TaxTMI 
TaxTMI 
Master Circular for Depositories
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....and clarifications relating to mandatory requirement of PAN 1.3 Simplification of demat account opening process (DP-BO Rights and Obligation Document) 1.4 Opening of demat account in case of HUF 1.5 Operation of minor‟s demat account 1.6 Facility for a Basic Services Demat Account (BSDA) 1.7 Change of Name in the Beneficial Owner (BO) Account 1.8 Fees/Charges to be paid by BO 1.9 Safeguards on transfer of securities in dematerialized mode 1.10 Delivery Instruction Slip (DIS) Issuance and Processing 1.11 Transmission of shares 1.12 SMS alerts for demat accounts operated by Power of Attorney 1.13 Exemption from sending quarterly statements of transactions by depository participants (DPs) to clients in respect of demat accounts with no transactions and no security balances 1.14 Discontinuation of sending transaction statements by depository participants to clients 1.15 Exemption to Depository Participants (DPs) from providing hard copies of transaction statements to BOs 1.16 Transfer of funds and securities from Clearing Member pool account to BO Account Section - 2: Depository Participants (DP) Related 2.1 Supervision of branches ....
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....0 Activity of Demat of warehouse receipts 4.21 Voting rights in respect of securities held in pool account SCHEDULE List of Circulars & Communications Section 1: Beneficial Owner (BO) Accounts 1.1 Opening of BO Account by non body corporates 1.1.1 Proof of Identity (PoI) i. Permanent Account Number (PAN) to be the sole identification number for all transactions in the securities market ^Reference circular MRD/DoP/Cir-5/2007 dated April 27, 2007 With effect from July 02, 2007, PAN is the sole identification number for all transactions in the securities market, irrespective of the amount of transaction. A copy of the PAN card with photograph may be accepted as Proof of Identity. In this regard, intermediaries shall:- a. Put necessary systems in place so that the databases of the clients and their transactions are linked to the PAN details of the client. b. Build necessary infrastructure to enable accessibility and query based on PAN thereby enabling retrieval of all the details of the clients. c. Collect copies of PAN cards issued to the existing as well as new clients by the Income Tax Department and maintain the s....
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....nt/Passbook -- Not more than 3 months old. d. Self-declaration by High Court and Supreme Court judges, giving the new address in respect of their own accounts. e. Proof of address issued by any of the following: Bank Managers of Scheduled Commercial Banks/Scheduled Co-Operative Bank/Multinational Foreign Banks/Gazetted Officer/Notary public/ Elected representatives to the Legislative Assembly/Parliament/Documents issued by any Govt. or Statutory Authority. f. Identity card/document with address, issued by any of the following: Central/State Government and its Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, Public Financial Institutions, Colleges affiliated to Universities and Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members. g. For FII/sub account, Power of Attorney given by FII/sub-account to the Custodians (which are duly notarized and/or apostiled or consularised) that gives the registered address should be taken. h. The proof of address in the name of the spouse may be accepted. i. Aadhaar Letter issued by UIDAI shall be admissible as Pro....
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....rified are "suspended for debit" until the same is verified with the Depository Participant (DP). With effect from August 16, 2010 such PAN non-compliant demat accounts were also "suspended for credit" other than the credits arising out of automatic corporate actions. It was clarified that other credits including credits from IPO/FPO/Rights issue, off-market transactions or any secondary market transactions would not be allowed into such accounts. 1.2.2 Central and State Government and officials appointed by Courts ^Reference Circular MRD/DoP/Cir-20/2008 dated June 30, 2008 PAN card may not be insisted upon in case of transactions undertaken on behalf of Central Government and/or State Government and where transactions are conducted by officials appointed by Courts e.g. Official liquidator, Court receiver etc. ^Reference Rule 114C (1)(c) of Income Tax Rules However DPs, before implementing the above exemption, shall verify the veracity of the claim of the organizations by collecting sufficient documentary evidence in support of their claim for such an exemption. 1.2.3 Investors in Sikkim ^Reference Circular MRD/DoP/Dep/Cir-09/06 dated July 20, 2006 ....
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....s ^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 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 c....
