Market regulator SEBI has given big relief to those holding shares in paper form i.e. holders of physical securities.
SEBI decided to do away with the provision of freezing the folios of shareholders without PAN, KYC details and nomination. SEBI said in a circular issued on Friday, November 17 that this rule came into effect with immediate effect. This decision has been taken after taking feedback from Registrar Association of India and investors.
Till now, investors holding shares of listed companies in paper form were required to provide PAN, nomination, contact details, bank account details, folio number and specimen signature.
Sebi had in May said that folios in which none of such documents are available on or after October 1, 2023, are mandatory to be frozen by the Registrar of Issue and Share Transfer Agents (RTAs). The market regulator said that based on the feedback received from Registrar Association of India, suggestions received from investors and to reduce the administrative challenges associated with banning shares under the Benami Transactions (Prohibition) Act 1988 and/or Prevention of Money Laundering Act. For this, it has been decided to abolish the above provision.
Making changes to the circular issued in May, SEBI said it has removed the reference to the word ‘freezing’. Earlier in March, SEBI had made it mandatory for all demat account holders to submit nomination declaration by September 30 or opt out of nomination. According to this, if you do not make nomination, your mutual fund folio may be frozen.