Strengthening the Guidelines and Raising Industry standards for RTA, Issuer Companies and Banker to an Issue
SEBI CIRCULAR DATED 20.04.2018_Guidelines for RTA
Here is a brief write-up on the SEBI Circular
I.
Provisions with regard to Payment of Dividend/Interest/Redemption:
Dividend/Interest/Redemption
MASTER FILE
a)
Dividend/Interest/redemption Master file (i.e. file containing
detailed list of beneficiaries entitled for dividend/interest/redemption
distribution by whatever name called on the record date) shall include:
·
Company Name,
·
Folio No./ DPID/Client ID,
·
Name of the first securities holder,
·
Dividend/interest/redemption payment date,
·
Dividend/interest/redemption amount,
·
Payee details,
·
Bank name, Bank account, Bank branch of the holder of securities,
MICR number, Dividend/Interest/Redemption Warrant number,
·
Details of payment made through electronic channels such as
RTGS/NEFT.
b)
The said file shall be shared with the Banker through a secured
process.
c)
Copy Dividend/Interest/redemption Master file shall be maintained
by the bank and the same shall be reconciled by the RTA and the Issuer Company.
BANK
UPDATION
a)
RTA shall obtain account details along with cancelled cheque to
update the securities holder’s data. The original cancelled cheque shall bear
the name of the securities holder failing which securities holder shall submit
copy of bank passbook /statement attested by the bank. RTA shall then update
the bank details in its records after due verification.
b)
The unpaid dividend shall be paid via electronic bank transfer.
c)
In cases where either the bank details such as MICR ,IFSC etc.
that are required for making electronic payment are not available or the
electronic payment instructions have failed or have been rejected by the bank,
the issuer companies or their RTA may ask the banker to make payment though
physical instrument such as banker’s cheque or DD.
UNPAID
INSTRUMENT
a)
Bank shall ensure that any instrument (such as demand drafts,
dividend/interest/redemption warrants etc.) lying unpaid beyond the validity
period of the instrument shall be cancelled and the
dividend/interest/redemption amount transferred shall be credited back
immediately to the relevant bank account of the Issuer Company.
b)
Banks should also provide the unpaid instrument details when
reconciliation data is shared with Issuer Company / RTAs. This provision will
come into effect after 30 days from the date of this circular.
REVALIDATION
OF DIVIDEND
a)
Request should contain following:
Name of the Company, DPID/Client ID/Folio No. (as applicable),
Original Instrument Number, MICR No., Security holder’s name, Payee’s name,
Payee’s bank account Number, Bank name, reason for revalidation etc.
b)
RTA shall maintain records of the revalidation/re-issue requests.
Reconciliation of the Paid and Unpaid
a)
Reconciliation of the Paid and Unpaid details (including bank
Transaction Reference Number, payee name etc.) of the
Dividend/interest/redemption paid fortnightly during the initial validity of
the instrument and after the expiry of validity period of the instrument, quarterly
till transfer of funds to IEPF.
b)
Reconciliation data shall contain details of all DDs/new
instruments issued/ electronic instructions sent in lieu of original
dividend/interest/redemption payment. Details of old as well as new dividend
instruments shall be provided.
c)
RTA shall also do the reconciliation and inform the Bankers/Issuer
Companies in case of any discrepancies. The reconciliation files sent by the
Banker shall be maintained by all the three entities, RTA, the Issuer Company,
and the Banker as its record for a period of eight years.
PAYMENT RECORD
Details of the rejection of electronic remittance,
dividend/interest/redemption instruments undelivered,
dividend/interest/redemption instruments expired and subsequent payment of
dividend/interest/redemption made through new instruments, including the status
of payment of the same shall be linked to dividend/interest/redemption payment
record of each of the specific folios by RTA .
II. Provisions with regard to Transfer/Transmission/Correction of
Errors etc.
FOLIO ONCE ALLOTTED
SHOULD NOT BE REALLOTTED
Folio once allotted to a person should never be re-allotted to any
other person under any circumstances. Ceased folios numbers i.e. folios having
nil balance should not be re-allotted to any other person.
