SEBI (Registrar to an Issue and Share Transfer Agents) Regulations, 2025

What this chapter covers

This chapter carries 3 per cent of the III-A examination.

LEARNING OBJECTIVES: After studying this chapter, you should know about: Registrar to an Issue and Share Transfer Agent · Comprehensive Policy Framework for QRTAs · General Obligations and Responsibilities for RTAs · Code of Conduct for RTAs

17.1 Who is a registrar to an issue and a share transfer agent?

"Registrar to an issue" means the person appointed by a body corporate or any person or group of persons to carry on the following activities on its or his or their behalf:

(i) collecting applications from investors in respect of an issue;

(ii) keeping a proper record of applications and monies received from investors or paid to the seller of the securities; and

(iii) assisting body corporate or person or group of persons in (a) determining the basis of allotment of securities in consultation with stock exchange; (b) finalising list of persons entitled to allotment; (c) processing and dispatching allotment letters, refund orders or certificates and other related documents in respect of an issue.

Limb (iii)(b) is the first review question — it is the registrar to an issue who finalises the list of persons entitled to allotment, and limb (iii)(a) that determines the basis of allotment of securities in consultation with stock exchange.

"Share transfer agent" means- (i) any person, who on behalf of anybody corporate, maintains the records of holders of securities issued by such body corporate and deals with all matters connected with the transfer and redemption of its securities; (ii) a department or division, by whatever name called, of a body corporate performing the activities referred in sub-clause (i) if at any time the total number of the holders of its securities issued exceed one lakh.

Limb (ii) is the striking one. A company that does the work itself becomes a share transfer agent — and therefore subject to these Regulations — once the total number of the holders of its securities issued exceed one lakh.

One lakh holders, and an in-house department is regulated like an outside agent.

Qualified RTAs

As per SEBI Circular No. SEBI/HO/MIRSD/DoP/CIR/P/2018/119 dated August 10, 2018, Registrars to an Issue and Share Transfer Agents (RTAs) servicing more than 2 crore folios referred to as "Qualified RTAs" or "QRTAs".

More than two crore folios — the second review question.

The QRTAs formulate and implement their comprehensive policy framework, which is approved by the respective Board of Directors ("BoD") of the QRTAs, covering ten aspects.

I. Risk Management Policy. It must give an integrated and comprehensive view of risks to the QRTAs including those emanating from vendors, third parties to whom activities are outsourced, clients, etc.; list all relevant risks, including Operational Risk, Fraud Risk, Technology Risk, Cyber Security Risk, and general business risks including Credit Risk, Market Risk, Legal Risk, Reputation Risk etc. as the BoD of QRTAs deems fit, with systems, policies and procedures to identify, assess, monitor and manage the risks, including audit and reporting of the same to the BoD; and fix responsibilities and accountability for risk decisions and decision-making process in crises and emergencies.

II. Business Continuity Plan. QRTAs shall maintain a Business Continuity Plan (BCP) with a centre situated at a location other than the primary processing location (off-site), which is capable to take over operations without disruption in case of any service failure at the primary processing site.

**Written policy, protocols, processes and controls are required, with no adverse impact on investor servicing resultant of any data loss — and testing: the effectiveness of BCP is to be tested periodically, and the gap between two tests (mock drills, etc.) shall not be more than twelve months.

Twelve months between drills.

III. Manner of keeping records. Where records are electronic, QRTAs shall ensure that the integrity of the automatic data processing systems is maintained at all times, shall maintain accurate up to date records for investor servicing and take all precautions necessary to ensure that the records are not lost, destroyed or tampered with, and in the event of loss or destruction, ensure that sufficient backup of records is available at all times at a different place.

IV. Wind-down Plan. Every QRTA shall have and maintain a wind-down plan. A 'wind-down plan' means a process or plan of action employed, for transfer of the entire operations of the QRTA to an alternative RTA/ QRTA registered with SEBI, that would take over the operations of the QRTA in scenarios such as erosion of net-worth of the QRTA or its insolvency or its inability to provide critical RTA operations or services.

