In a new paper asking for views, SEBI explains higher levels for simple documentation and a straight-through processing system for claims of little value – all with the aim of cutting paperwork, speeding up the transfer of securities, and making it easier for nominees and legal inheritors to get what is due to them.
Why SEBI Wants Easier Securities Transfers
SEBI says that the levels of documentation at present were set a number of years ago and do not now match market conditions. The value of assets, and the number of people taking part in the market, has grown a lot, meaning the earlier levels are now out of date. The suggestions are to make documentation rules match the size and difficulty of claims today.
The regulator also places stress on being able to check and standardise. A ‘death certificate that can be checked’ could be the original, a copy checked against the original by the nominee, a copy confirmed by a notary or a gazetted officer, or a certificate with a QR code. This flexibility will help to quickly check things across different organisations.
For proving who the legal inheritors are, SEBI suggests a legal heir certificate should be given by a revenue body with someone of Tehsildar rank or higher. The purpose is to balance controlling risk with making it easier to get access, especially for smaller claims where going through the legal system could cost a lot more than the claim is worth.
New Levels for STP and Simple Documentation
SEBI suggests a straight-through processing (STP) window for very small claims where the cost of the documents might be more than the value of the asset. The STP level suggested is Rs 10,000 for physical securities and Rs 30,000 for demat securities, letting transfers with little trouble and only a small amount of paperwork take place.
Over and above STP, the level for simple documentation would go up a lot. For physical holdings, it would go to Rs 10 lakh, and for demat holdings, to Rs 30 lakh. Companies listed on the stock exchange can, if they want, raise the Rs 10 lakh level for physical securities to make it even easier to transfer small-value investments.
These higher levels show that most normal retail holdings often fall within these bands. By changing the levels, organisations can deal with most claims without having to use long processes driven by the courts, improving service to investors and how well brokers, RTA agents, and depositories work.
If There Is a Nomination: A Smoother Path
When there is a valid nomination on record, the process is much less difficult. The nominee would give in a form asking for a transfer, the newest list of clients for the demat account confirmed by the depository participant, a death certificate that can be checked, and proof of identity.
With these documents, organisations can deal with claims more quickly, says SEBI. Once the transfer to the nominee is complete, the nominee can transfer the securities to legal inheritors without income tax being due. This encourages investors to keep nominations up to date to save their families from delays in process.
No Nomination or Will: A Documentation Approach Based on Risk
SEBI is putting forward a plan that goes step by step when there is no nomination or will. For claims of small value – those under the STP limits – people making the claim would give in a request for transfer, the newest CML, a death certificate that can be checked, proof of who they are, and a written promise to do what is required. This makes the costs fit the amount of the claim.
In the easier cases, those bigger than STP but still under the new limit, there are extra protections. Claimants will need to hand in a notarised bond saying they will cover any losses, and either letters saying other legal people who might inherit do not object, or a family agreement about how the estate is to be shared. This way, arguments are cut down, and going to court for medium-sized estates is not needed.
For claims over the new limit, much stronger legal proof is needed. Claimants must give in the request for transfer, the CML, the death certificate, proof of ID, and a sworn statement, which has been notarised, from all legal heirs confirming who owns what. Also, they must give in one of these: a succession certificate, a letter giving someone the right to administer the estate or a court order; a copy of a will with a notarised bond; or a legal heirship certificate with a bond and letters from people who are not claiming, saying they do not object.
Making Things Standard, and Giving Claimants Timelines and Digital Access
The regulator wants all companies to make how claims are submitted the same. Companies acting for others should give out standard forms, have them available in person and on the internet, quickly say they’ve got a claim, and tell claimants quickly if any papers are missing. This cuts down on going back and forth and makes expectations clear.
SEBI also wants ways to submit and follow claims on the internet, to help with openness and ease. Once all the papers needed are in, the companies acting for others should deal with transfer cases in 21 days of the calendar. If there’s a delay or a refusal, the claimant must get reasons quickly, to make people to account.
Special rules are put forward for investors who die outside India. As well as court, embassy, or apostille approvals, SEBI will take approvals from people allowed by overseas branches of banks in India which are on the official list, or foreign banks, to widen the ways death can be shown to be true.
What Investors, Nominees, and Companies Acting For Others Should Do Now
Investors should look at, and update, who they have named to inherit across demat and physical holdings. Making sure the details of the person named, including KYC and contact details, are up to date can cut delays a great deal. When it’s right, families might also think about getting a family settlement deed ready, to avoid arguments later.
Nominees and legal heirs should keep records which are easy to get at, including death certificates and ID papers which can be checked. For bigger estates, getting legal heirship or succession papers early can shorten times. Knowing the STP and new limits can help people decide the best way to make a claim.
Companies acting for others and listed companies should start planning to be ready. That includes making standard forms, putting in online submission and following, setting up internal controls for STP dealing, and training staff for the new, risk-based way of asking for papers. Listed companies might also think about raising the amount of physical securities.
These changes could cut down on paperwork problems a lot, lower costs for families, and free up the ability to do things for market companies. By matching what is asked for in papers with how much the claim is for, SEBI wants to protect investors without putting on unnecessary burdens on those who are left behind.
SEBI has asked the public to comment on the proposals until April 2. People involved in the whole system should give useful ideas about how things work, the limits, and digital processes, to help make a framework which is both safe and kind at a hard time for families.
