9911796707
TMI BlogMaster Circular for DepositoriesX X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 of depository participants 2.2 Printing of Grievances Redressal Mechanism on Delivery Instruction Form Book Section - 3: Issuer relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ening 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 same in their record after verifying with the original. d. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublic/ 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 Proof of Address in addition to Proof of Identity. Reference Circular MIRSD/09/2012 dated August 13, 2012 j. e-KYC service launched by UIDAI shall also be accepted as a valid process for KYC verification. The information containing the relevant client details and photograph made available from UIDAI as a result of e-KYC process shall be treated as a valid proof of address. Referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch 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 Investors residing in the state of Sikkim are exempted from the mandatory requirement of furnishing PAN card details for their demat accounts. Reference Hon‟ble High Court of Sikkim judgment dated March 31, 2006 DPs shall verify the veracity of the claim of the investors that they are residents of Sikkim, by collecting sufficient documentary evidence in support of their address. Reference Circular MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004 1.2.4 UN ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 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 common document "Rights and Obligations of the Beneficial Owner and Depository Participant". The document annexed herewith shall be mandatory and binding on all the existing and new clients and depository participants. This will harmonize the account opening process for trading as well as demat account. This will also rationalise the number of signatures by the investor, which he is required to affix at present on a number of pages. iii. The Depository Participant shall provide a copy of Rights and Obligations Document to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 shall open separate accounts in the name of each of the beneficial owners and securities of each beneficial owner shall be segregated and shall not be mixed up with the securities of other beneficial owners and/or DP‟s own securities held in dematerialized form. 10. The DP shall not facilitate the Beneficial Owner to create or permit any pledge and /or hypothecation or any other interest or encumbrance over all or any of such securities submitted for dematerialization and/or held in demat account except in the form and manner prescribed in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count 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 19. In event of Beneficial Owner committing a default in the payment of any amount provided in Clause 5 & 6 within a period of thirty days from the date of demand, without prejudice to the right of the DP to close the demat account of the Beneficial Owner, the DP may charge interest at a rate as specified by the Depository from time to time for the period of such default. 20. In case the Beneficial Owner has failed to make the payment of any of the amounts as provided in Clause 5&6 specified above, the DP after giving two days notice to the Beneficial Owner shall have the right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Any changes in the rights and obligations which are specified by SEBI/Depositories shall also be brought to the notice of the clients at once. 31. If the rights and obligations of the parties hereto are altered by virtue of change in Rules and regulations of SEBI or Bye-laws, Rules and Regulations of the relevant Depository, where the Beneficial Owner maintains his/her account, such changes shall be deemed to have been incorporated herein in modification of the rights and obligations of the parties mentioned in this document. 1.4 Opening of demat account in case of HUF Reference: SEBI/ MRD/CDSL/ 149156 /2009 dated January 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 50,000. b. For the value of holding from ₹ 50,001 to ₹ 200,000, AMC not exceeding ₹ 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 of the securities or units of mutual funds, as the case may be. Where such price is not available the last traded price may be taken into account and for unlisted securities other than units of mutual funds, face value may be taken in to account. iii. If the value of holding in such BSDA exceeds the prescribed criteria at any date, the DPs may levy charges as applicable to regular accounts (non BSDA) from that date onwards. iv. The DPs shall reassess the eligibility of the BOs at the end of every billing cycle and give option to the BOs who are eligible to opt for BSDA. 1.6.5 Services for Basic Services Demat Accounts: i. Transaction statements: a. Transaction statements shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 documents shall be submitted: a. Marriage Certificate or copy of Passport showing husband‟s name or publication of name change in official gazette. ii. In case of change in name on account of reasons other than marriage a. Publication of name change in official gazette. iii. In case of change in father‟s name a. Publication of name change in official gazette. 