Suspense Escrow Demat Account

 

Pursuant to SEBI Circular No. SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2022/6 dated January 25, 2022. Followed by SEBI Letter No. SEBI/HO/MIRSD/POD-1/OW/P/2022/64923 dated December 30, 2022, Listed Entity are required to Open Suspense Escrow Demat Account.

Those companies who have still not opened “Suspense Escrow Demat Account” and are currently using “Demat Suspense Account / Unclaimed Suspense Account” as provided under Schedule VI of SEBI (LODR) Regulations, 2015 for the purpose of Letter of Confirmation (“LOC”) cases, shall move securities pertaining to Letter of Confirmation cases to newly opened “Suspense Escrow Demat Account” latest by January 31, 2023.

 As per Circular dated January 25, 2022 The listed entity shall issue the securities in dematerialized form only while processing the following request:

1.       Issue of duplicate share certificate.
2.       Claim from unclaimed suspense certificate.
3.       Renewal /exchange of securities certificates/folios.
4.       Transmission.
5.       Transposition.
6.       Endorsement.
7.       Sub- division / splitting of the securities certificate.
8.       Consolidation of securities certificates/ folios.

 Process of claiming:

• The claimant shall submit duly filled up Form ISR- 4.
• In case of item no. 3 to 8 the RTA/ issuer company shall obtain the original securities certificate to processing the service requests.
• The RTA/ Issuer Company shall verify the request and issue a Letter of Confirmation to the claimant, within 30 days of its receipt of such request after removing objections, if any.
• The LOC shall be valid for 120 days from the date of its issuance, within which the claimant shall make a request to DP for dematerializing the said securities.
• The RTA / Issuer Company shall issue a reminder after the end of 45 days and 90 days from the date of issuance of LOC, in case of no such request has been received by the RTA / Issuer Company.
• In case the claimant fails to submit the demat request within aforesaid period, The RTA / Issuer company shall credit the securities to the Suspense Escrow Demat Account.

Guideline For Dematerialization Of Securities Received For Processing Investor Service Request

• After verifying and processing the request, the RTA / issuer company shall intimate the claimant about its execution / issuance of certificate as may be applicable, by way of issuing LOC in lieu of share certificate provided by the claimant.
• The letter shall inter- alia contain details of folio and demat account number (If available) of the claimant.
• Then letter shall be sent by the RTA through registered/ speed post to claimant, additionally the RTA / issuer company may send such letter by e- mail.
• Within 120 days claimant shall submit the demat request, with the original letter or a copy of  email with e- sign and/or digital signature  to the DP
• The RTA / Issuer Company shall issue a reminder after the end of 45 days and 90 days from the date of issuance of LOC, in case of no such request has been received by the RTA / Issuer Company.
• In case of the securities which are required to be locked in, The RTA / issuing company while approving the demat request shall intimate the depository about the lock- in and its period.
• In case the claimant fails to submit the demat request within aforesaid period, The RTA / Issuer company shall credit the securities to the Suspense Escrow Demat Account.
• The RTA shall retain the physical securities  and deface the certificate with  “LOC” stamp on the face / reverse of the securities , subsequent to  processing of service request.

·        Steps for Suspense Escrow Demat Account

• Open a separate demat account with name of Suspense Escrow Demat Account.
• Companies using demat suspense account/ unclaimed suspense account for the purpose of moving letter of confirmation cases require to open suspense Escrow demat account by January 31, 2023.
• In case where the security holder/ claimant fails to submit the demat request to the DPs within the period of 120 days from the date of issuance of letter of confirmation.
•  RTA shall move the said securities to a physical folio suspense Escrow demat account and issue a consolidated letter of confirmation to the company for the said securities on a monthly basis.
• The listed entity shall dematerialized these securities in suspense Escrow demat account with one of the DPs within 7 days of receipt of such letter of confirmation from RTA.
• The listed entity shall maintain details of security holder whose securities are credited to such suspense Escrow demat account.
• Suspense account shall be held by the company purely on behalf of the security holder.

On receipt of following document RTA shall re-issue:

• Duly filled in and signed Form ISR- 4.
• Client master list of the demat account for crediting the securities to the security holder account
• Provided the details of CML should match with the details recorded with RTA / Issuer Company.

Disclaimer: The content of this blog is for informational and educational purposes only and does not constitute legal advice or opinion.