MUMBAI: Sebi proposes to issue all shares in demat mode in case a company splits or consolidates the face value of its shares. The regulator also proposes to issue demat shares in case of corporate restructuring.
The inherent benefits of demated actions, primarily the elimination of risks associated with physical certificates i.e. loss, theft, mutilation and fraud etc., is prompting Sebi to come up with such a proposal. The regulator has issued a consultation document and the public could submit their comments until February 4.
For years, Sebi has been pushing investors to hold shares in demat mode. However, some investors still hold their shares in physical form.
In case investors who do not have demat accounts are allotted shares in demat form due to a split, consolidation or restructuring, the company issuing the shares in demat form will have to create a separate demat account or depository account. in suspended collateral with property records for investors lacking demat accounts, according to Sebi’s consultation paper.
In the same document, Sebi said holding shares in demat form offers numerous advantages, including fraud prevention, protection against physical damage, quick transfers, greater transparency, better regulatory oversight, fewer legal conflicts and lower costs for both investors and investors. for organizations.
Move towards comprehensive dematerialization and prevent new physical attacks securities issue by listed entities, Sebi determined that existing certificates needed to be converted to demat format, halting the creation of new physical certificates.
“It is proposed to amend the Sebi Regulations (LODR), 2015 to require issuance of securities only in demat form in case of subdivision, division (or) consolidation of face value of securities and a scheme of arrangement to encourage holding of securities in demat,” the regulator said.
The regulator also suggested amendments to the LODR provisions, including removing the requirement to maintain “proof of delivery” for notifications about “minor signature differences” and significant signature variations or signature unavailability.