HISTORY OF ALL
TRANSACTIONS IN A FOLIO
History of all transactions in a folio (w.r.t securities held or
dividend/interest/redemption issued in that folio, certificates issued or any
other change) are linked to a particular folio for easy retrieval.
“Maker-Checker”
concept
Follow the “Maker-Checker” concept in all of its activities to
ensure that accuracy of data and a mechanism to check unauthorised transaction
and record shall be maintained.
No back-end
entry/updation /correction
All updation in the folio records shall be enabled only through
front end modules. No back-end entry/updation /correction should be permitted.
RTAs and Issuer Companies shall ensure that “System Log” having complete
details for any change (viz. nature of change, user access history, user
identification, date/time of change etc.) must be maintained. This provision
will come into effect after 90 days from the date of this circular
CORRECTION OF ERRORS
Take prior approval from the Company similar to cases of
transfers, transmissions etc.
MEMBERS DATA
RTAs shall provide to the Issuer Company a soft copy of Members
data (having details inter alia Name, Address, Folio No, Number of Shares,
Distinctive numbers, Certificate numbers, etc.) under due certification at the
end of each quarter of a financial year. This data should also contain
transaction in the physical folio during the
period. The copy of these databases shall be maintained by Issuer Companies and
the RTAs independently as permanent record.
REGISTER OF DEBENTURE
HOLDERS
a)
RTAs shall provide to the Company a copy of the Register of
debenture holders under due certification at the end of each quarter of a
financial year.
b)
The register should contain information relating to name, father’s
/husband’s name; address and occupation, if any, of each debenture holder; date
of allotment; date of registration with the Registrar of Companies; the
debentures held by each holder distinguishing each debenture by its number
except where such debentures are held with a depository; distinctive number and
certificate number of debentures; the amount paid or agreed to be considered as
paid on those debentures; date of payment; date on which the name of each
person was entered in the register as a debenture holder; date on which any
person ceased to be a debenture holder; date of transfer of debentures; serial
number of instrument of transfer; transferor’s name and folio number;
transferee’s name and folio number, transfer number, number of debentures
transferred and their distinctive numbers; date of transfer; and instructions,
if any, for payment of interest.
c)
The copy of that Register of debenture holder shall be maintained
by Issuer Companies and the RTAs independently as permanent record.
d)
Any returns filed with Registrar of Companies (ROC) or any other
documents relating to company’s securities processed and compiled by the RTAs
will also be maintained by the RTAs and a copy of the return shall be forwarded
to the Issuer Company. The Issuer Companies will also independently preserve
these data as filed with the ROC at their end.
STRICT CONTROL ON
STATIONERY
RTAs and Issuer Companies shall frame a written policy and shall
maintain strict control on stationery including blank certificates,
dividend/interest/redemption warrants and shall periodically check by physical
verification. The reconciliation report shall be maintained by the RTAs and
concerned Issuer Company
CERTIFICATE PRINTING
REGISTER
In addition to maintaining details of securities certificates
issued or re-issued data in respective folios, RTAs shall maintain a
certificate printing register/records containing,
inter alia, details such as Date of Printing/issue, Folio No, Name in which
printed, Certificate No, Distinctive Nos, Old Certificate No (in case is
reprinting), Reason of printing etc.
HOLDING PHYSICAL
SECURITIES
If the security holder is holding physical securities, RTAs,
Issuer Companies and Depositories shall ensure that the Bonus securities
against these folios shall mandatorily be issued in physical mode only. In
other words, Bonus securities cannot be allotted in demat form with respect to
folios where physical securities certificates are maintained.
Collection of copy of
PAN, and bank account details of all securities holders
o
They preserve a verifiable record as on the date of this circular
regarding the folios which do not have PAN/bank account details.
o
They send a letter under registered/Speed post seeking PAN and
bank details (a copy of the PAN card and original cancelled cheque leaf
/attested bank passbook showing name of account holder) within 90 days of the
circular and two reminders thereof after the gap of 30 days. All the 3 letters
will have 21 days’ notice period to provide the details.
o
In case of residents of Sikkim, the requirement of PAN Card be
substituted with a valid Identity proof issued by Government.
o
Records of all communications sent, replies received and decisions
taken in the matter shall be properly maintained. The same information shall
also be linked to and available in each such folio.
o
Securities holders who are unable to respond to RTA call and
provide PAN and bank details within 180 days of the circular or have informed
that the securities available in their name as per the records of RTA does not
belong to them, shall be subject to enhanced due diligence by Issuer Company.
o
A list of all such accounts with complete details shall be shared
by the RTAs with the Issuer Companies within 30 days of completion of notice
period of the last reminder.
