Holding benami Physical Shares? Time to write off your Investment

SEBI tightening the screws…..In pursuance of SEBI circular, Securities holders holding securities in physical mode shall submit a copy of PAN and bank details (a copy of the PAN card and original cancelled cheque leaf /attested bank passbook showing name of account holder) within 21 days from the date of receiving notice from Issuer Companies through their RTAs.

RTAs is under obligation to send letter under registered/Speed post seeking PAN and bank details within 90 days from the date of this circular (which is dated 20th April 2018) and two reminders thereof after the gap of 30 days. All the 3 letters will have 21 days’ notice period to provide the details.

In case holder is the residence of Sikkim, PAN card can be substituted with valid Identity proof issued by Government.

Main Objectives

To keep a check on the wrong payment or return of dividend, interest, warrants etc and ensure smooth functioning and administration thereof. This will restrain benami transaction also.

Although updating PAN and Bank Detail is small change but its implication is much higher.

After effect of the Amendment:

This amendment will bring the followings changes:

• Eliminating fraud and manipulation in payment of dividend, warrant, interest etc. to holders holding securities in physical.
• Chances of Benami Transaction will be reduced to a greater extent.
• Proper & Adequate record will be available and linked to each folio.

What if PAN and Bank particulars not updated?

Securities holders who are unable to respond to RTA call/notice and not able to provide PAN and bank details within 180 days of the circular or have informed that the securities available in their name as per the records of RTA does not belong to them, shall be subject to enhanced due diligence by Issuer Company. Let’s see how RTA / company would respond to those cases.

Can holder continue to hold shares in Physical form?

Yes, the holder can continue to hold the shares in physical form but whose ledger folios do not have/ having incomplete details with respect to PAN and Bank particulars are mandatorily required to furnish these details to the Issuer Company/RTA for registration in the folio.