1.7.2 The Depository Participants (DPs) shall collect the self attested copies of above documents and maintain the same in their records after verifying with the original document. 1.8 Fees/Charges to be paid by BO 1.8.1 Account opening, custody and credit of securities Reference Circular MRD/DoP /SE/Dep/Cir-4/2005 dated January 28, 2005 With effect from February 1, 2005 i. No investor shall pay any charge towards opening of a Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the tariff/charge structure every year, latest by 30th April, and also inform the depository the changes in their tariff/charge structure as and when they are effected with a view to enabling the BOs to have a comparative analysis of the tariff/charge structure of various DPs. ii. For this purpose depositories shall put in place necessary systems and procedures including formats, periodicity, etc. for collection of necessary data from the DPs and dissemination of the same on their website which would enable the investors to have a comparative analysis of the tariff/charge structure of various DPs. 1.9 Safeguards to address the concerns of the investors on transfer of securities in dematerialized mode Reference Circular SEBI/MRD/Dep/Cir-03/2007 dated February 13, 2007 and Circular SEBI/MRD/Dep/Cir-03/2008 dated February 28, 2008 Following safeguards shall be put in place to address the concerns of the investors arising out of transfer of securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 pre-printed/pre stamped Beneficial Owner (BO) ID. The depositories shall prescribe a standard method of serial numbering and ensure that serial numbers issued by a DP are unique within the DP-ID. iii. DPs shall ensure that a. same DIS shall not be used for giving both market and off-market instructions b. a single DIS shall not be used for transactions with multiple execution dates. Monitoring of DIS iv. Upon issuance of DIS booklets or loose slips to BO, the DPs shall make available immediately the following details of the DIS to the depository system electronically: a. the DIS serial number b. BO ID c. date of issuance, and d. any other relevant details as decided by the depository v. At the time of execution of DIS, DPs shall enter the serial number of DIS in the depository system for validation. The depositories shall make provisions in their systems to facilitate the same. vi. In respect of all the transfer instructions on a DIS, Depositories shall validate the serial number o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. The Family Settlement Deed clearly vests the securities in favour of the person seeking transmission in his/ her name. b. Vesting of securities in favour of the person seeking transmission in his/ her name is not contingent upon any other onerous conditions in such Family Settlement Deed. Note: If the division of shares as per the Family Settlement Deed is amongst more than one person, then the Family Settlement Deed can be considered as an NOC for transmission of shares to each legal heirs applying for transmission. However, if DPs still have problems in comprehending the contents of the Family Settlement Deed, they should refer the matter to Depositories for necessary advice on case-to-case basis. 1.11.2 DP(s) shall automatically open new account in the name of the surviving members(s), in the same order as in the original account, on an application by the surviving member(s) based on existing documents required as per the KYC norms. Submission of new account opening form shall not be insisted upon. 1.11.3 A uniform time frame of 7 days, after receipt of all requisite documents, shall be prescribed for processing of Transmission requests. 1.11.4 In case of multiple suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments: a. No objection certificate [NOC] from all legal heir(s) who do not object to such transmission (or) copy of Family Settlement Deed duly notarized or attested by a Gazetted Officer and executed by all the legal heirs of the deceased holder. b. Indemnity made on appropriate non judicial stamp paper - indemnifying the STA/Issuer Company. iii. For value of securities more than ` 2,00,000 (Rupees Two lakh only) per issuer company as on date of application: a. Succession certificate (or) Probate of will (or) Letter of Administration (or) Court decree. 1.12 SMS alerts for demat accounts operated by Power of Attorney Reference: SEBI/MRD/DEP/VM/169784 /09 dated July 15, 2009 Subscription to SMS Alert facility for depository accounts operated through Power of Attorney (POA) would be mandatory except in case of accounts held by non-individuals, foreign nationals, and NRIs. 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 Reference: MRD/CDSL/VM/155773/2009 dated February 27, 2009, MRD/DoP/NSDL/VM/168994 /2009 dated July 07, 2009 and MRD/CDSL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discontinuation are also dispatched immediately without any additional cost to the clients. 