository participants 2.2 Printing of Grievances Redressal Mechanism on D....
X X X X Extracts X X X X
X X X X Extracts X X X X
....house receipts 4.23 Voting rights in respect of securities held in pool account 4.24 Risk Management Policy at the Depositories 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 after verif....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 j. e-KYC service launched by UIDAI shall also be accepted as a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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. Reference Hon'ble High Court of Sikkim judgment dated March 31, 2006 DPs shall verify the veracity of the claim of the investors that they are ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....count 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 binding on all the existing and new clients and depository participants. This will harmonize the account opening process for trading as well as demat account. This will also rationalise the number of signatures by the investor, which he is required to affix at present on a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ficial 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 segregated and shall not be mixed up with the securities of other beneficial owners and/or DP's own securities held in dematerialized form. 10. The DP shall not facilitate the Beneficial Owner to create or permit any pledge and /or hypothecation or any other interest or encumbrance over all or any of such securities submi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 theBeneficial 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 of thirty days from the date of demand, without prejudice to the right of the DP to close the demat account of the Beneficial Owner, the DP may charge interest at a rate as specified by the Depository from time to time for the period of such default. 20. In case the Beneficial Owner has failed to make the payment of any of the amounts as provided in Clause 5&6 sp....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 the clients at once. 31. If the rights and obligations of the parties hereto are altered by virtue of change in Rules and regulations of SEBI or Bye-laws, Rules and Regulations of the relevant Depository, where the Beneficial Owner maintains his/her account, such changes shall be deemed to have been incorporated herein in modification of the rights and obligations of the parties mentioned in this document. 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndividuals 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 account and for unlisted securities other than units of mutual funds, face value may be taken in to account. The value of suspended securities may not be considered for the purpose of determining eligibility of demat account as BSDA. iii. If the value of holding in such BSDA exceeds the prescribed criteria at any date, the DPs may le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts with no transaction and nil balance even after the account has remained in such state for one year. The DP shall inform the BO that if no Annual Maintenance Charge (AMC) is received by the DP, the dispatch of the physical statement may be discontinued for the account which continues to remain zero balance even after one year. 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, half yearly statement of holding for 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 marr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e AMC collected upfront on annual/half yearly basis by the DP, shall be refunded by the DP to the BO for the balance of the quarter/s. For instance, in case annual 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. 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 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 th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the DIS issued as per the provisions of this circular. 1.11 Transmission of shares Reference: MRD/DoP/Dep/VM/182963/2009 dated November 12, 2009, Reference: CIR/MIRSD/10/2013 dated October 28, 2013 1.11.1 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 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 transmis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....strars to an Issue and Share Transfer Agents shall publicize nomination as an additional right available to investors, while sending communications to the investors. Annexure A Documentary requirement for securities held in physical 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 O....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... subject to the following conditions: i. Transaction statements were returned undelivered on three consecutive occasions. ii. The depository participant (DP) maintains proof 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 s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tories so that the client receives pay out of securities directly to the extent of instructions received from the respective clearing members. To the extent of instruction not received, the securities shall be credited to the CM pool account. 1.17 Consolidated Account Statement (CAS) for all securities assets Circular CIR/MRD/DP/31/2014 dated November 12, 2014 i. Pursuant to the Interim Budget announcement in 2014 to create one record for all financial assets of every individual, it has been decided to enable a single consolidated view of all the investments of an investor in Mutual Funds (MF) and securities held in demat form with the Depositories. ii. The Depositories and the Asset Management Companies (AMCs)/ MF-RTAs shall put in place systems to facilitate generation and dispatch of single Consolidated Account Statements (CAS) for investors having MF investments and holding demat accounts. AMCs/ RTAs shall share the requisite information with the Depositories on monthly basis to enable generation of CAS. iii. Consolidation of account statement shall be done on the basis of PAN. In case of multiple holding, it shall be PAN of the first holder and pattern ofholding. Based on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e required to share such information with unregulated entities like third party printers, the depositories shall enter into necessary data confidentiality agreements with