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By addressing long-pending transfer issues and removing redundant steps in the current system, Sebi aims to enhance investor convenience while continuing to promote dematerialisation in the securities market.
In its consultation paper, Sebi proposed to temporarily relax rules to allow the transfer of such old shares, even though they are in physical form.
This exception, however, will be time-bound, with a sunset clause to ensure that dematerialisation remains the long-term goal. Once verified by the company or the Registrar and Transfer Agent (RTA), these shares will be credited directly to the investor’s demat account.
In addition to this proposal, the regulator has suggested abolishing the current process of issuing a ‘Letter of Confirmation’ (LOC) to further simplify the dematerialisation procedure.
The move is aimed at removing an unnecessary intermediate step and providing greater convenience to investors.Under the proposed framework, RTAs and listed companies will directly credit shares to investors’ demat accounts after carrying out the necessary due diligence. Investors will only need to provide their demat account details (Client Master List or CML) when submitting a request, Sebi said.Consequently, suitable amendments have been proposed to the LODR Regulations.
At present, when investors make service requests such as for transfer, issue of duplicate certificates, or transmission, companies issue a Letter of Confirmation. The investor are then required to submit this LOC to their Depository Participant (DP) within 120 days to get the shares credited in demat form.
Failure to do so within the deadline results in the shares being moved to a Suspense Escrow Demat Account (SEDA), which adds delays and administrative burden for both investors and companies.
This move follows Sebi’s earlier efforts to help investors regularise old physical share transfers.
The regulator had previously allowed investors who had lodged transfer requests before April 1, 2019, to re-lodge them till March 31, 2021, if their earlier requests had been rejected. However, many investors 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, enabling such investors to re-lodge their transfer documents.
“Since most of the transfer cases pertain to fresh lodgement of transfer deeds for transfers executed prior to April 1, 2019, an exception may be created in Regulation 40(1) of LODR Regulations to facilitate the investors to get rightful access to their property,” Sebi said in the paper.
The regulator further noted that “such exception must be with a sunset clause in order to ensure that the overall broader objective of Sebi to ensure maximum dematerialisation is fulfilled, while also providing an avenue to investors to transfer and dematerialise their securities.” PTI SP SHW