Three trigger scenarios — net worth erosion, insolvency, or inability to provide critical services.

V. Data Access and Data Protection Policy. QRTAs shall extend all such co-operation to the investors, issuers, custodians of securities, depositories and other QRTAs as is necessary for effective and smooth investor servicing, laying down appropriate protocols, processes and controls for themselves and also for entities who wish to connect with the database of the QRTAs electronically, with written agreements, confidentiality contracts, security protocols and such other relevant procedures for data integrity while facilitating electronic access.

VI. Ensuring Integrity of Operations. QRTAs shall maintain adequate human resources, systems and processes for smooth functioning. QRTAs also ensure that their database, servers, data storage media shall reside in India.

Data localisation — servers and storage in India.

**They must also lay down the minimum standards, protocol and procedures for smooth running of operations, to protect the investor data and maintain information security, keep a detailed operations manual explaining all aspects of its functioning, including the interface and method of transmission of information between the depository, issuers, and others, and have a mechanism in place to have periodic replication of data with the concerned Mutual Funds / Issuer Companies / Real Estate Investment Trusts (REITs)/ Infrastructure Investment Trusts (InVITs).

VII. Scalable infrastructure. The board shall approve a policy framework for the up-gradation of infrastructure and technology from time to time, and QRTAs shall at all times, maintain adequate technical capacity to process twice the peak transaction load encountered during past six months.

Twice the peak of the past six months.

VIII. Board of Directors and its Committees. The BoD of QRTAs shall seek reports on incidents having an impact on investor protection including data security breaches that can affect investor data, and QRTAs shall have Committees of the Board of Directors including Audit Committee, Nomination and Remuneration Committee and IT Strategy Committee.

The Audit Committee shall assist the BoD in fulfilling its corporate governance and overseeing responsibilities in relation to an entity's financial reporting, internal control system, and risk management system including the risk parameters, and shall also review the internal audit reports, compliance to SEBI Regulations, circulars and the reasonableness of the price being charged for investor services.

Note that last item — the audit committee reviews the reasonableness of the price being charged for investor services.

The Nomination and Remuneration Committee shall... recommend to the BoD a policy, relating to the appointment, tenure and remuneration for the directors, key managerial personnel and other employees.

The IT Strategy Committee shall provide insight and advice to the BoD... in various areas that may include developments in IT and alignments with the same from investor services perspective, scalability of operations.

IX. Investor Services and Service Standards.

QRTAs, servicing Mutual Funds investors, must have Investor Service Center in at least 100 cities based on investor population pertaining to the Mutual Funds clients they service. For corporate, REIT, InvIT investors, they must maintain adequate investor service centers based on investor population, reviewed from time to time by SEBI.

Online capabilities for investor queries, complaints and their redressal are required, the mechanism being investor-friendly and convenient and retrievable easily by the complainant online through complaint reference number, e-mail id, mobile no. etc.

**QRTAs handling corporate registry functions shall develop a facility for providing services for managing Shareholders General Meetings including shareholders voting / poll process and web streaming of all Annual General Meetings (AGMs) of all their listed client companies.

And transparency about performance: QRTAs must publish on their website, the service standards (e.g.: turnaround time for services rendered), and should also carry out stakeholder/ investor satisfaction surveys annually, and the same should also be published on the website before March 31, every year.

X. Insurance against Risks. All QRTAs shall take adequate insurance for omissions and commissions, frauds by employee/s to protect the interests of the investors.

Reporting on all of it: the compliance report of the enhanced reporting norms shall be submitted to SEBI duly reviewed by the BoD of QRTAs, within 60 days of the expiry of each calendar quarter. This is in addition to half-yearly periodic reporting done by Registrars to an Issue and Share Transfer Agents as prescribed by SEBI vide circular dated July 05, 2012 on "Review of Regulatory Compliance and Periodic Reporting".