1.15 Exemption to Depository Participants (DPs) from providing hard copies of transaction statements to BOs Reference Circular MRD/DoP/Dep/Cir-27/2004 dated August 16, 2004 DPs are permitted to provide transaction statements and other documents to the BOs under Digital signature, as governed under the Information Technology Act, 2000, subject to the DP entering into a legally enforceable arrangement with the BO for the said purpose. While such practice in the aforesaid manner shall be deemed to be in compliance of the provisions of the Regulation 43 of SEBI (Depositories & Participants) Regulations, 1996; if the BO is still desirous of receiving statements in hard copy, DPs shall be duty bound to provide the same. 1.16 Transfer of funds and securities from Clearing Member pool account to BO Account Reference Circular SMDRP/Policy/Cir-05/2001 dated February 1, 2001 & Circular SEBI/MRD/Policy/AT/Cir-19/2004 dated April 21, 2004 i. Clearing members shall transfer the funds and securities from their respective pool account to the respective beneficiary account of their clients within 1 worki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensure that all branches exercise due diligence in opening accounts, complying with KYC requirements, in ensuring systems safety in complying with client instructions, manner of uploading client instructions, in verifying signatures and maintaining client records, etc. DPs shall also ensure that the branches are suitably integrated. ii. Depositories shall examine the adequacy of the above mechanisms during their inspections of DPs. The Depositories shall also carry out surprise inspections/ checks of the DP branches apart from the regular inspection of the DPs. Depositories shall also put in place appropriate mechanisms for monitoring opening of branches by DPs. 2.2 Printing of Grievances Redressal Mechanism on Delivery Instruction Form Book Reference Circular No. SEBI/MRD/DP/25/2012 dated September 21, 2012 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. In case you have grievances against a listed company or intermediary registered with SEBI, you should first approach the concerned com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcular CIR/MRD/ DP/05/2011 dated April 27, 2011 i. With effect from April 27, 2011 depositories may levy and collect the charges towards custody from the issuers, on the basis of average no. of folios (ISIN position) during the previous financial year, as per the details given below: ii. Issuers to pay @ ₹ 8.00 (*) per folio (ISIN position) in the respective depositories, subject to a minimum as mentioned below: Nominal value of admitted securities (Rs.) Annual Custodial Fee payable by a Issuer to each Depository (Rs.) (*) Upto 5 crore 6,000 Above 5 crore and upto 10 crore 15,000 Above 10 crore and upto 20 crore 30,000 Above 20 crore 50,000 * Plus service tax as applicable iii. The average no. of folios (ISIN positions) for an Issuer may be arrived at by dividing the total number of folios for the entire financial year by the total number of working days in the said financial year. iv. If the issuer fails to make the payment, Depositories may charge penal interest subject to a maximum of 12% per annum. 3.2 Activation of ISIN in case of IPO and additional issue of shares/ securities i. Depositories shall activate the ISINs only on the date of commencement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be deemed to have been confirmed. The Registrars shall not reject inter-Depository transfers except where i. A Depository does not have adequate balance of securities in its account or ii. there is mismatch of transfer requests from the Depositories. 3.3.3 Common Registrars and Share Transfer agents Reference Circular SMDRP/Policy/Cir-28/99 dated August 23, 1999 Every company shall appoint the same Registrars and Share Transfer agents for both the depositories. 3.3.4 Dematerialisation requests Reference Circular no. SMDRP/Policy/Cir-28/99 dated August 23, 1999, Reference: D&CC/ 1099 / 2002 dated November 01, 2002 i. 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. ii. It is clarified that the above provision sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9/2008/01/02 dated February 1, 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. 3.6.2 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 59 Reference Circular CIR/MRD/DP/10/2013 dated March 21, 2013 i. 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 getting returned by destination banks because of incorrect or old account numbers provided by beneficiary account holders. ii. RBI has stated that Investors will have to ensure through their DPs that bank account particulars are updated i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to provide to companies (or to their RTI & STA) updated bank details of their investors. 3.7 Withdrawal by issuers from the depository Reference: MRD/DoP/NSDL/VM/ 162378 /2009 dated May 06, 2009 i. As regards voluntary withdrawal by issuers from the depository, it is informed that listed companies may not be allowed to withdraw from the depository system unless they delist their securities from the stock exchanges. ii. As regards companies under liquidation are concerned, it is informed that deactivation of the ISIN may be only done in cases where companies have been liquidated. In other cases where companies are being liquidated, deactivation of ISIN resulting in total freezing may not be desirable as it will disallow investors to hold shares in dematerialized form 3.8 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 differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. i. 