Stop transfer
Also written Stop transfer marking · Stop transfer direction
A freeze an RTA marks on physical securities reported lost, or under a court restraining order, so they cannot change hands — lifted if no FIR arrives within 21 days of the notice of loss.
In plain language
A physical share certificate is a piece of paper that can be stolen, forged against, or sold by someone who has no right to it. The moment its owner realises it is missing, the priority is to make sure nobody can use it.
That is what a stop transfer does. The holder tells the registrar the certificate is lost, and the registrar marks the securities so that no transfer or other service request goes through against them without further checks.
It is a protective freeze, not a permanent block. The registrar needs evidence that the loss is real — a police report — and if that evidence does not come, the freeze is lifted.
How it works
When it is marked.
- The security holder reports that certificates have been lost. The R&T agent marks the stop transfer and calls for an FIR or an acknowledged copy of a police complaint.
- A restraining order from a court of competent jurisdiction is received.
- The holder says that documents sent by the R&T agent were not received. The RTA records a stop transfer and keeps the stock exchanges informed.
When it is removed.
- If the FIR or acknowledged police complaint is not submitted within 21 days from the date of notice of loss, the stop transfer direction is removed.
- If the holder asks for removal, the RTA gives effect to it after verifying the holder's signature, and communicates the removal to the holder.
- In transmission, the RTA removes the stop transfer after verifying documents and obtaining the issuer's approval.
When a request arrives against a marked holding. The RTA intimates the holder, or processes the request after due verification. If documents supporting the stop transfer are not received within 15 days of informing the holder, the RTA can process the request, provided the lodged documents are in order. If the supporting documents are received, the request is not processed.
The duplicate that follows. A stop transfer is the first step towards a duplicate certificate. Filing an FIR, e-FIR or police complaint is mandatory; the issuer approves; the duplicate is issued with the legend Duplicate certificate issued in lieu of certificate no. ___, within 30 days of complete documents; and the stock exchange is informed of the loss and the duplicate within 2 days. Duplicates are now issued in demat form via a Letter of Confirmation.
A worked example
Illustrative dates and figures. On 4 August a shareholder writes to the RTA that her certificate for 1,200 physical shares is missing after a house move. The RTA marks a stop transfer on the certificate and asks for an FIR.
Notice of loss 4 Aug
FIR deadline (21 days) 25 Aug
On 18 August a transfer deed arrives from a stranger in another city, with the missing certificate attached. Because the stop transfer is marked, the RTA does not process it. It writes to the registered holder.
On 22 August she sends the RTA an acknowledged copy of her police complaint — within the 21 days. The stop transfer stays. The supporting documents have been received, so the stranger's request is not processed.
Had she found the certificate in a carton on 10 August instead, she could have written asking for the stop transfer to be removed; the RTA would verify her signature, lift it and tell her in writing.
Had she simply done nothing after 4 August, the direction would have lapsed after 25 August — and a transfer deed arriving later would be dealt with on its own merits.
Why NISM asks about it
Chapter 13.4 (Stop Transfers) sets out the rules, and 13.3 connects them to duplicate certificates; Annexure 13.2 is the SOP. The numbers that get tested are 21 days for the FIR, 15 days after informing the holder, 30 days for the duplicate and 2 days to inform the exchange. Stop transfer also appears in the Chapter 13 learning objectives, so a direct definition question is likely.
Common exam traps
- 21 days for the FIR, measured from the notice of loss — after which the stop transfer is removed, not extended.
- 15 days is a different clock: it runs from the RTA informing the holder that documents have been lodged against a marked holding.
- A court restraining order is also a ground, with no police complaint involved.
- Non-receipt of RTA documents by the holder triggers a stop transfer too, and the stock exchanges are informed.
- Removal on the holder's request needs signature verification, and the removal is communicated to the holder.
- A stop transfer is not a duplicate. It freezes the lost securities; a duplicate needs the FIR, the prescribed affidavit-cum-indemnity and issuer approval.
Check yourself
1.How long does a stop transfer last if the holder does not produce an FIR, and what happens when a service request is lodged against frozen securities?
