June 1, 1999
Treatment of Stock-invests, after basis of allotment is finished

MAY 1999

May 20, 1999
Delay in processing dematerialisation requests

JANUARY 1999

January 18, 1999 
Submission of the Networth Certificate

Circulars prior to 1.1.1999

SECURITIES AND EXCHANGE BOARD OF INDIA PRIMARY MARKET DEPARTMENT  Mittal Court, ‘A’ Wing, Ground Floor Nariman Point, MUMBAI - 400 021.

To:

All Registrars to an issue and share transfer agents

Dear Sir,

As per our Circular PMD/Cir. 11006/92, dated November 02, 1992, regarding handling of applications accompanied by stock-invests, point no. 8 states that "Registrars shall deposit the stock invest, duly filled in and sorted out "issuer bank branch wise", with the company’s banker whose name shall be intimated to him in advance by the company and who will take further steps to realise the amount of the stock- invest from the issuing bank through banking channel and credit the company’s account".

It has been noticed during the inspections of the RTI/STAs, carried out by us, that the issuer company is able to utilise the money received from the applications accompanied by stock-invests, as soon as the basis of allotment is finalised i.e. much before the despatch of the share certificates/listing of the shares on the stock exchanges. This is on account of the fact that the stock-invests are deposited with the company’s banker and not in the issue account and thus, the company has access to the issue funds before the listing of the issue, defeating the very purpose of having a separate issue account.

A company should receive the subscription money only after the listing of the shares at all the stock exchanges is complete in all respects. This is ensured by keeping the subscription money in a separate "issue account" with the bankers to the issue, from where it is released only after the company/lead manager provides conclusive evidence that the shares have been listed at all the stock exchanges mentioned in the prospectus.

In view of the above, point no. 8 of our circular no. PMD/Cir. 11006/92, dated November 02, 1992, regarding handling of applications accompanied by stock-invests, will read as follows :

"The successful/partially successful applicants’ stock invests would, after encashing, be deposited in the separate bank account, where the cash and other monies received from other investors are deposited."

This circular comes into effect immediately.

Yours faithfully,
 

D RAVIKUMAR
DIVISION CHIEF
PRIMARY MARKET INTERMEDIARIES DIVISION

All Category I Registrars to an issue and share transfer agents
All Category II Share transfer agents.

Dear Sir,

It has come to our notice that some of the share transfer agents are taking an unduly long time for dematerialisation of shares and are also rejecting the dematerialisation requests on flimsy grounds without providing necessary reasons and legal documentation. Such practices are detrimental to the interest of the investors and slow down the process of dematerialisation.

You are therefore requested to expedite the processing of dematerialisation request, in any case ensuring that the request is processed within 15 days from the date of the such request. You are also advised not to reject the request on flimsy grounds or without specifying reason for rejection or without proper documents supporting your reason for rejection. A violation of this directive would invite suitable action.

Yours faithfully,

D RAVIKUMAR
DIVISION CHIEF
PRIMARY MARKET INTERMEDIARIES DIVISION

To: All Registered REgistrars to an Issue
       / Share Transfer Agents
 

Sub: Submission of the Networth Certificate

Dear Sirs

In exercise of the powers conferred upon SEBI, under section 11 of the SEBI Act, 1992, as also in implementation of the provisions of the SEBI (Registrars to an Issue and Share Transfer Agents), Regulations, 1993, the present circular is hereby issued to all Registrars to an Issue/Share Transfer Agents (RTIs/STAs) holding a certificate of registration, granted to them in accordance with the SEBI (Registrars to an Issue and Share Transfer Agents), Rules and Regulations, 1993.

SUBMISSION OF THE NETWORTH CERTIFICATE

In terms of sub Clause (iii) of Clauses (a) & (b) of Regulations 14 (1) of the SEBI (Registrars to an Issue and Share Transfer Agents) Regulation, 1993, every RTI/STA whether a body corporate or not, is required to keep and maintain, in respect of the three preceding financial years, statement of capital adequacy requirement for each quarter. Further under Regulation 7, every RTI/STA is required to fulfil the networth criteria, prescribed therein. Hence in order to monitor on regular basis and to ensure compliance of the capital adequacy and the networth norms by the RTI/STA, as specified under Regulation 7(1) of the SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 which is required to be fulfilled and maintained, both at the time of the grant of renewal of the certificate of registration and at all times during the period of registration, all RTIs/STAs are hereby directed to submit, as soon as possible, but not later than two months from the close of each financial year, a certified true copy of their networth statement.

All RTIs/STA/s are advised to ensure compliance of the instructions contained herein and the non compliance of this would amount to a violation of the Code of Conduct as specified in Schedule III of the SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993.

Please acknowledge receipt.

Yours faithfully,
 

D. RAVIKUMAR

December 17, 1998