TaxTMI 
TaxTMI 
Master Circular for Depositories
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.... 1.4 Transfer of funds and securities from Clearing Member pool account to BO Account 1.5 Printing of Grievances Redressal Mechanism on Delivery Instruction Form Book 1.6 Exemption to Depository Participants (DPs) from providing hard copies of transaction statements to BOs 1.7 Safeguards on transfer of securities in dematerialized mode Section-2 - Issuer related 2.1 Charges to be paid by Issuers 2.2 Activation of International Securities Identification Number (ISIN) in case of IPO 2.3 Registrar and Transfer Agents 2.4 Mandatory admission of debt instruments on both the Depositories 2.5 American Depository Receipts (ADRs)/Global Depository Receipts (GDRs) 2.6 Electronic Clearing System (ECS) facility 2.6.1 Dividend Distribution 2.6.2 Refund in public/rights issues Section-3 - Depositories/ Depository Participant (DP) Related 3.1 Limitation period for filing an arbitration reference 3.2 Designated e-mail ID for redressal of investor complaints 3.3 Approval of amendments to Bye Laws / Rules of Stock Exchanges and Depositories 3.4 Preservation of Records 3.5 Foreign investments in infrastructure companies in securities ....
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....- I. Put necessary systems in place so that the databases of the clients and their transactions are linked to the PAN details of the client. II. Build necessary infrastructure to enable accessibility and query based on PAN thereby enabling retrieval of all the details of the clients. III. Collect copies of PAN cards issued to the existing as well as new clients by the Income Tax Department and maintain the same in their record after verifying with the original. IV. Cross-check the aforesaid details collected from their clients with the details on the website of the Income Tax Department i.e. http://incometaxindiaefiling.gov.in/challan/enterpanforchallan.jsp^ IT Department since changed the link for verification: http://incometaxindiaefiling.gov.in/portal/knowpan.do. 1.1.1.2 For individuals falling under the category exempted from the mandatory requirement of PAN (Para 1.2), a copy of any one of the following may be accepted as Proof of Identity^ Reference Circular MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004 and circular I. Passport II. Voter ID Card III. Driving license IV. PAN card with photograph ....
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....hird party address as correspondence address ^Reference circular CIR/MRD/DP/37/2010 dated December 14, 2010 SEBI has no objection to a BO authorizing the capture of an address of a third party as a correspondence address, provided that the Depository Participant (DP) ensures that all prescribed 'Know Your Client' norms are fulfilled for the third party also. The DP shall obtain proof of identity and proof of address for the third party. The DP shall also ensure that customer due diligence norms as specified in Rule 9 of Prevention of Money Laundering Rules, 2005 are complied with in respect of the third party. The depository participant should further ensure that the statement of transactions and holding are sent to the BO's permanent address at least once in a year. However, the above provision shall not apply in case of PMS (Portfolio Management Services) clients. 1.2 Exemptions from and clarifications relating to mandatory requirement of PAN 1.2.1 Mandatory requirement of Permanent Account Number (PAN) ^Reference Circular MRD/DP/22/2010 dated July 29, 2010. The demat accounts for which PAN details have not been verified are "suspe....
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....stitutional clients, namely, FIIs, MFs, VCFs, FVCIs, Scheduled Commercial Banks, Multilateral and Bilateral Development Financial Institutions, State Industrial Development Corporations, Insurance Companies registered with IRDA and Public Financial Institution as defined under section 4A of the Companies Act, 1956. 1.2.6 HUF, Association of Persons (AoP), Partnership Firm, unregistered Trust, Registered Trust, Corporate Bodies, minors, etc. ^Reference Circular MRD/DoP/Dep/Cir-09/06 dated July 20, 2006. The BO account shall be in the name of natural persons, PAN card details of the respective HUF, AoP, Partnership Firm, Unregistered Trust, etc shall be obtained. The PAN number of Registered Trust, Corporate Bodies and minors shall be obtained when accounts are opened in their respective names. 1.2.7 Difference in maiden name and current name of investors. ^Reference Circular MRD/DoP/Dep/Cir-09/06 dated July 20, 2006. DPs can collect the PAN card proof as submitted by the account holder subject to the DPs verifying the veracity of the claim of such investors by collecting sufficient documentary evidence in support of the identity of the investors^. Reference C....
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....vent 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. For the purpose of the above requirement the year shall begin from the date of opening of the account in quarterly rests. The above requirements shall be applicable to all existing and new accounts held with DPs which collect annual/half yearly upfront AMC. It is clarified that the above requirements shall not be applicable to those DPs who collect quarterly/ monthly AMC. 1.3.6 Dissemination of tariff/charge structure of DPs on the website of depositories ^Reference Circular MRD/Dep/Cir- 20/06 dated December 11, 2006. DPs shall submit to their depository the tariff/charge structure e....
