In a significant relief for investors holding legacy physical shares, market regulator Securities and Exchange Board of India (Sebi) on January 30 announced a one-year special window to enable transfer and dematerialisation of securities bought or sold before April 1, 2019.
The window will remain open from February 5, 2026, to February 4, 2027, allowing investors to regularise long-pending physical share transfers that could not be completed earlier due to procedural gaps or documentation issues.
Who Can Use the Special Window
The facility is aimed at aiding investors who executed transfer deeds before the April 2019 deadline but were unable to complete the process after Sebi made dematerialisation mandatory for all share transfers.
Sebi clarified that the window will also cover cases where transfer requests were earlier rejected, returned, or left unattended by companies or registrars due to deficiencies in paperwork. However, eligibility is strictly limited to situations where the original share certificates are available, and the transfer deed was executed before the cut-off date.
Mandatory Demat and One-Year Lock-In
Shares transferred under this special dispensation will be credited only in dematerialised form to the transferee’s demat account. To prevent misuse, Sebi has imposed a mandatory one-year lock-in period from the date of registration of transfer.
During this lock-in, investors will not be allowed to sell, pledge, or create any lien on the securities.
Documentation Investors Must Submit
To avail the benefit of the window, investors will need to submit a comprehensive set of documents, including original share certificates, duly executed transfer deeds, proof of purchase where available, KYC documents, an attested Client Master List of the demat account, and an undertaking-cum-indemnity bond in the prescribed format.
Sebi has directed listed companies and registrar and transfer agents (RTAs) to process eligible applications within 70 days of receiving complete documentation and to widely publicise the facility for one year.
Cases Excluded From the Scheme
Sebi has clarified that disputed cases between transferor and transferee will not be entertained under this window and must be resolved through courts or the National Company Law Tribunal (NCLT).
Similarly, securities that have already been transferred to the Investor Education and Protection Fund (IEPF), or cases where original share certificates are missing, will not be eligible.
Sebi Scraps Letter of Confirmation Requirement
In a separate but related move aimed at simplifying dematerialisation, Sebi has also abolished the requirement of issuing a Letter of Confirmation (LOC) for credit of securities arising from various investor service requests, such as issuance of duplicate certificates, transmission, transposition, corporate actions, and claims from unclaimed suspense accounts.
Under the new framework, registrar and transfer agents and listed companies will directly credit securities to investors’ demat accounts after due diligence, eliminating delays and risks associated with physical documentation.
Effective Date for LOC Changes
The LOC-related changes will come into effect from April 2, 2026. Any LOC issued before that date will remain valid, provided it is used for dematerialisation within 120 days of issuance.