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.... at the time of opening the demat account or furnished to the DP from time to time. Fees/Charges/Tariff 5. The Beneficial Owner shall pay such charges to the DP for the purpose of holding and transfer of securities in dematerialized form and for availing depository services as may be agreed to from time to time between the DP and the Beneficial Owner as set out in the Tariff Sheet provided by the DP. It may be informed to the Beneficial Owner that "no charges are payable for opening of demat accounts" 6. In case of Basic Services Demat Accounts, the DP shall adhere to the charge structure as laid down under the relevant SEBI and/or Depository circulars/directions/notifications issued from time to time. 7. The DP shall not increase any charges/tariff agreed upon unless it has given a notice in writing of not less than thirty days to the Beneficial Owner regarding the same. Dematerialization 8. The Beneficial Owner shall have the right to get the securities, which have been admitted on the Depositories, dematerialized in the form and manner laid down under the Bye Laws, Business Rules and Operating Instructions of the depositories. Separate Accounts 9. The DP ....
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....time. Manner of Closure of Demat account 17. The DP shall have the right to close the demat account of the Beneficial Owner, for any reasons whatsoever, provided the DP has given a notice in writing of not less than thirty days to the Beneficial Owner as well as to the Depository. Similarly, the Beneficial Owner shall have the right to close his/her demat account held with the DP provided no charges are payable by him/her to the DP. In such an event, the Beneficial Owner shall specify whether the balances in their demat account should be transferred to another demat account of the Beneficial Owner held with another DP or to rematerialize the security balances held. 18. Based on the instructions of the Beneficial Owner, the DP shall initiate the procedure for transferring such security balances or rematerialize such security balances within a period of thirty days as per procedure specified from time to time by the depository. Provided further, closure of demat account shall not affect the rights, liabilities and obligations of either the Beneficial Owner or the DP and shall continue to bind the parties to their satisfactory completion. Default in payment of charges 1....
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....out in this document, the DP and the Beneficial owner shall be entitled to exercise any other rights which the DP or the Beneficial Owner may have under the Rules, Bye Laws and Regulations of the respective Depository in which the demat account is opened and circulars/notices issued there under or Rules and Regulations of SEBI. 27. The provisions of this document shall always be subject to Government notification, any rules, regulations, guidelines and circulars/ notices issued by SEBI and Rules, Regulations and Bye-laws of the relevant Depository, where the Beneficial Owner maintains his/ her account, that may be in force from time to time. 28. The Beneficial Owner and the DP shall abide by the arbitration and conciliation procedure prescribed under the Bye-laws of the depository and that such procedure shall be applicable to any disputes between the DP and the Beneficial Owner. 29. Words and expressions which are used in this document but which are not defined herein shall unless the context otherwise requires, have the same meanings as assigned thereto in the Rules, Bye-laws and Regulations and circulars/notices issued there under by the depository and /or SEBI. 30. ....
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....unt/s where they are not the first holder shall be eligible for BSDA in respect of the single demat account where they are sole or first holder. iii. The individual shall have only one BSDA in his/her name across all depositories. iv. Value of securities held in the demat account shall not exceed Rupees Two Lakhs at any point of time. 1.6.3 Option to open BSDA: The DP shall give option: i. To open BSDA to all eligible individuals who open a demat account after the date of applicability of this circular; ii. To all the existing eligible individuals to convert their demat account into BSDA on the date of the next billing cycle based on value of holding of securities in the account as on the last day of previous billing cycle. 1.6.4 Charges: i. The charge structure may be on a slab basis as indicated below: a. No Annual Maintenance Charges (AMC) shall be levied, if the value of holding is upto Rs. 50,000. b. For the value of holding from Rs. 50,001 to Rs. 200,000, AMC not exceeding Rs. 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 o....