Sixty days after each calendar quarter, reviewed by the board.

17.2 General obligations and responsibilities

Regulation 15 to 16A deals with this aspect.

Code of conduct — Regulation 15. Every registrar to an issue and share transfer agent holding a certificate shall at all times abide by the Code of Conduct as specified in Schedule III.

The associate bar. No registrar to an issue shall act as such registrar for any issue of securities in case he or she is an associate of the body corporate issuing the securities.

And "associate" is defined by two tests. A registrar or the body corporate shall be deemed to be an associate of the other where: (a) he or it controls directly or indirectly not less than 10 per cent of the voting power of the body corporate or of the registrar to an issue, as the case may be; or, (b) he or any of his relatives is a director or promoter of the body corporate or of the registrar to an issue, as the case may be.

Ten per cent of voting power, or a relative as director or promoter — relative having the meaning assigned to it under section 6 of the Companies Act, 1956.

Note that the bar applies to the registrar to an issue — the person who determines the basis of allotment and finalises who gets shares. An associate of the issuer in that seat would be deciding on its own affiliate's issue.

Books, accounts and records

Every registrar to an issue and share transfer agent being a body corporate shall keep and maintain the following books of accounts and documents in respect of the eight preceding financial years.

Eight preceding financial years — the fourth review question.

For a body corporate: (i) a copy of balance sheet and profit and loss account of each accounting period; (ii) a copy of the auditor's report of each accounting period; (iii) a statement of networth for each quarter.

For one not a body corporate: (i) all sums of money received and expended by them and the matters in respect of which the receipt and expenditure take place; (ii) their assets and liabilities; and (iii) a statement of capital adequacy requirements for each quarter.

Every registrar to an issue shall also maintain records of:

(a) all the applications received from investors in respect of an issue;

(b) all applications of investors rejected and reasons therefore;

(c) basis of allotment of securities to the investors as finalised in consultation with the stock exchange;

(d) terms and conditions of purchase of securities;

(e) allotment of securities;

(f) list of names of allottees and non-allottees of the securities;

(g) refund orders dispatched to investors in respect of application monies received from them in response to an issue;

(h) such other records as may be specified by the Board.

Note limb (b) — rejections and reasons therefore, so that a refusal can be tested afterwards.

Every share transfer agent shall maintain, for each body corporate it acts for: (a) list of holders of securities of such body corporate; (b) the names of transferor and transferee and the dates of transfer of securities; (c) such other records as may be specified by the Board.

Two administrative duties. Every registrar to an issue or share transfer agent shall intimate the Board the place where the books of accounts, records and documents are maintained, and shall after the close of each financial year as soon as possible but not later than six months from the close of the said period furnish to SEBI if so required copies of the balance sheet, profit and loss account, statement of capital adequacy requirement and such other documents.

Preservation — Regulation 15. Subject to provisions of any other law, the registrar to an issue or share transfer agent shall preserve the books of accounts and other records and documents maintained under regulation 14 for a minimum period of eight years.

Eight years, and eight preceding financial years — the same span expressed two ways.

Compliance officer — Regulation 15A. Every registrar to an issue and share transfer agent shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions etc. issued by the Board or the Central Government and for redressal of investors' grievances, and the compliance officer shall immediately and independently report to the Board any non-compliance observed by him.

**And: Regulations 15B, 15C and 15D, describe the dispute resolution, the grievance redressal mechanism and the investor charter.

17.3 Code of conduct

Schedule III prescribes it. The RTA shall:

• Maintain high standards of integrity in the conduct of its business.
• Fulfil its obligations in a prompt, ethical and professional manner.
• At all times, exercise due diligence, ensure proper care and exercise independent professional judgment.

Two clauses are specific to this intermediary's core work.

Exercise adequate care, caution and due diligence before dematerialisation of securities by confirming and verifying that the securities to be dematerialized have been granted listing permission by the stock exchange/s.

