Shares in demat form would help in maintaining a transparent record of shareholding of companies amid rising concerns over beneficial ownership of entities.
Subsequent to processing of re-lodged transfer request, the RTA (registrar to an issue and share transfer agent) would retain physical shares and intimate the investor (transferee) about the execution of transfer through a letter of confirmation, Sebi said in a circular.
This letter will be sent through speed post or e-mail, with the digitally signed letter containing details of endorsement, shares, folio of investor as available on physical shares, it added.
The investor would have to submit the demat request, within 90 days of issue of letter of confirmation, to depository participant along with the letter of confirmation.
The RTA would also issue a reminder at the end of 60 days of issue of letter of confirmation, informing the investor to submit the demat request.
According to Sebi, depository participant will process the demat request on the basis of letter of confirmation, as this letter is a confirmation of holding of physical shares on behalf of the investor by the RTA.
In case of shares that are required to be locked-in, the RTA, while confirming the demat request, will also intimate the depository about the lock-in and its period.
Such shares would be in lock-in demat mode for six months from the date of registration of transfer.
In case of non-receipt of demat request from the investor within 90 days of the date of letter of confirmation, the shares will be credited to suspense escrow demat account of the company.
In September, Sebi had fixed March 31, 2021 as the cut-off date for re-lodgement of share transfer requests.
Transfer of securities held in physical mode has been discontinued with effect from April 1, 2019, but investors have not been barred from holding shares in physical form.
In March 2019, Sebi had clarified that transfer deeds lodged before the deadline of April 1, 2019, and rejected or returned due to deficiency in documents may be re-lodged with requisite documents.