By addressing long-pending transfer issues and removing redundant steps in the current system, Sebi aims to increase convenience for investors while continuing to promote dematerialization in the securities market.
In its consultation paper, Sebi proposed to temporarily relax the rules to allow transfer of such old shares even if they are in physical form.
However, this exception will be time-bound, with a sunset clause to ensure that dematerialization remains the long-term goal. After verification by the company or the Registrar and Transfer Agent (RTA), these shares are credited directly to the investor’s demat account.
In addition to this proposal, the regulator has proposed to do away with the current process of issuing a ‘Letter of Confirmation’ (LOC) to further simplify the dematerialization procedure.
This step aims to eliminate an unnecessary intermediate step and provide greater convenience to investors. Under the proposed framework, RTAs and listed companies will credit shares directly to investors’ demat accounts after conducting necessary due diligence. Investors only need to provide their demat account details (Client Master List or CML) while submitting a request, Sebi said. As a result, appropriate changes to the LODR regulations have been proposed.
Currently, when investors submit service requests such as transfer, issuance of duplicate certificates or transfer, companies issue a confirmation letter. The investor must then submit this LOC to his Depository Participant (DP) within 120 days to get the shares credited in demat form.
Failure to do so by the deadline will result in the shares being moved to a Suspense Escrow Demat Account (SEDA), causing delays and administrative burdens for both investors and companies.
The move follows Sebi’s earlier efforts to help investors regularize old physical share transfers.
The regulator had previously allowed investors who submitted transfer requests before April 1, 2019, to resubmit them until March 31, 2021, if their previous requests had been rejected. However, many investors have missed this window for various reasons, such as the seller being deceased or untraceable, companies being dissolved or transfer requests being sent to the wrong registrar.
To address these concerns, Sebi reopened a special window from July 7, 2025 to January 6, 2026, allowing such investors to resubmit their transfer documents.
“Since most of the transfer cases involve fresh filing of transfer deeds for transfers effected before April 1, 2019, an exception may be made in Regulation 40(1) of the LODR Regulations to facilitate the investors in getting lawful access to their properties,” Sebi was quoted as saying in the paper.
The regulator further noted that “such an exception should be accompanied by a sunset clause to ensure that Sebi’s overall broader objective of ensuring maximum dematerialization is achieved, while providing an opportunity for investors to transfer and dematerialize their securities.” PTI SP SHW
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