them. ix. The CAS shall be implemented from the month of March 2015 with respect to the transactions carried out during the month of February 2015. x. If an investor does not wish to receive CAS, an option shall be given to the investor to indicate negative consent. Depositories shall accordingly inform investors in their statements from the month of January 2015 about the facility of CAS and give them information on how to opt out of the facility if they do not wish to avail it. xi. Where such an option is exercised, the concerned depository shall inform the AMC/MF-RTA accordingly and the data with respect to the said investor shall not be shared by the AMC/MF-RTA with the depository. xii. If there is any transaction in any of the demat accounts of the investor or in any of his mutual fund folios, then CAS shall be sent to that investor on monthly basis. In case there is no transaction in any of the mutual fund folios and demat accounts then CAS with holding details shall be sent to the investor on half yearl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....struction Form (DIF) Book issued by all Depository Participants. In case you have grievances against a listed company or intermediary registered with SEBI, you should first approach the concerned company or intermediary against whom you have grievance. If you are not satisfied with their response, you may approach SEBI or other regulatory bodies. You can approach SEBI for following type of grievances. Listed Companies * Refund / Allotment/ Bonus/ Dividend/ Rights/ Redemption/ Interest * Prelisting offer documents (shares) * Prelisting offer documents (debentures and bonds) * Delisting of Securities * Buyback of Securities * Takeover and Restructuring * Corporate Governance and Listing conditions Brokers and stock exchanges * Stock Brokers * Sub brokers * Portfolio managers * Stock exchanges Registrar and Transfer Agents Other entities Collective Investment Schemes Debenture Trustees Merchant Bankers Bankers to Issue Credit Rating Agencies Custodian of Securities Foreign Institutional Investors Underwriters Venture Capital Funds KYC Registration Agency(KRA) Alternative Investment Fund Mutual Funds Depository and Depository Participants Inform....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ximum of 12% per annum. 3.2 Activation of ISIN in case of IPO and additional issue of shares/ securities i. Depositories shall activate the ISINs only on the date of commencement of trading on the stock exchanges in case of IPOs for both the equity and debt securities. Reference Circular SEBI/MRD/DEP/Cir-2/06 dated January 19, 2006 and Circular CIR/MRD/DP/ 21 /2012 dated August 02, 2012 ii. Further, in order to curtail the transfer of additional issue of shares/ securities including by way of further public offerings, rights issue, preferential allotment, bonus issue etc of the listed company, prior to receipt of final listing / trading approval, the depositories shall devise a mechanism so that such new securities created shall be frozen till the time final listing/ trading permission is granted by the exchange. Reference Circular CIR/MRD/DP/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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the DP and proof of dispatch of document given by DP. ii. It is clarified that the above provision shall be applicable to all the securities like scrips, bonds, debentures, debenture stock or other marketable securities eligible to be held in dematerialised form in a depository as defined in Regulation 28 of the SEBl (Depository and Participants) Regulations, 1996. 3.4 Mandatory admission of debt instruments on both the Depositories Reference Circular D&CC/FITTC/Cir-13/2002 dated November 1, 2002 and Circular MRD/DoP/SE/Dep/Cir-36/04 dated October 27, 2004 Debt instruments shall necessarily be admitted on both the Depositories. 3.5 American Depository Receipts (ADRs)/Global Depository Receipts (GDRs) 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/GDR issue. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ps 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). iii. 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. 3.6.3 Usage of electronic payment modes for making cash payments to the investors Reference Circular CIR/MRD/DP/10/2013 dated March 21, 2013 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 usa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Share Capital with Differential Voting Rights) Rules, 2001, separate ISIN may be allotted to differentiate such shares from ordinary shares. SECTION - 4: Depositories Related 4.1 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 i. The activity schedule for T+2 Rolling Settlement is as under: Sr. No. Day Time Description of activity 1 T 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.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... v. 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. 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 impos....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 17, 2010 i. Section 12 of the Depositories Act and Regulation 58 of the SEBI (Depositories and Participants) Regulations, 1996 along with the relevant Bye Laws of the Depositories clearly 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 communiqué 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 Gover....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., submission of physical ATR shall not be accepted for complaints lodged in SCORES. ii. The SEs and Depositories shall do the following: a. 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,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he 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 1 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 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 3 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) Report 1C: Redressal of Complaints received against Depository Participants (DPs) during 2009-10: Updat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed 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 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 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 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aint 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. 