In a relief to holders of physical shares, market regulator SEBI has done away with the requirement of freezing these without PAN, KYC details and nomination. Securities and Exchange Board of India ( SEBI ) issued a circular regarding this. According to this circular, this step has been taken with the aim of simplifying the rules and it will come into effect immediately.

This decision has been taken after receiving feedback from Registrar Association of India and investors. Under the rule, it was mandatory for all holders of physical shares of listed companies to furnish PAN, nomination, contact details, bank account details and specimen signatures for their respective folio numbers.

SEBI had said in May that folios whose details are not available after October 1, 2023, will be frozen by the Registrar of Issue and Share Transfer Agents (RTAs). Amending the circular issued in May, SEBI said that the reference to the word freeze has been removed.

Why did SEBI change the rules?

SEBI said that they have taken this decision to make share trading easier. After the change in this rule, the unexpected challenges faced by investors will be reduced to a great extent. When folios were frozen, investors had to face many problems. SEBI has taken this decision after suggestions received from investors.

SEBI had issued a circular in May this year. In this circular he had removed the reference ‘freezing/frozen’. The decision was taken after consultation and feedback from the Registrar Association of India and investors.

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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.

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