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....or regular demat accounts: i. Accounts with zero balance and nil transactions during the year: The DPs shall send one physical statement of holding annually to such BOs and shall resume sending the transaction statement as and when there is a transaction in the account. ii. Accounts which become zero balance during the year: For such accounts, no transaction statement may be sent for the duration when the balance remains nil. However, an annual statement of holding shall be sent to the BO. iii. Accounts with credit balance: For accounts with credit balance but no transactions during the year, one statement of holding for the year shall be sent to the BO. 1.7 Change of Name in the Beneficial Owner (BO) Account ^Reference Circular CIR/MRD/DP/27/2012 dated November 01, 2012 1.7.1 In order to simplify the procedure of change of name in individual Beneficial Owner‟s (BO) account, it has been decided that an individual BO may be allowed to change his/ her name, subject to the submission of following documents at the time of change of name of the individual in the BO account. i. In case of change in name on account of marriage following docu....
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.... i. In the event of closing of the demat account or shifting of the demat account from one DP to another, the 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 th....
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....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 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 pr....
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....er thehead 'Monitoring of DIS' shall be made applicable to 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 seekin....
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.... days and 21 days respectively, after receipt of the prescribed documents. 1.11.8 To improve the awareness of nomination facility, all Registrars 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 objecti....
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....f sending transaction statements by depository participants to clients ^Reference: MRD/NSDL/VM/158886 /2009 dated March 30, 2009 SEBI allowed discontinuation of sending transaction statements by depository participants to clients 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....
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....elivery of securities to the investors. Clearing corporation/clearing house (CC/CH) shall ascertain from each clearing member, the beneficial account details of their respective clients due to receive pay out of securities. Based on this, the CC/CH shall send pay out instructions to the depositories 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. Section 2: Depository Participants Related 2.1 Supervision of branches of DPs ^Reference Circular MIRSD/DPS-III/Cir-9/07 dated July 3, 2007 i. To ensure compliance with Regulation 46 of the SEBI (Depositories and Participants) Regulations, 1996, and Clause 19 of the Code of Conduct for Participants contained in the Third Schedule to the Regulations the DP shall ensure that it has satisfactory internal control procedure in place, inclusive of their branch offices. DPs are therefore required in terms of these provisions to put in place appropriate mechanisms to ensure that their branches are carrying on the operations in compliance with the applica....
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.... Credit Rating Agencies Custodian of Securities Foreign Institutional Investors Underwriters Venture Capital Funds KYC Registration Agency(KRA) Alternative Investment Fund You can file your complaints online at http://scores.gov.in or alternately send your complaints to Office of Investor Assistance and Education of SEBI at Mumbai or Regional Offices at the following addresses: Address of SEBI Offices • Office of Investor Assistance and Education, SEBI Bhavan, Plot No.C4-A, 'G' Block, Bandra Kurla Complex, Bandra (E), Mumbai 400 051 Tel: 022-26449188 / 26449199 (http://scores.gov.in) • SEBI, Northern Regional Office, 5th Floor, Bank of Baroda Building, 16, Sansad Marg, New Delhi -110001 Tel: 011-23724001-05 ([email protected]) • SEBI, Eastern Regional Office, L&T Chambers, 3rd Floor, 16, Camac Street, Kolkata - 700 016 Tel: 033-23023000. ([email protected]) • SEBI, Southern Regional Office, 7th Floor, Overseas Towers, 756-L, Anna Salai Chennai 600 0102  Tel: 044-24674000/ 24674150 ([email protected]) • SEBI, Ahmedabad Regional Office, Unit No: 002, Ground Floor, SAKAR I, N....
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....dvised to allot such additional shares/securities under a new temporary ISIN which shall be kept frozen. Upon receipt of the final listing/ trading permission from the exchange for such additional shares/ securities, the shares/securities credited in the new temporary ISIN shall be debited and the same would get credited in the preexisting ISIN for the said security. Thereafter, the additional securities shall be available for trading. iv. The stock exchanges are advised to provide the details to the depositories whenever final listing / trading permission is given to securities. Further, in case of issuance of equity shares by a company, listed on multiple stock exchanges, the concerned stock exchanges shall synchronize their effective dates of listing / trading approvals and intimate the same to depositories in advance. ^Reference Circular SEBI/MRD/Dep/Cir-03/2007 dated February 13, 2007 and Circular SEBI/MRD/Dep/Cir-03/2008 dated February 28, 2008 3.3 Registrar and Share Transfer Agent 3.3.1 Appointment of a single agency for share registry work^ Reference Circular D&CC/FITTC/Cir-15/2002 dated December 27, 2002 All work related to share registry pertaining in t....