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 "Depository Participant", i.e. to open BO accounts for inv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll 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 besubmitted 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 transactional details from stock exchanges viz. Actual Trade value, Trading date, Settleme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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.: Conversion of warrants into equities) Annexure B - Illustration of lock-in period in RGESS I. RGESS lock-in period if investments are brought in at once Annexure B - Illustration of lock-in period in RGESS I. RGESS lock-in period if investments are brought are in installmen 4.17 Principles of Financial Market Infrastructures (PFMIs) Reference Circular SEBI/MRD/DRMNP/26/2013 dated September 04, 2013 Background i. To promote and sustain an efficient and robust global financial infrastructure, the Committee on Payments and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO) published the Principles for financial market infrastructures1 (PFMIs) on April 2012. They replace the three existing sets of international standards set out in the Core Principles for Systemically Important Payment Systems (CPSIPS); the Recommendations for Securities Settlement Systems (RSSS); and the Recommendations for Central Count....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsfer of funds is effected using an agreed-upon operational infrastructure. Central Securities Depositories (CSD) Central securities depository provides securities accounts, central safekeeping services, and asset services, which may include the administration of corporate actions and redemptions, and plays an important role in helping to ensure the integrity of securities issues (that is, ensure that securities are not accidentally or fraudulently created or destroyed or their details changed). A CSD can hold securities either in physical form (but immobilised) or in dematerialised form (that is, they exist only as electronic records). A CSD may maintain the definitive record of legal ownership for a security; in some cases, however, a separate securities registrar will serve this notary function. Securities Settlement Systems (SSS) A securities settlement system enables securities to be transferred and settled by book entry according to a set of predetermined multilateral rules.Such systems allow transfers of securities either free of payment or against payment. When transfer is against payment, many systems provide delivery versus payment (DvP), where delivery of the securit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....FMIs and implement them in their respective jurisdictions. vii. SEBI as a member of IOSCO is committed to the adoption and implementation of the new CPSS-IOSCO standards of PFMIs in its regulatory functions of oversight, supervision and governance of the key financial market infrastructures under its purview. viii. Depositories and Clearing Corporations regulated by SEBI are FMIs in terms of the criteria described above. These systemically important financial infrastructures provide essential facilities and perform systemically critical functions in the market and shall hence be required to comply with the principles of financial market infrastructures specified by CPSS-IOSCO as applicable to them. The list of SEBI regulated FMIs is provided in Annexure 2. ix. All FMIs in the securities market shall be monitored and assessed against the PFMIs on a periodic basis. Annexure 1 Principles for financial market infrastructures General Organisation Principle 1: Legal basis An FMI should have a well-founded, clear, transparent, and enforceable legal basis for each material aspect of its activities in all relevant jurisdictions. Principle 2: Governance An FMI should have governanc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fidence under 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 generate the largest aggregate liquidity obligation for the FMI in extreme but plausible market conditions. Settlement Principle 8: Settlement finality An FMI should provide clear and certain final settlement, at a minimum by the end of the value date. Where necessary or preferable, an FMI should provide final settlement intraday or in real time. Principle 9: Money settlements An FMI should conduct its money settlements in central bank money where practical and available. If central bank money is not used, an FMI should minimise and strictly control the credit and liquidity risk arising from the use of commercial bank money. Principle 10: Physical deliveries An FMI should clearly state its obligations with respect to the delivery of physical instruments or commodities and should identify, monitor, and manage the risks associated with such physical deliveries. Central securities depositories and exchange-of-value settlement systems Principle 11: Central securities depositories A CSD should have appropriate rules a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llment of the FMI's obligations, including in the event of a wide-scale or major disruption. Access Principle 18: Access and participation requirements An FMI should have objective, risk-based, and publicly disclosed criteria for participation, which permit fair and open access. Principle 19: Tiered participation arrangements An FMI should identify, monitor, and manage the material risks to the FMI arising from tiered participation arrangements. Principle 20: FMI links An FMI that establishes a link with one or more FMIs should identify, monitor, and manage link-related risks. Efficiency Principle 21: Efficiency and effectiveness An FMI should be efficient and effective in meeting the requirements of its participants and the markets it serves. Principle 22: Communication procedures and standards An FMI should use, or at a minimum accommodate, relevant internationally accepted communication procedures and standards in order to facilitate efficient payment, clearing, settlement, and recording. Transparency Principle 23: Disclosure of rules, key procedures, and market data An FMI should have clear and comprehensive rules and procedures and should provide sufficient info....
