PROHIBITION TO TRANSFER SECURITIES IN PHYSICAL FORM DEFERRED TO APRIL 1, 2019: SEBI

The Securities and Exchange Board of India (SEBI) vide its notification dated November 30, 2018, extended the deadline for the mandatory transfer of securities only in dematerialised form, from earlier fixed date of December 5, 2018 to April 1, 2019 upon representations received from various shareholders. The fact of the same was also informed through its press release dated December 3, 2018.

On June 8, 2018, the SEBI issued notification amending the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) wherein a proviso was inserted to Regulation 40 of the Listing Regulations prohibiting the transfer of securities, except in dematerialised form. Later, through its press release on August 10, 2018, SEBI clarified that investor has the option of holding shares in physical form even after December 5, 2018.

There is a misinterpretation of this notification by many investors holding physical shares of listed entities, that they cannot hold physical shares after the due date. For those who still think so, it is pertinent to note that, as per the above clarification issued by SEBI, a person holding physical shares can continue to hold such shares in physical form without getting it dematerialised even after the due date.

The deadline of April 1, 2019, is applicable only for the transfer of shares in physical form and not for holding of shares in physical form. Hence, after April 1, 2019, one can still hold shares in physical form but cannot transfer the same unless dematerialised.

Mr Prakul Thadi is a Company Secretary and Cost Accountant and holds a Masters degree in Law. He co-founded VirtuaLaw in 2017 and is currently the Chief-Editor of the blog at VirtuaLaw. After having gained an industry experience of 3 years he’s currently pursuing Graduate Insolvency Programme (GIP) at the Indian Institute of Corporate Affairs (IICA), Manesar. His interests spread across varied fields of law and majorly corporate laws.