Thereafter any transaction in the
physical securities should done be with enhanced supervision by company and
RTAs.
DUE
DILIGENCE IN FOLLOWING CASES:
a)
dividend/interest/redemption
remains unpaid for three years & above
b)
PAN
/ bank account details not available in the folio.
c)
Unclaimed
suspense account
d)
IEPF
suspense account set up pursuant to Companies Act 2013.
e)
Any
other stringent criteria as decided by the Issuer Company and the RTAs.
RTAs shall maintain a list of
such account folios and share with the Issuer Company at the end of every
quarter of a financial year .RTAs shall have system
based alerts for processing of all transactions in such account folios
MAINTAIN REGISTER
RTAs shall maintain a register containing details of records and
documents destroyed.
Following are the
Particulars:
A.
Description of the records and documents destroyed,
B.
Name of authority authorising the destruction,
C.
Date of authorization of destruction,
D.
Destroyed in whose presence (with signature) and date of
destruction.
The authenticity of the register shall be verified during internal
audit. The register shall be maintained till perpetuity.
III. Compulsory internal audit of RTAs
Internal audit on
annual basis by independent qualified Chartered Accountants or Company Secretaries or Cost
and Management Accountants and Certified Information Systems Auditor (CISA) who
don’t have any conflict of interest.
Eligibility of
auditors
A. Minimum experience of
three years in the financial sector.
B. Appointed for a
maximum term of five years, with a cooling-off period of two years
Audit shall cover
Investor grievance redressal mechanism and compliance with the
requirements stipulated in the SEBI Act, Rules and Regulations made thereunder,
and guidelines/circulars issued by SEBI from time to time.
Content of report
A. Report shall state
the methodology adopted, deficiencies observed, and consideration of response
of the management on the deficiencies
B. The report shall
include a summary of operations and of the audit, covering the size of
operations, number of transactions audited and the number of instances where
violations / deviations were observed while making observations on the
compliance of any regulatory requirement.
C. The report shall
comment on the adequacy of systems adopted by the RTAs for compliance with the
requirements of regulations and guidelines issued by SEBI and investor
grievance redressal.
D. RTA shall submit a
copy of report of the internal audit to Issuer Company within three months from
the end of the financial year. Copy of the same shall also be preserved by the
RTA.
E. The Governing Council
(i.e. Board of Directors, Board of Partners, proprietor etc. as applicable) of
the RTA shall consider the report of the internal auditor and take steps to
rectify the deficiencies, if any. The RTA shall send the Action Taken Report to
Issuer Company within next one month and a copy thereof shall be maintained by
the RTA.
F.
The Action Taken report shall be submitted in the following
formula.
Serial No
|
Audit period & name of Issuer Company
|
Observations of the Auditor
|
Comments of the Board of the RTA
|
Corrective actions taken
|
G. Audit observations
along with the corrective steps taken by the RTA shall be placed before the
Board of Directors of the Issuer Company. The Issuer Companies shall satisfy
themselves regarding the adequacy of the corrective measures taken by the
concerned RTA. If not satisfied with the corrective measures, Issuer Company
may ask RTA to take more stringent corrective measures.
H. The audit
observations along with the corrective steps taken by the RTA shall be placed
before the Board of Directors of the Issuer Company. The Issuer Companies shall
satisfy themselves regarding the adequacy of the corrective measures taken by
the concerned RTA. If not satisfied with the corrective measures, Issuer
Company may ask RTA to take more stringent corrective measures.
Thank you
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Ravi Garg
Company Secretary
91-7838204665,
csravi2014@gmail.com
