Who Are Share Transfer Agents?
Registrars or transfer agents (RTA) are often defined as establishments that work as a trust or institutions that register and maintain the entire record of transactions of the investors, for the benefit or convenience of Mutual Funds and listed entities. By Investor’s transactions, we mean buying and selling, changes in personal data, any other exchanges, processing of emails and related information which occur frequently and should be maintained. The registrar or transfer agents have expertise in the maintenance of such data as a professional and thus, they contribute to the cost and time-saving that it takes in the maintenance of the investor’s transactional records. They also provide investors with information on new offers and the maturity of funds in one place. The provisions of RTAs are regulated as per the SEBI guidelines i.e Securities and Exchange Board of India (Registrars to a problem and share transfer agent) Regulations, 1993. Therefore, it’s foremost important for the applicant to obtain the registration from SEBI. There are basically two categories in which an applicant can register as an RTA: Category 1: Continuing its activities as a registrar to an issue as well as a share transfer agent. Category 2: Continue activities as either the registrar of an issue or as a share transfer agent.
Benefits of Hiring a Share Transfer Agent
There are specific roles to be performed by a share transfer agent which are given below:
- Endorsement of certificates for allocation or call monies.
- Conducting transmission, consolidation or sub-division of securities.
- Dispatching transferred securities and securities received for transmission, consolidation, sub-division, etc., over to the investors.
- Cancelling the name and certificate of the shareholder who had sold the shares and securities, and exchanging them with a replacement shareholder.
Other Services Offered by RTA
The basic services provided by the RTAs include:
- Processing financial and non-financial transactions of clients.
- Buying and selling records along with managing changes within the investor’s data.
The primary services of Registrar and Share Transfer Agency/Agent are:
- Dematerialisation of the investor’s securities through NSDL or CDSL depositories.
- Maintaining a record of investors’ transactions and other related activities.
- Transfer of investor’s share certificate.
- Regulation of reporting services.
- Providing new information about offers and maturity dates to investors.
- Payout of Dividends or Interests and ECS transfer.
- Conducting Re-validation of Dividend.
Eligibility Criteria for Registrar and Share Transfer Agent Registration
- The applicant must have adequate infrastructure like office space, equipment, and most significantly the necessary manpower to handle the activities of RTA.
- They should have past experience in the related activities.
- No person whose registration has been denied by the board should be directly or indirectly linked with the applicant.
- Capital adequacy or net worth should be INR 50 lacs for category 1 registration whereas, for category 2 it should be INR 25 lacs.
- The applicant shall be a fit and proper person as per the standards prescribed in Schedule 11 of the regulations. The applicant must be fit and proper.
- The applicant’s objective must indicate their work to be in the interest of the investors.
- The application could be rejected in the following situations:
- If an earlier application from the same applicant was rejected by the board.
- If the board has conducted any disciplinary action against any person who has a direct or indirect connection with the applicant.
- If the applicant is convicted or found guilty of any financial offense or anything similar.
Procedure for Registrar and Share Transfer Agent Registration
- An applicant seeking to get registered as an RTA shall make an application to the board in Form A accompanied by the non-refundable fees of INR 6 lacs for category 1 registration and INR 2 lacs for category 2 registration.
- After receiving the application, the board may intimate the applicant to supply some further information as needed and ask them for face to face meeting too.
- If the Board concludes that the application is incomplete altogether or it doesn’t conform to the instructions as per the prescribed norms, then the Board may reject it. Before rejecting, a chance to get rid of the shortcomings within a specified time shall is given to the applicant.
- If the board is satisfied with the application then it will send intimation to the applicant mentioning the category for which they’ve been considered eligible for registration and grant certificate of registration in Form B alongside the payment of fees as prescribed in schedule II.
- The certificate of Registration for Registrar and Share Transfer Agent remains valid until it gets rejected or suspended by the Board.