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....ce Circular SMDRP/Policy/Cir-9/99 dated May 6, 1999 Underlying shares of GDRs/ADRs shall be compulsorily delivered in dematerialised form. Pursuant to RBI directions in this regard, a non-resident holder of ADRs/GDRs issued by a company registered in India, on surrender of such ADRs/GDRs, can acquire the underlying shares when such shares are released by the Indian Custodian of the ADR/GDRissue. Further, the company whose shares are so released, or a Depository shall enter in the register or books, wherein such securities are registered or inscribed, an address outside India of the non-resident holder of shares. 3.5.2 Tracking of underlying shares of GDRs/ADRs ^Reference Circular D&CC/FITTC/Cir-09/2002 dated July 4, 2002 and Circular D&CC/FITTC/Cir-10/2002 dated September 25, 2002 To ensure easy tracking of the underlying shares released on conversion of the "depositories receipts" all such shares shall be credited to a separate Depository Receipts (DRs) account of the respective investor. In this regard, Depositories shall ensure that the following information is provided to the domestic custodian holding the underlying shares on a regular basis: i. T....
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....sh payments to the investors59 i. For making cash payments to the investors, companies whose securities are listed on the stock exchanges shall use, either directly or through their Registrars to an Issue and Share Transfer Agent (RTI & STA), any RBI (Reserve Bank of India) approved electronic mode of payment such as Electronic Clearing Services (ECS) [LECS (Local ECS) / RECS (Regional ECS) / NECS (National ECS)], National Electronic Fund Transfer (NEFT), etc. ii. In order to enable usage of electronic payment instruments, companies whose securities are listed on the stock exchanges (or their RTI & STA) shall maintain requisite bank details of their investors - a. For investors that hold securities in demat mode, companies or their RTI & STA shall seek relevant bank details from the depositories. To this end, vide circular SEBI/MRD/DEP/Cir-3/06 dated February 21, 2006 and letter MRD/DEP/PP/123624/2008 dated April 23, 2008, depositories have been advised to ensure that correct account particulars of investors are available in the database of depositories. b. For investors that hold physical share / debenture certificates, companies or their RTI & ....
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.... extended time limit for late confirmations). By 2.30 pm Completion of process and download obligation files to brokers/ custodians by the CC/CH. 3 T+2 By 11.00 am Pay-in of securities and funds. By 1.30 pm Pay-out of securities and funds. ii. All Depositories shall adhere to the aforementioned activity schedule to implement T+2 rolling settlement. DPs shall adhere to the designated activities within the prescribed time limits as under: b. DPs shall accept instructions for pay-in of securities from clients in the physical form atleast upto 4 p.m. and in electronic form atleast upto 6 p.m. on T+1. c. DPs shall complete execution of pay-in instructions latest by 10:30 a. m. on T+2. d. Depositories shall download the processed pay-in files to the Exchange / Clearing House / Clearing Corporation latest by 11:00 a.m. on T+2. e. Pay-out of securities by the Exchange / Clearing House / Clearing Corporation to the Depositories shall be executed by 1:30 p.m. on T+2. f. Pay-out of securities shall be completed by the Depositories by 2:00 p.m. on T+2. iii. All instructions received by the DPs shall have an execution da....
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....ositories are advised that any overrun of the time specified for 'spot delivery contract' in the SCRA would result in the contract becoming illegal under section 16 of the SCRA (unless it is put through the stock exchange). The DP-BO agreement cannot add anything to or subtract anything from this position. However, it should be the responsibility of the DP to ensure that the client's contract is not rendered illegal on account of delayed execution of the delivery instruction. ii. Keeping the hardships to change all the existing DP-BO agreements to enforce the above into consideration, it is advised that suitable bye laws can be made under section 26(2)(e) and (d) of Depositories Act, 1996 for imposing such obligation on the DPs. Therefore, it is advised to amend/insert bye laws which should expressly provide that the DPs shall execute the non pay-in related instructions on the same day or on the next day of the instruction. Further, pending such amendment, suitable instructions may be issued to DPs to adhere to such time limit. iii. The above clause may be suitably incorporated in the DP-BO agreement while opening new accounts. 4.4 Approval of amendments to Bye....