Do not reject the dematerialisation/rematerialisation requests on flimsy grounds. Such a request could be rejected only on valid and proper grounds and supported by relevant documents.

Care before accepting; no flimsiness in refusing.

Service standards: always endeavour to ensure that a) inquiries from investors are adequately dealt with; b) grievances of investors are redressed without any delay; c) transfer of securities held in physical form and confirmation of dematerialisation/rematerialisation requests and distribution of corporate benefits and allotment of securities is done within the time specified under any law.

Information. The RTA must:

• Make reasonable efforts to avoid misrepresentation and ensure that the information provided to the investors is not misleading.
• Not make any exaggerated statement, whether oral or written, to the clients either about its qualifications or capability to render certain services or about its achievements in regard to services rendered to other clients.
• Not divulge to other clients, press or any other person any confidential information about its clients which has come to its knowledge except with the approval / authorisation of the clients or when it is required to disclose the information under any law.

Conflicts. The RTA must:

• Avoid conflict of interest and make adequate disclosure of its interest.
• Put in place a mechanism to resolve any conflict-of-interest situation.
• Make appropriate disclosure to the client of its possible source or potential areas of conflict of duties and interest which would impair its ability to render fair, objective and unbiased services.

Competition and clients. The RTA must:

• Not indulge in unfair competition, which is likely to harm the interests of other Registrar to the Issue and Share Transfer Agent or investors.
• Always endeavour to render the best possible advice to the clients having regard to their needs.
• Not discriminate, save and except on ethical and commercial considerations.
• Promptly tell clients of any change in registration status / any penal action taken by the Board or any material change in financials.

Towards the regulator. The RTA must:

• Maintain the required level of knowledge and competency, and comply with the award of the Ombudsman passed under SEBI (Ombudsman) Regulations, 2003.
• Co-operate with the Board as and when required.
• Not neglect or fail or refuse to submit to the Board or other agencies with which he is registered, such books, documents, correspondence, and papers.
• Ensure the Board is promptly informed about any action, legal proceeding etc. initiated against it in respect of any material breach or non-compliance.

Records and complaints: take adequate and necessary steps to ensure that continuity in data and record-keeping is maintained and that the data or records are not lost or destroyed, with up-to-date backup for electronic records; and endeavour to resolve all the complaints against it or in respect of the activities carried out by it as quickly as possible.

Investment advice. An RTA or any of its employees shall not render, directly or indirectly any investment advice about any security in the publicly accessible media, whether real-time or non-realtime, unless disclosure of its long or short position in the said security has been made while rendering such advice.

Its long or short position — the third review question. And where an employee advises, the RTA shall ensure that it also discloses its own interest, the interests of his dependent family members and that of the employer including their long or short position.

Handing over on exit. The RTA must hand-over all the records/ data and all related documents which are in its possession in its capacity as a Registrar to an Issue and / or Share Transfer Agent to the respective clients, within one month from the date of termination of the agreement with the respective clients or within one month from the date of expiry/cancellation of certificate of registration... whichever is earlier.

One month, on the earlier of the two events.

Governance. The RTA must have:

• Satisfactory internal control procedures in place.
• Adequate financial and operational capabilities which can be reasonably expected to take care of any losses arising due to theft, fraud and other dishonest acts, professional misconduct or omissions.
• Adequate freedom and powers for its compliance officer.
• An internal code of conduct. It covers professional excellence and standards, integrity, confidentiality, objectivity, avoidance of conflict of interests, disclosure of shareholdings and interests.
• Good corporate policies and corporate governance.
• Employees who are fit and proper and otherwise qualified.
• Responsibility for the acts or omissions of its employees and agents.

And market integrity: the RTA must not, in respect of any dealings in securities, be a party to or instrumental for - a. creation of false market; b. price rigging or manipulation; c. passing of unpublished price sensitive information in respect of securities which are listed and proposed to be listed in any stock exchange to any person or intermediary.