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....ties 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. 1.5 Printing of Grievances Redressal Mechanism on Delivery Instruction Form Book ^Reference Circular No. SEBI/MRD/DOP/Cir-22/2004 dated July 14, 2004. To promote investor awareness regarding mechanism for redressing investor grievances, the information placed below shall be printed on the inside back cover of the Delivery Instruction Form (DIF) Book issued by all Depository Participants. There will be occasions when you have grievances against a listed company/ intermediary registered with SEBI. In the event of such grievance you should first approach the concerned company/ intermediary against whom you have a grievance. However, you may not be satisfied with their response. Therefore you should know whom you should turn to get your grievance redressed. SEBI takes up grievances related to issue and transfer of securities and non-payment of dividend with listed Companies. In addition, SEBI also takes up grievances against the various intermediaries registered with it and related issues.....
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....ges Trades effected on the exchange w.r.t the companies listed on it or by the members of exchange With the Department Of Company Affairs (DCA/ concerned Registrar of Companies (ROC) • Against unlisted companies For non-receipt of annual report, AGM Notice • Fixed deposit in manufacturing companies Forfeiture of shares With the Reserve Bank of India • Fixed deposits in Banks • Fixed deposits in Non Banking Finance Companies For more information visit our website - http\\:investor.sebi.gov.in The following types of grievances should be taken up with: With the Stock Exchange: At the Investor Information Centre of all the recognised Stock Exchanges • Related to securities traded/listed with the exchanges • Trades effected on the exchange w.r.t the companies listed on it or by the members of exchange With the Department Of Company Affairs (DCA/ concerned Registrar of Companies (ROC) • Against unlisted companies For non-receipt of annual report, AGM Notice • Fixed deposit in manufacturing companies Forfeiture of shares With the Reserve Bank of India ....
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...., etc., as referred to in clause (c) above f. The DPs shall put in place appropriate checks and balances with regard to verification of signatures of the BOs while processing the DIS. g. The DPs shall cross check with the BOs under exceptional circumstances before acting upon the DIS. h. The DPs shall mandatorily verify with a BO before acting upon the DIS, in case of an account which remained inactive i.e., where no debit transaction had taken place for a continuous period of 6 months, whenever all the ISIN balances in that account (irrespective of the number of ISINs) are transferred at a time. However, in case of active accounts, such verification may be made mandatory 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. SECTION 2: ISSUER RELATED 2.1 Charges paid by Issuers^ Reference Circular MRD/DoP/SE/Dep/Cir-2/2009 dated February 10, 2009 and Circular SEBI/MRD/SE/DEP/Cir-4/2005 dated January 28, 2005^, R....
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....y company shall appoint the same Registrars and Share Transfer agents for both the depositories. 2.3.4 Dematerialisation requests ^Reference Circular MRD/DoP/SE/Dep/Cir-2/2009 dated February 10, 2009 and Circular SEBI/MRD/SE/DEP/Cir-4/2005 dated January 28, 2005., ^Reference: D&CC/ 1099 / 2002 dated November 01, 2002 Registrars and Share Transfer agents shall accept partial dematerialisation requests and will not reject or return the entire dematerialization request where only a part of the request had to be rejected. In cases where a DP has already sent information about dematerialisation electronically to a Registrar but physical shares have not yet been delivered, the Registrar shall accept the demat request and carry out dematerialization on an indemnity given by the DP and proof of dispatch of document given by DP. 2.4 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. 2.5 American Depository Receipts (ADRs)/Global Depository Receipts (GDRs) ....
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..../02 dated February 1, 2008 and Letter no. MRD/DEP/PP/123624/08 dated April 23, 2008. & ^Reference: MRD/DEP/PP/123624 /2008 dated April 23, 2008 For locations where facility of refund through ECS is available details of applicants shall be taken directly from the database of the depositories in respect of issues made completely in dematerialised form. Accordingly, DPs shall maintain and update on real time basis the MICR (Magnetic Ink Character Recognition) code of Bank branch of BOs and other bank details of the applicants in the database of depositories. This is to ensure that the refunds through ECS are made in a smooth manner and that there are no failed/wrong credits. SECTION-3: DEPOSITORIES/ DEPOSITORY PARTICIPANT (DP) RELATED 3.1 Limitation period for filing an arbitration reference ^Reference Circular no.CIR/MRD/DP/4/2011 dated April 7, 2011 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: i. where the limitation period (in terms of Limitation Act 1963) have not ....
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.... and Depository Participants are required to preserve the records and documents for a minimum period of 5 year. ii. Depositories and DPs shall preserve respective original forms of documents either in physical form or an electronic record, copies of which have been taken by CBI, Police or any other enforcement agency during the course of their investigation till the trial is completed. 3.5 Foreign investments in infrastructure companies in securities markets ^Reference Circular MRD/DSA/SE/Dep/Cust/Cir-23/06 dated December 22, 2006. Pursuant to Government of India Policy, foreign 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 prior approval of FIPB; c) FII shall be allowed only through purchases in the secondary market; d) FII shall not seek and will not get representation on the Board of Directors; e) No foreign i....