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....der 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 Government of India Policy, foreign investments in infrastructure companies in the securities markets, namely Stock Exchanges, Depositories and Clearing Corporations shall be as under: a. Foreign investment shall be allowed in such companies up to 49% with a separate Foreign Direct Investment (FDI) cap of 26% and Foreign Institutional Investment (FII) cap of 23%; b. FDI shall be allowed with specific....
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....ade widely available for e.g. on the websites of Depositories. b. address/redress the complaints within a period of 15 days upon receipt of complaint on SCORES. In case additional information is required from the complainant, the same shall be sought within 7 days of receipt on SCORES. In such case, the period of 15 days will be counted upon the receipt of additional information. c. maintain a monthly record of the complaints which are not addressed/redressed within 15 days from the date of receipt of the complaint/information, alongwith the reason for such pendency. d. Upload/update the ATR on the SCORES. Failure to do so shall be considered as non-redressal of the complaint and the complaint shall be shown as pending. 4.11 Limitation period for filing an arbitration reference ^Reference Circular CIR/MRD/DP/4/2011 dated April 7, 2011 i. It is decided that the limitation period for filing an arbitration reference shall be governed by the law of limitation, i.e., The Limitation Act, 1963. The modified limitation period shall also be applicable to cover inter alia the following cases: a. where the limitation period (in terms of Limitation Act....
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.... N *including against 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 2A: Details of Arbitration Proceedings (where BO is a party) during 2008-09: 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 ....
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....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 ....
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.... 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 ....
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....p; 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 invest....
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....II a Delay in/ Non-Receipt of Statements from DP III b Discrepancy in Transaction statement Type IV Improper Service Related IV a Insistence on Power of Attorney in its favour IV b Deactivation/ Freezing/ Suspension related IV c Defreezing related IV d Transmission Related IV e Pledge Related IV f SMS Related IV g Non-updation of changes in account (address/ signatories/bank details/ PAN/ Nomination etc.) Type V Charges Related V a Wrong/ Excess Charges V b Charges paid but not credited V c Charges for Opening/closure of Account Type VI Delivery Instruction Related (DIS ) VI a Non acceptance of DIS for transfer VI b Delay in/ non Execution of DIS VI c Delay in Issuance / Reissuance of DIS Booklet Type VII Closure 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 Una....
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....s as well as promoters holdings of a company held in dematerialised form, may be excluded ^Reference: SMDRP/RKD /NSDL/2494 /98 dated November 18, 1998, SMDRP/CDSL / 18300 /2000 dated November 16, 2000. ii. In view of the potential risk to the system and also to maintain theintegrity of the market, the depositories are advised to develop an appropriate systemic alert in the depository system, so as to enable the system to generate and convey automatic alerts to those SBDPs that reach a pre-determined level of exposure. These alerts would serve as forewarnings to the SBDPs to the fact that they are approaching their respective maximum exposure limits. [Note: For this purpose, the depositories may monitor the value of securities with its SBDPs on an "end of the day" basis.] ^Reference: MRD/DRK/SU/16034/2003 dated August 22, 2003 4.16 Rajiv Gandhi Equity Savings Scheme, 2012 (RGESS) ^Reference Circular CIR/MRD/DP/32/201 dated December 06, 2012 i. Vide notification 51/2012 dated November 23, 2012, Department of Revenue, Ministry of Finance (MoF) has notified the Rajiv Gandhi Equity Savings Scheme (RGESS), 2012. The notification is available on the website of Income Tax Departme....