X X X X Extracts X X X X
X X X X Extracts X X X X
....c compliance / non-compliance issues, observations for minor deviations as well as qualitative comments for scope for improvement. The report should also take previous audit reports in consideration and cover any open items therein. 6. The Auditee management provides their comment about the Non-Conformities (NCs) and observations. For each NC, specific time-bound (within 3 months) corrective action must be taken and reported to SEBI. The auditor should indicate if a follow-on audit is required to review the status of NCs. The report along with Management Comments shall be submitted to SEBI, within 1 month of completion of the audit. 7. Follow-on audit, if any, has to be scheduled within 3 months of the Audit to ensure that the corrective actions have been taken. 8. If follow-on audit is not required, the Auditee management has to submit a report of actions taken and evidence of corrections to the Auditors & SEBI within 3 months. This report should include updated Issue-Log to indicate the corrective actions taken, verified by the auditors. Auditor Selection Norms 1. Auditor must have minimum 3 years of experience in IT audit of Securities Industry participants e.g. stock exch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te approvals > Production issues / disruptions reported during last year & corrective actions taken. 3. Data communication / Network controls - It must include > Network Administration - Redundancy, Monitoring, breakdown resolution etc. > WAN Management - Connectivity provisions for business continuity. > Encryption - Router based as well as during transmission > Connection Permissions - Restriction on need to have basis > Fallback mechanism - Dial-up connections controls etc. > Hardware based Signing Process > Incidences of access violations in last year & corrective actions taken 4. Security Controls - General office infrastructure - It must include > Security Policy & quality of implementation of the same > LAN security control and monitoring > OS & Database Security controls & monitoring > Internet connection controls - Firewall protection, Intrusion Detection System, Access rights and privileges. > Virus protection - Controls to mitigate the Virus attacks / Outbreaks. > Secured (digitally signed) e-mail with other entities like SEBI, other partners > Email Archival Implementation > Incidences of security violations in last year & corrective actions taken. 5.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rence Reference to the section in detailed report - where full background information about the findings are available Auditor Process/ Unit Process or unit where the audit is conducted and the finding pertains to Auditor Category of Findings Major/Minor Nonconformity, Observation, Suggestion etc. Auditor Audited By Which Auditor covered the findings Auditor Root Cause Analysis A detailed analysis on the cause of the nonconformity Auditee Remediation The action (to be) taken to correct the nonconformity Auditee Target Completion Date for Remedial Action The date by which remedial action must be/will be completed Auditor/ Auditee Status Status of finding on reporting date (open/close) Auditor/ Auditee Verified By Auditing personnel (upon verification that finding can be closed) Auditor Closing Date Date when finding is verified and can be closed Auditor The Executive Summary should also include an overall comment from the Auditors to indicate if a follow-on audit is required and the time lines of respective corrective action for non conformities. Further, along with the audit report, the Stock Exchange / Depository shall also submit a declaration from ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lls / Testing a) DR drills should be conducted on quarterly basis. In case of exchanges, these drills should be closer to real life scenario (trading days) with minimal notice to DR staff involved. b) During the drills, the staff based at PDC should not be involved in supporting operations in any manner. To begin with, initial three DR drills from the date of this circular may be conducted with the support of staff based at PDC. c) The drill should include running all operations from DRS for at least 1 full trading day. d) Before DR drills, the timing diagrams clearly identifying resources at both ends (DRS as well as PDC) should be in place. e) The results and observations of these drills should be documented and placed before the Governing Board of Stock Exchange / Depositories. Subsequently, the same along with the comments of the Governing Board should be forwarded to SEBI within a month of the DR drill. f) The system auditor while covering the BCP - DR as a part of mandated annual system audit should also comment on documented results and observations of DR drills. vii. BCP - DR Policy Document a) The BCP - DR policy of stock exchanges and depositories should be....