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....sufficient balance before pay-in deadline or till EOD, such instructions shall fail. 3.7 Settlement of transactions in case of holidays ^Reference Circular SEBI/MRD/Policy/AT/Cir- 19/2004 dated April 21, 2004 Due to lack of uniformity of holidays and force majeure conditions which necessitate sudden closure of one or more Stock Exchanges and banks in a particular state, result in situations where multiple settlements have to be completed by the Stock Exchanges on the working day immediately following the day(s) of the closure of the banks. Accordingly the Stock Exchanges/Depositories are advised to follow the guidelines and adhere to the time line. • The Stock Exchanges shall clear and settle the trades on a sequential basis i.e., the pay-in and the pay-out of the first settlement shall be completed before the commencement of the pay-in and pay-out of the subsequent settlement/s. • The cash/Securities pay out from the first settlement shall be made available to the member for meeting his pay-in obligations for the subsequent settlement/s. • Further, in-order to meet his pay-in obligations for the subsequent settlement, the member ....
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....centric. 3.10 Disclosure of investor complaints and arbitration details on Depository website ^Reference Circular SEBI/MRD/ OIAE/ Dep/ Cir- 4/2010 dated January 29, 2010. Depositories shall disclose the details of complaints lodged by Beneficiary Owners (BO's)/ investors against Depository Participants (DPs) in their website. The aforesaid disclosure shall also include details pertaining to arbitration and penal action against the DPs. The format for the reports for the aforesaid disclosure consists of the following reports: a. Report 1A: Complaints received against DPs during 2009-10 b. Report 1B: Redressal of Complaints received against DPS during 2008-09 c. Report 1C: Redressal of Complaints received against DPs during 2009-10 d. Report 2A: Details of Arbitration Proceedings (where Investor is a party) during 2008-09: e. Report 2B: Details of Arbitration Proceedings (where Investor is a party) during 2009-10 f. Report 3A: Penal Actions against DPs during 2008-09 g. Report 3B: Penal Actions against DPs during 2009-10 h. Report 4A: Redressal of Complaints lodged by investors against Listed Companie....
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....p; N # including against its authorized persons, employees, etc. ## Status date is the date of resolution/reference to arbitration/finding it non-actionable. If under process, it is the date of updation of this sheet. */** As per Table 1A Report 1B: Redressal of Complaints received against Depository Participants (DPs) during 2008-09: Updated on mmm dd yyyy (to be updated every quarter) (In excel sheet) Sl. No Name of the DP Status of DP (active/ inactive/ in process of termination /withdrawal) No. of BOs accounts at the beginning of the year No. of Complai nts received against the DP * Of the Complaints received during 2008-09 No. of Complaints Resolved through the Depository Non actiona ble** Arbitrat ion Advise d Pending for redressal with Depository No. of Arbitrati on filed by BOs Decide d by the Arbitrat ors Decided by Arbitrator s in favour of the BOs Pending for Redressal with Arbitrators 1 &n....
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.... **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: Updated on mmm dd yyyy (to be updated every quarter) (In excel sheet) Sl. No Name of the DP Status of DP (active/ inactive/ in process of termination /withdrawal) No. of BOs accounts at the beginning of the year No. of Complai nts received against the DP * Of the Complaints received during 2008-09 No. of Complaints Resolved through the Depository Non actiona ble** Arbitrat ion Advise d Pending for redressal with Depository No. of Arbitrati on filed by BOs Decide d by the Arbitrat ors Decided by Arbitrator s in favour of the BOs Pending for Redressal with Arbitrators 1 2 3 ....
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.... Pending For more than 6 months For more than 3 months, but less than 6 months 1 2 3 ....
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....p; N Total (In case of panel of arbitrators, the ca....
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....ry Participants (DPs) during 2009-10: Updated on mmm dd yyyy (to be updated every quarter) (in excel sheet) Sl. No. Name of DP Registration No. No. of Complaints received Action against DP, its authorized person and employees together Action against DP, its authorized person and employees together Monetary Penalties levied (Rs. Lakh) No. of Arbitration Awards issued against DP For complaints For others For complaints For others 1 2 3 &nbs....
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....bsp; N Total *Non actionable means the complaint that are incomplete / outside the scope of Depository (Arrange the companies in descending number of complaints filed against them during the period) Report 4B: Redressal of Complaints lodged by investors against Listed Companies during 2009 -10: Updated on mmm dd yyyy (to be updated every quarter) (In excel format) Sl. No. Name of the Company No. of Complaints Received Redressed through Depository Non-Actionable* Pending for Redressal with Depository 1 2 3 &nbs....
