Sebi Simplifies Transfer Of Securities After Investor's Death, Introduces Fast-Track Route For Small Claims

The Securities and Exchange Board of India (Sebi) has simplified the process of transferring securities after an investor's death. It has introduced a fast-track route for low-value claims and eased documentation requirements to make the process quicker and more investor-friendly.

In a circular issued on July 23, Sebi said it has introduced a new category called Quick Transmission Processing (QTP) for small-value claims. Under this route, transmission requests involving securities worth up to Rs 10,000 in physical form and Rs 30,000 in demat form can be processed through a simplified mechanism. At the same time, the regulator has raised the threshold for claims eligible under the simplified documentation framework to Rs 10 lakh for physical securities and Rs 30 lakh for demat holdings.

Explaining the objective behind the changes, Sebi said the revised framework introduces a "harmonised, standardised and risk-based process for transmission of securities."

The market regulator has also standardised documentation requirements across listed companies, registrars and transfer agents (RTAs), depositories, depository participants and asset management companies. Among the key changes, Sebi has removed the mandatory requirement of obtaining probate of a will, replacing separate affidavits and no-objection certificates (NOCs) with a single affidavit-cum-NOC. It has also recognised QR code-enabled death certificates as valid documents for verification.

For death certificates issued outside India, the regulator has widened the modes of verification. Such certificates can now be certified by overseas branches of Indian banks or foreign banks that have correspondent banking relationships with Indian banks, in addition to existing methods.

Under the QTP mechanism, transmission without nomination will be allowed only in favour of the deceased investor's immediate relatives, including parents, spouse, children and parents-in-law. Claimants will have to submit a transmission request form-cum-undertaking along with a document establishing their relationship with the deceased.

Sebi has also directed processing entities to use standardised forms for transmission requests and make them available both physically and on their websites. They may additionally provide an online facility for submitting claims and tracking their status.

The regulator said transmission requests must be processed within 21 calendar days from the receipt of all required documents. If a claim is rejected or delayed beyond the prescribed timeline, the processing entity must communicate the reasons to the claimant in writing. Sebi added that it "may undertake appropriate action" if the delay is attributable to the processing entity.

The revised framework will come into effect 30 days from the date of the circular. Sebi has also asked processing entities to try to handle pending transmission requests under the new rules, without asking investors to submit documents again if they have already been provided. In addition, these entities will have to submit monthly reports on transmission requests to the regulator for six months after the new framework is implemented.