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....emes on their website. Further, the list shall also be forwarded to the depositories at monthly intervals and whenever there is any change in the said list. For this purpose, Mutual Funds / AMCs shall communicate list of RGESS eligible MF schemes / ETFs to the stock exchanges. Annexure A Treatment of corporate actions (i) Involuntary corporate actions: In case of corporate actions where investors has no choice in the matter, for example: demerger of companies, etc, the compliance status of RGESS demat account shall not change. (ii) Voluntary corporate actions: In case of corporate actions where investors has the option to exercise his choice and thereby result in debit of securities, for example: buy-back, etc, the same shall be considered as a sale transaction for the purpose of the scheme. Consolidated list of 'corporate actions' Sr. No. Corporate Action Classification (Involuntary or Voluntary) 1 Amalgamation Involuntary 2 Scheme of Arrangement Involuntary 3 Reduction of Capital Involuntary 4 Bonus issue Involuntary 5 Buy Back of Shares Voluntary (Involuntary in case of court intervention) 6 Stock Split ....
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....damental to ensuring the safety, soundness and efficiency of key FMIs and for supporting the resilience of the global financial system. In addition, the PFMIs play an important part in the G20's mandate that all standardized over-the-counter (OTC) derivatives should be centrally cleared. Global central clearing requirements reinforce the importance of strong safeguards and consistent oversight of derivatives CCPs in particular. Financial Market Infrastructure (FMI) iv. The Principles apply to systematically important financial market infrastructures entities such as Central Counterparty (CCP), Central Securities Depository (CSD)/ Securities Settlement System (SSS), Payment and Settlement systems, and Trade Repository (TR) which are responsiblefor providing clearing, settlement and recording of monetary and other financial transactions. The principles are international standards set forth to - a. Enhance safety and efficiency in payment, clearing, settlement, and recording arrangements, b. Reduce systemic risk. c. Foster transparency and financial stability and d. Promote protection of participants and investors. v. Financial Market Infrastruc....
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....gally binding arrangement. CCPs have the potential to significantly reduce risks to participants through the multilateral netting of trades and by imposing moreeffective risk controls on all participants. For example, CCPs typically require participants to provide collateral (in the form of initial margin and other financial resources) to cover current and potential future exposures. CCPs may also mutualise certain risks through devices such as default funds. As a result of their potential to reduce risks to participants, CCPs also can reduce systemic risk in the markets they serve. Trade Repositories (TR) A trade repository is an entity that maintains a centralised electronic record (database) of transaction data. TRs have emerged as a new type of FMI and have recently grown in importance, particularly in the OTC derivatives market. By centralising the collection, storage, and dissemination of data, a well designed TR that operates with effective risk controls can serve an important role in enhancing the transparency of transaction information to relevant authorities and the public, promoting financial stability, and supporting the detection and prevention of market abuse. A....
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...., and manage its credit exposures to participants and those arising from its payment, clearing, and settlement processes. An FMI should maintain sufficient financial resources to cover its credit exposure to each participant fully with a high degree of confidence. In addition, a CCP that is involved in activities with a more-complex risk profile or that is systemically important in multiple jurisdictions should maintain additional financial resources sufficient to cover a wide range of potential stress scenarios that should include, but not be limited to, the default of the two participants and their affiliates that would potentially cause the largest aggregate credit exposure to the CCP in extreme but plausible market conditions. All other CCPs should maintain additional financial resources sufficient to cover a wide range of potential stress scenarios that should include, but not be limited to, the default of the participant and its affiliates that would potentially cause the largest aggregate credit exposure to the CCP in extreme but plausible market conditions. Principle 5: Collateral An FMI that requires collateral to manage its or its participants‟ credit exposure....
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.... the final settlement of one obligation upon the final settlement of the other. Default management Principle 13: Participant-default rules and procedures An FMI should have effective and clearly defined rules and procedures to manage a participant default. These rules and procedures should be designed to ensure that the FMI can take timely action to contain losses and liquidity pressures and continue to meet its obligations. Principle 14: Segregation and portability A CCP should have rules and procedures that enable the segregation and portability of positions of a participant‟s customers and the collateral provided to the CCP with respect to those positions. General business and operational risk management Principle 15: General business risk An FMI should identify, monitor, and manage its general business risk and hold sufficient liquid net assets funded by equity to cover potential general business losses so that it can continue operations and services as a going concern if those losses materialise. Further, liquid net assets should at all times be sufficient to ensure a recovery or orderly wind-down of critical operations and services. Principle ....
