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SEBI Implements Regulatory Overhaul: No PAN, KYC, or Nomination Mandatory for Holders of Physical Securities in Listed Companies

KYCSEBI Implements Regulatory Overhaul: No PAN, KYC, or Nomination Mandatory for Holders of Physical Securities in Listed Companies

The Securities and Exchange Board of India (SEBI) has announced a substantial regulatory shift regarding the holding of physical securities in listed companies. The market regulator has decided to eliminate the mandatory provision of PAN (Permanent Account Number), KYC (Know Your Customer) details, and nomination for all holders of physical securities. This move is aimed at streamlining and simplifying existing rules and is effective immediately. SEBI’s decision follows a comprehensive review of feedback from the Registrars’ Association of India and investors.

Under previous regulations, holders of physical securities in listed companies were required to furnish PAN, nomination, contact details, bank account information, and specimen signatures corresponding to their folio numbers. A circular issued in May had indicated that folios lacking these documents would be frozen by the Registrars to an Issue and Share Transfer Agents (RTA).

In an amendment to the May circular, SEBI removed references to ‘freezing/frozen’ following extensive consultations and feedback from stakeholders. The reversal was prompted by feedback from the Registrars’ Association of India and investors. SEBI aims to address challenges arising from frozen folios, which could be referred to the administering authority under the Benami Transactions (Prohibitions) Act, 1988, and/or the Prevention of Money Laundering Act, 2002.

The requirement to refer frozen folios to the administering authority by December 31, 2025, has been canceled. This regulatory change by SEBI represents a departure from previous stringent requirements for physical securities holders in listed companies, with the goal of simplifying the process and reducing complications arising from the freezing of folios.

By FCCT Editorial Team

Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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