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 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, establish appropriate standards and controls, and direct the establishment and implementation of policies and procedures. vi. SEBI has laid down Guidelines for Business Continuity Plan (BCP) and Disaster Recovery (DR) for stock exchange and depositories vide circular CIR/MRD/DMS/12/2012 dated April 13, 2012 and CIR/MRD/DMS//17/2012 dated June 22, 2012. In Addition to the requirements of the aforementioned circulars, depositories shall designate a senio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rresponding 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 21-45 Low ≤ 20 viii. After arriving at the risk rating / categorization as mentioned above, for subsequent inspections, depositories shall use the DP risk rating/ categorization to decide on the frequency of inspection of DPs ix. Apart from the above, depositories may undertake specific purpose inspections for DPs which score high in the specific inspection areas as mentioned at Annexure - I. x. Depositories shall jointly inspect DPs which are registered with both depositories to have better control over DPs, avoid duplicity of manpower, time and cost and also to reduce the possibility of regulatory arbitrage, if ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ol 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.15. Signature Verification E.16. Corrections / Cancellations to DIS E.17. Blocking of used / executed / lost / misplaced / Stolen DIS E.18. Procedure for processing of DIS E.19. Any other area as may be specified by the depository F. Transaction F.1. Checks pertaining to setting up / processing of transactions F.2. Future dated transactions F.3. Transfer of all ISINs of BO account having 5 or more ISINs F.4. Any other area as may be specified by the depository G. Transaction Statement (TS) G.1. Validation of TS G.2. Maintenance of records of TS G.3. Issuance of TS to BOs G.4. Any other area as may be specified by the depository H. Compliance under Prevention of Money Laundering Act, 2002 (PMLA) H.1. Compliance with PMLA Act, 2002 and SEBI Guidelines on areas such ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../ 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 of Information sought by Depositories specifically through Circulars / Letters. R.9. Half Yearly Compliance R.10. Any other area as may be specified by the depository S. Status of compliance for deviations / observations noted in last inspection T. Complaints T.1. Account Opening T.2. Demat / Remat T.3. Transaction Statement T.4. Improper Service T.5. Charges T.6. Delivery Instruction Related ( DIS ) T.7. Closure T.8. Manipulation / Unauthorized Action T.9. Monthly report for client complaints T.10. Other Complaints Annexure -II Adaptive Sample Size Determination methodology 1. Sample Size for inspection area of 'Account Opening' * The sample selection for account opening shall cover all categories of clients such as individuals, HUF, Corporate, FIIs etc. * Base sample size: 5% of Account Opening Forms (AOFs) or 150 AOFs whichever is higher, with a maximum cap of 1000 accounts. * Final Sample Size: The final sample size....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hange in e-mail Id = 25 * Change in mobile number = 25 * Change in SMS flag = 50 * Change in standing instruction flag = 50 * Transmission = 50% of total transmission cases * Previous compliance = 100% of total samples * Final sample size shall be arrived at after multiplying with the respective multiplier corresponding to the DP Risk rating / categorization as given below. In case the total number of instances / cases is less than the final sample size, then 100% of the samples shall be verified. DP Rating/ Categorisation Multiplier High risk 3 Medium High risk 2 Medium risk 1.5 Low risk 1 * A uniform Base sample size of 100 shall be adopted in case of all other activities. In case the total number of samples is less than 100, then 100% of the samples shall be verified. Annexure-III DP Rating / Categorization Model I. Quantitative Score Calculation: Specific weights shall be assigned to each area as decided by each depository. The Total Quantitative Score shall be the summation of all individual inspection scores. Table: Indicative Table for calculation of Quantitative Score Sr No Inspection Areas Weight (A) B = No of Instances divided by Sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vious 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 4.22 Activity of Demat of warehouse receipts Reference: MRD/DP/SG-OW/202/2012 and MRD/DP/SG-OW/203/2012 dated January 4, 2012 The aforesaid activity is not in compliance with Regulation 28 of SEBI (D&P) Regulations, 19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....shall have access to the Board. The CRO shall be responsible, accountable and answerable to the board on overall risk management issues. SCHEDULE CIRCULARS 1. SMDRP/Policy/Cir-28/99 dated August 23, 1999. 2. SMDRP/Policy/Cir-05/2001 dated February 1, 2001. 3. D&CC/FITTC/Cir-09/2002 dated July 4, 2002. 4. D&CC/FITTC/Cir-10/2002 dated September 25, 2002. 5. D&CC/FITTC/Cir-13/2002 dated November 1, 2002. 6. D&CC/FITTC/CIR - 12/2002 dated October 30, 2002. 7. D&CC/FITTC/Cir-15/2002 dated December 27, 2002. 8. LGL/Cir-2/2003 dated February 19, 2003. 9. DCC/FITTC/Cir-19/2003 dated March 4, 2003 10. SEBI/MRD/Policy/AT/Cir-19/2004 dated April 21, 2004. 11. MRD/DoP/Dep/Cir-27/2004 dated August 16, 2004. 12. MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004. 13. MRD/DoP/SE/Dep/Cir-36/04 dated October 27, 2004. 14. SEBI/MRD/SE/DEP/Cir-4/2005 dated January 28, 2005. 15. SEBI/MRD/SE/Cir-16/2005 dated August 04, 2005. 16. MRD/DoP/SE/Dep/Cir-18/2005 dated September 2, 2005. 17. MRD/DoP/Dep/Cir-22 /05 dated November 09, 2005. 18. SEBI/MRD/DEP/Cir-24/05 dated December 22, 2005. 19. SEBI/MRD/DEP/Cir-2/06 dated January 19, 2006. 20. SEBI/MRD/DEP/Cir-3/06 dated February 21, 2006. 21....