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.... Corporations a. Indian Clearing Corporation Ltd. (ICCL) b. MCX-SX Clearing Corporation Ltd. (MCX-SXCCL) c. National Securities Clearing Corporation Ltd. (NSCCL) 2. Depositories a. Central Depository Services Ltd. (CDSL) b. National Securities Depository Ltd (NSDL) 4.18 (Information Technology) IT Governance For Depositories^ Reference: MRD/DMS/03/2014 dated January 21, 2014 i. SEBI constituted the Depository System Review Committee (DSRC) to undertake a comprehensive review of the Indian depository system. Based on the recommendations of DSRC, following guidelines are issued to strengthen the information Technology (IT) governance framework of depositories. ii. Depositories shall formulate an IT strategy committee at the Board level of depository to provide insight and advice to the Board in various areas that may include: a. Developments in IT from a business perspective. b. The alignment of IT with the business direction. c. The availability of IT resources to meet strategic objectives. d. Competitive aspects of IT Investments. e. Alignment of the IT architecture to the organiza....
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....daptive Sample Size determination methodology' as mentioned at Annexure - II. Categorization / Risk Rating of DPs v. For the purpose of computing total risk score of DPs, depositories shall be guided by "DP Rating Model / Categorization" as mentioned at Annexure - III. vi. Depositories should periodically undertake risk - impact analysis for each of the inspection areas, assign appropriate risk weightage, calculate risk scores for each DPs in the lines mentioned below. a. Risk Weightage: Depositories shall assign risk weights for each of inspection areas after taking into consideration following factors: 1. Operational risks in each of the inspection areas. 2. Category of DPs (such as stock broker DPs, bank DP, etc) 3. Size of Operation 4. Repetitive violations 5. IT Security and BCP 6. Complaints received and redressed b. Quantitative Score Calculation: Depositories shall arrive at a Quantitative Risk Score for each inspection area by multiplying percentage of non-compliance to the sample size with the corresponding assigned risk weight. c. Qualitative Score Calculation: Depositories shal....
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.... A.2.2. In-person verification A.2.3. Forwarding of Documents to KYC Registration Agency (KRA) A.3. Proof of Identity (POI) A.4. Proof of Address A.5. Correspondence Address A.6. Authorized Signatories A.7. Completeness / Validation of data entered into DPM with data provided in the Account Opening forms A.8. Minor BO / Joint / HUF accounts A.9. Account Activation A.10. PMS Accounts A.11. Nomination A.12. Any other area as may be specified by the depository B. Basic Service Demat Account (BSDA) B.1. Procedures and Checks pertaining to BSDA B.2. Any other area as may be specified by the depository C. Client Data Modification (CDM) C.1. Procedure for CDM C.2. Any other area as may be specified by the depository D. Demat / Remat / Conversion /Reconversion request D.1. Procedure for receiving/processing requests pertaining to Demat / Remat / Conversion /Reconversion request D.2. Procedure for forwarding requests pertaining to Demat / Remat / Conversion /Reconversion request to RTA / issuer D.3. Arrangement for Safekee....
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....ry J. Service Centre Opening and closing/ modification of service centers J.1. Procedure for Opening /Closure of Service centers J.2. Details of Service centre on Depository website J.3. Qualified persons at service centers J.4. Any other area as may be specified by the depository K. Information Technology areas K.1. Hardware, Software and Network requirements / configurations K.2. Logical and Physical restrictions / safeguards K.3. IT Security K.4. Procedure for alteration of parameters / configurations K.5. Redundancy K.6. Any other area as may be specified by the depository L. Power of Attorney (POA) L.1. Documents executed L.2. Maintenance of POA Register L.3. Clauses of POA L.4. Registration of BO for SMS Alert facility for POA L.5. Any other area as may be specified by the depository M. Inter Depository Transfers (IDT) M.1. Processing of IDT M.2. Checks pertaining to IDT M.3. Any other area as may be specified by the depository N. Account Transfer N.1. Procedure followed for account transfer ....
