CENTRALIZED MECHANISM FOR REPORTING THE DEMISE OF AN INVESTOR THROUGH KRA's

INTRODUCTION:

SEBI, India's regulatory authority, has introduced a groundbreaking circular, numbered SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/0000000163, dated 03.09.2023. This circular aims to establish a centralized mechanism for reporting and verifying the demise of investors through KYC Registration Agencies (KRAs) to enhance the efficiency of the transmission process in the securities market.

Key Highlights:

Centralized Mechanism Implementation:

SEBI is implementing a centralized mechanism to facilitate the reporting and verification of investor demises through KYC Registration Agencies (KRAs). This move is designed to streamline the transmission process in the securities market.

Intermediary's Role and Obligations:

Verification of Death Certificate:

Upon receiving notification of an investor's demise, the concerned intermediary must obtain the death certificate along with the PAN from the notifier. A KYC modification request must be submitted to the KRA after verifying the death certificate.

KRAs' Responsibilities:

Independent Validation and Verification:

KRAs are obligated to conduct independent validation and verification of the death certificate within the next working day after receiving the modification request from the intermediary. Validated death certificates trigger the update of the KYC record as "Blocked Permanently" in the system, with notifications to linked intermediaries.

Error Resolution:

If errors are identified in the modification request, KRAs must consult with the concerned intermediary, resolving issues and updating KYC status accordingly.

Standard Operating Procedure (SOP):

To ensure consistency in implementing the circular, Stock Exchanges, Depositories, and industry associations will collaborate to create a common Standard Operating Procedure (SOP).

Effective Date:

The circular comes into effect from January 01, 2024.

Connectivity for Listed Companies:

Listed companies can establish connectivity with KRAs through their RTAs to provide beneficial access to investors holding physical securities.

Dematerialization Option:

Investors of listed companies not opting for KRA connectivity can still benefit by dematerializing their securities.

Detailed Steps for Intermediaries:

Outlines the detailed steps for intermediaries upon receiving intimation about the demise of an investor, covering verification, record-keeping, and KYC updates.

Conclusion:

SEBI's Circular presents a comprehensive framework for reporting and verifying investor demises, bringing transparency and efficiency to the securities market. The collaboration between regulatory bodies, intermediaries, and KRAs is crucial for the successful implementation of this centralized mechanism. Investors and market participants should familiarize themselves with the circular's guidelines to ensure compliance and contribute to the overall integrity of the securities market.