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.... 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 Unauthorised changes in account (address/ signatories/bank details/PAN etc.) Type IX Company/ RTA related IX a Action - Cash IX b Action - Non-Cash IX c Initial Public Offer/ Follow-on Public Offer Related Type X Others ** Status Type Description I I a I b I c Non actionable Complaint incomplete Outside the scope o....
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....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. 4.4. Transmission of shares ^Reference: MRD/DoP/Dep/VM/182963/2009 dated November 12, 2009 Depositories are advised to ensure compliance with the following: 1. In cases of transmission of shares of a deceased security holder, where the shareholding in the BO account of the deceased member, as calculated on the date of application for transmission, is within the threshold limit of Rupees One lakh in value, the DPs shall not insist on additional documents other than any one or more of the documents mentioned below. i. Affidavit - to the effect of the claim of legal ownership of the shares ii. Deed of indemnity - indemnifying the depository and DP iii. NOC from other legal heir(s), wherever applicable, along with the Claim Form/TRF and copy of death certificate duly notarized/attested by a Gazetted officer ....
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....Therefore, HUF demat accounts can be opened in the name of Existing Karta but not in the name of Deceased Karta and HUF entity. 4.7. 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 ^Reference: MRD/CDSL/VM/155773/2009 dated February 27, 2009, MRD/DoP/NSDL/VM/168994 /2009 dated July 07, 2009and MRD/CDSL/VM/168989 /2009 dated July 07, 2009 SEBI has provided exemption to Depository Participants from sending quarterly transaction statements to the clients in respect of demat accounts with no transactions and no security balances subject to the following conditions: • Client is informed in advance that it will not be receiving Transaction Statements for such accounts till there are any transactions or security holdings in the demat account. • KYC and PAN requirement in respect of all such depository accounts are complied. • No Annual Maintenance Charges are levied for such an account. • Information which is required to be disseminated by Participants by way of a note in the Transaction Statement....
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....delivered and dispatched due to discontinuation are also dispatched immediately without any additional cost to the clients. 4.10. Further issue of shares under Section 86 of Companies Act and Companies (Issue of Share capital with Differential Voting Rights) Rules, 2001 ^Reference: MRD/DoP/MC/141442 /2008 dated October 17, 2008 In all cases of shares issued by companies under Section 86(a) (ii) of Companies Act and Companies (Issue of Share Capital with Differential Voting Rights) Rules, 2001, separate ISIN may be allotted to differentiate such shares from ordinary shares. 4.11. Updation of bank accounts details, MICR code and IFSC of bank branches by Depository Participants (DPs) ^Reference: MRD/DEP/PP/123624 /2008 dated April 23, 2008 • Please refer to SEBI Circular No. SEBI/MRD/DEP/Cir- 3/06 dated February 21, 200639 whereby depositories were advised to instruct Depository Participants (DPs) to update the MICR code and bank details of the client in database of depositories. • It has been informed by RBI that they have been receiving complaints from managers to the issues that the funds routed through the electronic mode are gettin....
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..../CDSL / 18300 /2000 dated November 16, 2000. In view of the potential risk to the system and also to maintain the integrity 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 4.14. Deadline time for accepting non pay-in related instructions ^Reference: MRD/VSS/ARR/ 12255/2004 dated June 10, 2004 4.14.1. The depositories are advised that any overrun of the time specified for 'spot delivery contract' in the SCRA would result in the contract becoming illegal under section 16 of the SCRA (unless it is put through the stock exchange). The DP-BO agreement cannot add anything to or subtract anything from this position. However, it should be the responsibility of the DP to ....
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.... shares are not immovable properly. Section 2(7) of Sale of Goods Act. 1930 includes shares within the definition of "goods''. Neither the Indian Contract Act nor the Sale of Goods Act provide for transfer by sale or otherwise by guardian /natural guardian of goods/movable property in the name of minor to the effect that permission of court is required in the matter of such transfer. In the case of accounts of minor in banks also, the guardian is entitled to open, operate and even close the account also. The DP account can, therefore, be operated by a natural guardian without any order from the court though the same is neither expressly permitted nor prohibited. SCHEDULE CIRCULARS • SMDRP/Policy/Cir-28/99 dated August 23, 1999 • SMDRP/POLICY/Cir-36/2000 dated August 4, 2000 • D&CC/FITTC/CIR-3/2001 dated October 15, 2001 • D&CC/FITTC/Cir- 04/2001 dated November 13, 2001 • SMDRP/Policy/Cir-05/2001 dated February 1, 2001 • D&CC/FITTC/Cir-13/2002 dated November 1, 2002 • D&CC/FITTC/Cir-09/2002 dated July 4, 2002 • D&CC/FITTC/Cir-10/2002 dated September 25, 2002 ....