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.... / categorization of DP. The following multipliers shall be used to determine the final sample size for the current inspection. 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 / Categorization Multiplier High risk 3 Medium High risk 2 Medium risk 1.5 Low risk 1 • The selected sample shall maintain the proportion of new accounts opened in each category, except for Account Opening Forms (AOF) relating to FIIs where it shall be checked on a 100% basis. 2. Sample Size for inspection area relating to DIS • Base sample size: 10% of total DIS processed or 200 processed DIS whichever is higher, with a maximum cap of 1000 DIS. • Final Sample Size: The sample size shall also be dependent on rating / categorization of DP. The following multipliers shall be used to determine the final sample size for the current inspection. 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 / Categorization Multiplier High risk 3 Medium High risk 2 ....
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....on 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 Sample size Inspection Score IS = A*B A. Inspection Area 1 A.1. Inspection Sub Area A 1 A.2. Inspection Sub Area 2 B. Inspection Area 2 B.1. Inspection Sub Area B 1 B.2. Inspection Sub Area B 1 B.3. Inspection Sub Area B 3 Total Score for Inspection Area 2 Depositories shall include all inspection areas and sub areas, as per Annexure -I (List of Inspection Areas) of this circular, in the above model to arrive at the Quantitative Score for a DP. Table: Indicative Table for calculation of Quantitative Score for Complaints Received Sr No Type and Nature of Com....
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....itecture. 3. Appropriate Recovery Time Objective (RTO) and Recovery Point Objective (RPO) and near "Zero Data Loss". 4. Periodic drills that simulate the real life disaster scenarios on a regular basis. 5. Technological glitches in the past period and remedies taken. 6. Information security. 7. Upgradation of technology (d) Financial Status / profitability of DPs 1. The net-worth of the DPs (whether reducing or increasing from previous years) 2. Net Profits of DPs operations. (e) Complaints redressal 1. Complaint redressal system 2. Percentage of complaints pending and resolved. (f) Other adverse findings 1. Actions taken by Stock exchange and SEBI / RBI with respect to other activities 2. Actions taken by other depository. III. Total Score = Qualitative Score + Quantitative Score 4.20 Activity of Demat of warehouse receipts ^Reference: MRD/DP/SG-OW/202/2012 and MRD/DP/SG-OW/203/2012 dated January 4, 2012 The aforesaid activity is not in compliance with Regulation 28 of SEBI (D&P) Regulations, 1996 and therefore depositories cannot carry out this activity. Depositori....
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..../SE/Dep/Cir-2/2009 dated February 10, 2009. 35. CIR/MRD/DP/19/2010 dated June 10, 2010. 36. CIR/MRD/DP/20/2010 dated July 1, 2010. 37. CIR/MRD/DP/22/2010 dated July 29, 2010. 38. CIR/MRD/DO/37/2010 dated December 14, 2010. 39. CIR/MRD/DP/04/2011 dated April 07, 2011. 40. CIR/MRD/DP/05/2011 dated April 27, 2011. 41. MIRSD/SE/Cir-21/2011 dated October 5, 2011. 42. CIR/MRD/ICC/16/2012 dated June 15, 2012. 43. CIR/MRD/DP/21/2012 dated August 02, 2012. 44. CIR/MIRSD/09/2012 dated August 13, 2012. 45. CIR/MRD/DP/22/2012 dated August 27, 2012. 46. CIR/MRD/DP/24/2012 dated September 11, 2012. 47. CIR/MRD/DP/DA/25/2012 dated September 21, 2012. 48. CIR/MRD/DP/27/2012 dated November 01, 2012. 49. CIR/MRD/DP/32/2012 dated December 06, 2012. 50. CIR SEBI/MIRSD/01/2013 dated January 04, 2013 51. CIR/MRD/DP/10/2013 dated March 21, 2013. 52. CIR SEBI/MRD/DRMNP/26/2013 dated September 04, 2013 53. CIR SEBI/MIRSD/09/2013 dated October 08, 2013 54. CIR/MIRSD/10/2013 dated October 28, 2013 55. CIR SEBI/MIRSD/ 12/2013 dated December 04, 2013 56. CIR SEBI/MRD/DOP/01/2014 dated January 07, 2014 57. CIR MRD/DMS/03/2014 dated January 21,....