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. ii. 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. iii. Further, in-order to meet his pay-in obligations for the subsequent settlement, the member may need to move securities from one depository to another. The Depositories shall, therefore, facilitate the inter-depository transfers within one hour and before pay-in for the subsequent settlement begins. iv. The Stock Exchanges/Depositories shall follow a strict time schedule to ensure that the settlements are completed on the same day. v. The Clearing Corporation/Clearing House of the Stock Exchanges shall execute Auto D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustification and need for forwarding the same to SEBI, indicating whether it forms a part of any Bye Law/ Rule/ Regulation. ii. Further, all Exchanges shall ensure that requests for dispensation of the requirement of pre-publication shall be accompanied with proper justification and indicate how the public interest or interest of trade shall be served by such dispensation of pre-publication. 4.5 Preservation of Records Reference Circular SEBI/MRD/DEP/Cir-24/05 dated December 22, 2005, circular SEBI/MRD/SE/Cir-16/2005 dated August 04, 2005 and circular MRD/DoP/DEP/Cir-20/2009 dated December 9, 2009 i. Depositories 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. 4.6 Pledge of Shares through depository system Reference: MRD/DoP/MAS - OW/16723/2010 dated August 17, 2010 i. Section 12 of the Depositories Act and Regulation 58 of the SEBI (Deposito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-centric. 4.9 Designated e-mail ID for redressal of investor complaints Reference Circular MRD/DoP/Dep/SE/Cir-22/06 dated December 18, 2006 i. Depositories and registered DPs shall designate an exclusive e-mail ID for the grievance redressal division/compliance officer exclusively for registering investor complaints. ii. The designated email ID and other relevant details shall be prominently displayed on the websites and in the various materials/pamphlets/advertisement campaigns initiated by the Depositories and DPs for creating investor awareness. 4.10 Redressal of complaints against Stock Exchanges (SEs) and Depositories through SEBI Complaints Redress System (SCORES). Reference Circular CIR/MRD/ICC/16/2012 dated June 15, 2012 i. The complaints received by SEBI against SEs and Depositories shall be electronically sent through SCORES. Depositories are advised to view the pending complaints at http://scores.gov.in/admin and submit the Action Taken Report (ATR) along with supporting documents electronically in SCORES. Updation of action taken shall not be possible with physical ATRs. Hence, submission of physical ATR shall not be accepted for complaints lodged in SCORES. ii. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against DPS during 2008-09 iii. Report 1C: Redressal of Complaints received against DPs during 2009-10 iv. Report 2A: Details of Arbitration Proceedings (where Investor is a party) during 2008-09: v. Report 2B: Details of Arbitration Proceedings (where Investor is a party) during 2009-10 vi. Report 3A: Penal Actions against DPs during 2008-09 vii. Report 3B: Penal Actions against DPs during 2009-10 viii. Report 4A: Redressal of Complaints lodged by investors against Listed Companies during 2008 -09 ix. Report 4B: Redressal of Complaints lodged by investors against Listed Companies during 2009 -10 Report 1A: Complaints received against Depository Participants (DPs)# during 2009-10: Updated on mmm dd yyyy (to be updated weekly) (In excel sheet) Sl. No. Details of Complaint Status of Complaint Date of Receipt Name of Complainant Type of Complaint* SEBI Ref. No. (if applicable Name of DP Status** Status Date## - Date of Filing Arbitration Name of Arbitrator(s) Date of Arbitration Award 1 2 3 N # including against its authorized persons, employees, etc. ## Status date is the date of resolution/reference to arbitration/finding it non-actionable. If under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 3 N Total (In case of panel of arbitrators, the cases / awards would appear against every member of the panel) (Arrange the arbitrators in descending number of awards passed by them during the period) Report 2B: Details of Arbitration Proceedings (where BO is a party) during 2009-10: 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 2 3 N Total (In case of panel of arbitrators, the cases / awards would appear against every member of the panel) (Arrange the arbitrators in descending number of awards passed by them during the period) Report 3A: Penal Actions against Depository Participants (DPs) during 2008-09: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsistence 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nerate 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 Department under section "Notifications". ii. With regard to implementation of the MoF notification, the following is clarified: a. For RGESS