India: SEBI facilitates physical transfer of securities

November 21, 2018

India is increasingly becoming a popular hub for business activities across the world. With the changing policies, reduced procedural hurdles, easy availability of resources and labour, the industrial sector of the country has improved significantly. This has promoted more and more people to invest and thus make their contributions in the development of the country’s economy. The Government is regularly devising schemes that boost the Indian market.

Regulated framework

Governed under the provisions of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the “SEBI Act”), the Securities and Exchange Board of India (hereinafter referred to as the “SEBI”) is the market regulator of India which aims to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for the matters connected there with or incidental thereto.

Monitoring transfer in physical mode

Although, the Government has been promoting digitalization as the mode of all major operations using the electronic medium, there are still some section which prefer opting the physical medium. In order to address the difficulties faced by investors in transmission of shares in physical mode, SEBI introduced standardised norms for transfer of securities in physical mode vide notification dated November 6, 2018 (hereinafter referred to as “norms”)[1] . Some of the features of the said norms are listed below:

  • Transfer deeds executed prior to notification of Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as “LODR”) may be registered with or without the Permanent Account Number (hereinafter referred to as “PAN”) of the transferor as per the requirement of quoting PAN under the applicable Income Tax Rules.
  • In case of mismatch of name in PAN card vis-à-vis name on share certificate/ transfer deed documents to be submitted include copy of passport, legally recognized Marriage Certificate, gazette notification regarding change in name and Aadhar Card.
  • For non-availability / major mismatch in transferor’s signature the transferor is required to update his / her signature by submitting bank attested signature along with an affidavit and cancelled cheque.
  • Where the bank attested address of the transferor differs from the records available with the company, it shall register the transfer by updating the new address as attested by the bank.

SEBI has also received representations, highlighting difficulties faced by transferees in providing these documents. The new norms aim to facilitate the process of transfer of physical securities.

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