- a)It lasts indefinitely; the request is always rejected
- b)It is removed if the FIR or acknowledged police complaint is not submitted within 21 days of the notice of loss; where a request is lodged, the holder is intimated and has 15 days to furnish supporting documents — if he does, the request is not processed, and if he does not, the RTA may process it
- c)It is removed after 7 days; the request is processed immediately
- d)It lasts 60 days and the request is referred to SEBI
Show the answer
Answer: (b) It is removed if the FIR or acknowledged police complaint is not submitted within 21 days of the notice of loss; where a request is lodged, the holder is intimated and has 15 days to furnish supporting documents — if he does, the request is not processed, and if he does not, the RTA may process it
If FIR/ Acknowledged copy of police complaint is not submitted within 21 days from the date of notice of loss to the R&T Agent, the direction to 'stop transfer' shall be removed.
Twenty-one days for the FIR.
And when a request arrives against frozen shares: if the R&T Agent receives a document for certain service requests against which a 'stop transfer' directive has been recorded, the R&T Agent intimates the holder of the same or processes the request after due verification.
Then the second clock: if the documents to support the 'stop transfer' directive are not received by the R&T Agent within a period of 15 days from informing the holder about the receipt of documents, the R&T Agent can process the service request, subject to the documents lodged being in order.
If the supporting documents are received from the security holder, then the service request shall not be processed.
The holder's evidence wins — which is the balance option A misses. An indefinite freeze on an unsupported claim would itself be abusable; a freeze that ignores proof would be useless.
How a stop transfer starts: a security holder can request the R&T Agent to effect a "Stop Transfer" against securities that have been lost. The R&T Agent shall give effect to this and call for an FIR/ Acknowledged copy of police complaint.
And two other triggers. Stop transfer is also noted where a restraining Order from a Court of competent jurisdiction is received, and in case a security holder intimates that documents sent by the R&T Agent are not received by the holder, the R & T Agent records a 'stop transfer' on the securities and keeps the stock exchanges informed.
Removal on request is simple: effected after verifying the signature of the holder, and communicated to the holder.
2.Issue of duplicate certificates in place of lost ones has to be completed within ______ days of submission of duly completed documents.
- a)30 days
- b)15 days
- c)7 days
- d)60 days
Show the answer
Answer: (a) 30 days
The process has to be completed within a period of 30 days from receipt of duly completed documents.
Thirty days, and section 13.6 confirms it — processing of issue of duplicate security certificate request: 30.
A separate and much shorter deadline runs to the exchange: the Stock Exchange where the securities are listed shall also be informed of the loss of certificate and issue of duplicate certificates within 2 days of getting the information.
Two days there; thirty days here.
What must happen inside the thirty. The R&T Agent shall verify the documents and send them to the Issuer Company for approval. On receipt of the approval, the duplicate certificate shall be issued with the legend, "Duplicate certificate issued in lieu of certificate no._______" printed on it. The stamp duty, as applicable, has to be paid on it.
The words "duly completed documents" matter. The clock starts only when the file is complete — the holder having intimated the loss so that a 'Stop Transfer' shall be marked on the lost securities, filed a Police Complaint/ FIR/e-FIR, and furnished an indemnity bond and an Affidavit attested by a Notary Public or First Class Magistrate.
Option B's 15 days belongs to other services — demat, transposition, contact details, bank details, PAN and revalidation of instruments.
And since January 2022 the output is electronic. Issue of a duplicate is one of the eight requests where all listed companies shall issue the securities in dematerialized form only, the investor receiving a Letter of confirmation valid 120 days.
Where this is taught
Free preparation for NISM Series II-ARelated terms
- Change of addressThe investor service request to update the address on a folio — signed by the first named holder, backed by PAN and a fresh address proof, and confirmed to both the old and the new address.
- Folio numberThe unique account number a fund house allots to an investor, under which the registrar holds that investor's units across every scheme of the fund, along with the bank mandate, address and signature.
- Registrar and Transfer AgentThe SEBI-registered agency that keeps the investor records of a mutual fund — processing purchases and redemptions, updating folios and unit capital, and issuing account statements.
- Instrument of transferThe stamped deed (Form SH-4) signed by transferor and transferee to transfer physical securities — valid only if lodged within 60 days of execution; since April 2019 transfers need demat.
- Letter of ConfirmationThe letter an RTA issues instead of a physical certificate after processing a duplicate, transmission, split or similar request — valid for 120 days, within which the holder must demat the shares through a DP.
- Annual General MeetingThe meeting every company must call once a year, where shareholders vote on major decisions and approve the dividend — and the R&T agent runs the notices, proxies and e-voting behind it.
- E-votingCasting a shareholder vote electronically instead of by postal ballot — the RTA sets up the platform, sends notices 25 days ahead by post or 21 by email, and closes the voting site at 5 p.m. the day before the AGM.