eligible close-ended Mutual Funds schemes, advice given by AMCs to the depository for extinguishment of units of close ended schemes upon maturity of the scheme shall be considered as settled through depository mechanism and therefore RGESS compliant. b. AMCs shall disclose that the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Involuntary 7 Consolidation of Shares Involuntary 8 Conversion of Partly Paid up Involuntary 9 Dividend [Final/ Interim/ Special] Involuntary 10 Exchange of Share Certificate [Name change] Involuntary 11 Rights Issue Voluntary 12 Conversion (compulsory)* Involuntary 13 Conversion (optionally)* Involuntary 14 Redemption Involuntary (voluntary, if there is option to continue with revised terms) 15 Dividend on Mutual Fund Involuntary 16 Redemption of Mutual Fund Involuntary on maturity ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CP), 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 Infrastructure (FMI) are critically important institutions responsible for providing clearing, settlement and recording of monetary and other financial transactions. The different categories of FMIs, as identified under PFMIs, are listed below - Payment Systems (PSS) A payment system is a set of instruments, procedures, and rules for the transfer of funds between or among participants. The system includes the participants and the entity operating the arrangement. Payment systems are typically based on an agreement between or among participants and the operator of the arrangement, and the transfer of funds is effected using an ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. An important function of a TR is to provide information that supports risk reduction, operational efficiency and effectiveness, and cost savings for both individual entities and the market as a whole. Such entities may include the principals to a trade, their agents, CCPs, and other service providers offering complementary services, including central settlement of payment obligations, electronic novation and affirmation, portfolio compression and reconciliation, and collateral. Adoption of Principles of Financial Market Infrastructures vi. All CPSS and IOSCO members are required to strive to adopt the PFMIs and implement them in their r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 should accept collateral with low credit, liquidity, and market risks. An FMI should also set and enforce appropriately conservative haircuts and concentration limits. Principle 6: Margin A CCP should cover its credit exposures to its participants for all products through an effective margin system that is risk-based and regularly reviewed. Principle 7: Liquidity risk An FMI should effectively measure, monitor, and manage its liquidity risk. An FMI should maintain sufficient liquid resources in all relevant currencies to effect same- day and, where appropriate, intraday and multiday settlement of payment obligations with a high degree of confidence under a wide range ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal 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 16: Custody and investment risks An FMI should safeguard its own and its participants‟ assets and minimise the risk of loss on and delay in access to these assets. An FMI‟s investments should be in instruments with minimal credit, market, and liquidity risks. Principle 17: Operational risk An FMI should identify the plausible sources of operational risk, both internal and external, and mitigate their impact through the use of appropriate systems, policies, procedures, and controls. Systems should be designed to ensure a high degree of security and operational reliability and should have adequate, scalable capacity. Business continuity management should aim for timely recovery of operations and fulfillm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory 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 organization needs and its approval. f. Setting priorities and milestones. iii. Depositories shall formulate an executive level IT Steering Committee to assist the IT Strategy Committee in Implementation of IT strategy. The IT steering committee shall comprise of representatives from IT, Human Resources (HR), Legal and various business functions as felt appropriate. iv. The Depositories shall formulate an IT strategy document and an Information Security policy which should be approved by the Board and reviewed annually. v. The Depositories shall create an Office of Information Security and designate a senior official as Chief Information Security Officer (CISO) whose work would be to assess, identify and reduce information technology (IT) risks, respond to incidents, establish appropriate standards and controls, and direct the establishm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 shall arrive at a Qualitative Risk Score for each qualitative area by multiplying the score assigned by inspection team to DP with corresponding assigned risk weight. d. Total DP Risk Score shall be the summation of quantitative and qualitative scores assigned to the DP. e. Depositories shall suitably normalize the scales of the qualitative and quantitative scores in arriving at the Total DP risk score. vii. Depositories shall categorize