17.4 Investor Charter

All the registered RTAs shall take necessary steps to bring the Investor Charter to the notice of existing and new shareholders by way of: a) disseminating the Investor Charter on their websites/through e-mail; b) displaying the Investor charter at prominent places in offices etc.

And an industry body publishes the complaint data: the Registrar Association of India (RAIN) shall also disseminate the Investor Charter on its website, the data on complaints received against them or against issues dealt by them and redressal thereof, latest by 7th of succeeding month.

By the 7th of the following month, and these disclosure requirements are in addition to those already mandated by SEBI.

Case 17.1 — SEBI v Sharepro Services (I) Pvt Ltd

How it began. Basis an anonymous [complaint] with respect to Sharepro Services (I) Pvt. Ltd. (Sharepro), a SEBI registered registrar to an issue and share transfer agent, alleging inter alia misappropriation of unclaimed dividend which were to be transferred to IPEF, misappropriation of shares belonging to deceased shareholders and tampering of accounts, SEBI conducted an investigation.

**An ex-parte ad-interim order dated March 22, 2016 restrained Sharepro and others from buying selling or dealing in the securities market or associating themselves with the securities market, either directly or indirectly, in any manner, till further directions, and SEBI vide order dated November 03, 2017 (Confirmatory Order) confirmed the directions.

What the investigation revealed.

Dividends belonging to the rightful shareholders were fraudulently paid to persons belonging to or connected with the management of Sharepro. On 1004 instances (involving Rs.74,95,420/-) Sharepro has misused the authority of instructing the bankers directly by issuing dividend payment instruments to persons who were not shareholders — and where companies had not given that authority, it misled such companies by asking them to issue requisite instructions to bankers to credit the dividend proceeds of rightful investors to entities/persons who were linked to management.

Sharepro's management has committed fraud in respect of the transfer, transmission, buyback/ redemption of securities, printing of share certificates and maintenance of records.

The total value of securities of various companies so misappropriated, as on October 10, 2016, amounted to Rs. 60,45,74,718.15.

Other findings:

• Non-maintenance of proper records and destruction of records.
• Compromise of internal checks and balances in RTA's systems and non-adherence to due procedures. Sharepro processed requests for issue of duplicate shares without checking the genuineness of such requests.
• Massive falsification and manipulation of records maintained at RTA's end.
• A deliberate attempt by Sharepro to mislead SEBI and non-cooperation with SEBI in the course of investigation.
• Failing to comply with the summonses issued by the Investigating Authority by submitting false and misleading information or not submitting any information.

SEBI's statement of principle is the part to remember. SEBI registered and regulated intermediaries command and enjoy a solid trust from other market participants, including the common investors. These institutions have a sacrosanct duty to preserve that trust by upholding institutional integrity, fairness and professionalism in the conduct of their business at all times and costs as these values lie at the core of their functioning and are beyond compromise. Any institutional fraud and act of dishonesty committed by such an institution... is very likely to undermine the public faith in the entire market mechanism and has the potential to disrupt its smooth functioning and development.

The orders. By order dated July 8, 2020, Sharepro and four named individuals were restrained from accessing the securities market and... further prohibited from buying, selling or otherwise dealing in securities in any manner whatsoever, directly or indirectly, for a period of 10 years.

**And by order of September 2020, noting that by failing to respond to the post-enquiry SCN, Sharepro has admitted the said charges, and that its conduct even prior to the period covered by the inspection, lacked integrity and did not befit a registered intermediary, SEBI cancel[led], with immediate effect, the certificate of registration of the Sharepro as a Registrar to an Issue and Share Transfer Agent.

The chapter's review questions confirm that the registrar to an issue is primarily responsible for finalising the list of persons entitled to allotment; that a Qualified RTA is one servicing more than two crore folios; that public investment advice requires disclosure of the RTA's long or short position in the security; and that books of accounts and documents are maintained for 8 preceding financial years.