their DPs as 'High Risk', 'Medium to High Risk', 'Medium Risk', and 'Low Risk' DPs based on the percentile of risk score. DP Risk Rating / Categorization Percentile of Risk Score High ≥ 80 Medium-High 46-79 Medium 21-45 Low ≤ 20 viii. After arriving at the risk rating / categorization as mentioned above, for subsequent inspections, depositories shall use the DP risk rating/ categorization to decide on the frequency of inspection of DPs ix. Apart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / issuer D.3. Arrangement for Safekeeping of Security / Share Certificates D.4. Tracking of demat requests D.5. Rejection of above requests attributable to DPs D.6. Checks pertaining to processing of Demat / Remat / Conversion / Reconversion request D.7. Any other area as may be specified by the depository E. Delivery Instruction Slip (DIS) E.1. Issuance of DIS E.2. Inventory Control of DIS E.3. First Instruction Slip Booklet E.4. Requisition Slip E.5. Procedure for Loose DIS E.6. Depository specific areas E.7. Verification of DIS E.8. Procedure for accepting DIS E.9. Time Stamping and related Areas E.10. Accepting DIS by Fax E.11. Accepting DIS in form of Annexure E.12. Completeness of DIS E.13. Accepting DIS in electronic form E.14. Procedure for Verification of DIS E.15. Signature Verification E.16. Corrections / Cancellations to DIS E.17. Blocking of used / executed / lost / misplaced / Stolen DIS E.18. Procedure for processing of DIS E.19. Any other area as may be specified by the depository F. Transaction F.1. Checks pertaining to setting up / processing of transactions F.2. Future dated transactions F.3. Transfer of al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edge P.1. Procedure followed for Pledge / Unpledge P.2. Checks pertaining to Pledge / Unpledge P.3. Any other area as may be specified by the depository Q. Freeze / Unfreeze Q.1. Freeze facility Q.2. Procedure followed for Freeze Q.3. Checks pertaining to freeze Q.4. Any other area as may be specified by the depository R. Miscellaneous areas R.1. Investor Grievance R.2. Forms for various activities R.3. Execution of any supplementary agreement/ Letter of Confirmation R.4. Submission of Internal Audit / Concurrent Audit / Net worth Certificate R.5. Submission of Annual Financial Statement R.6. Outsourcing of Activities R.7. Closure / transfer of Balances R.8. Submission of Information sought by Depositories specifically through Circulars / Letters. R.9. Half Yearly Compliance R.10. Any other area as may be specified by the depository S. Status of compliance for deviations / observations noted in last inspection T. Complaints T.1. Account Opening T.2. Demat / Remat T.3. Transaction Statement T.4. Improper Service T.5. Charges T.6. Delivery Instruction Related ( DIS ) T.7. Closure T.8. Manipulation / Unauthorized Action T.9. Mont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecific requirements' * Base Sample Size * Address change = 50 * Samples from Urban, Semi Urban and Rural Areas shall be equally represented if available. * Nomination Change = 25 * Signature change = 100 * Addition / Deletion / Modification of POA = 100 * Freeze / Unfreeze = 50 * Bank Details Change = 100 * PAN modification = 100 * Account closure initiated by clients = 25 * Closure initiated by DPs = 25 * Demat rejection = 30 * Transactions = 25 * Change in e-mail Id = 25 * Change in mobile number = 25 * Change in SMS flag = 50 * Change in standing instruction flag = 50 * Transmission = 50% of total transmission cases * Previous compliance = 100% of total samples * Final sample size shall be arrived at after multiplying with the respective multiplier corresponding to the DP Risk rating / categorization as given below. 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/ Categorisation Multiplier High risk 3 Medium High risk 2 Medium risk 1.5 Low risk 1 5. Other Aspects * A uniform Base sample size of 100 shall be adopted in case of all othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Directors etc. 2. Role of non-executive directors / Independent directors. (b) Quality of Management 1. Experience, Fit and Proper and Qualification of Key Personnel. 2. Existence of Succession planning for top management especially in control functions. 3. Chinese walls between the activities in terms of manpower, resources etc. 4. Training and development of employees. 5. Adequacy of staff strength. 6. Compliance level of previous inspection observations/ directions of regulatory bodies (c) IT security and Business Continuity 1. High Availability. 2. Appropriate Interconnected Architecture. 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 pendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 18, 2006. 26. MRD/DSA/SE/Dep/Cust/Cir-23/06 dated December 22, 2006. 27. SEBI/CFD/DILDIP/29/2008/01/02 dated February 1, 2008. 28. SEBI/MRD/Dep/Cir-03/2007 dated February 13, 2007. 29. MRD/DoP/Cir- 5/2007 dated April 27, 2007. 30. MIRSD/DPS-III/Cir-9/07 dated July 3, 2007. 31. MIRSD/DPS- III/Cir-23/08 dated July 25, 2008. 32. SEBI/MRD/Dep/Cir-03/2008 dated February 28, 2008. 33. MRD/DoP/Cir-20/2008 dated June 30, 2008. 34. MRD/DoP/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. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
