Sebi to introduce centralised mechanism for verification in case of demise of investors from January 1

The Securities and Alternate Board of India (SEBI) on Tuesday introduced a centralised mechanism for reporting and verification via the KYC Registration Company in case of the demise of an investor. The capital markets regulator has additionally put in place operational norms, together with the obligations of regulated entities and registered intermediaries which have interfaces with buyers or account holders who’re pure individuals.

As per SEBI’s official launch, the brand new framework pertaining to the mechanism for verification in case of demise of buyers will come into impact from January 1, 2024. 

Sebi stated that listed corporations wishing to offer useful entry to such a centralized mechanism to their buyers holding securities in bodily kind can set up connectivity with KRA via their RTAs.

How will the mechanicsm work?

After receiving intimation in regards to the demise of an investor, the involved middleman must receive the demise certificates together with the PAN from the notifier or nominee and confirm the demise certificates via on-line or offline mode. 

If the involved middleman, after receiving details about the demise of the investor from the notifier or nominee, will not be ready to acquire the demise certificates, then it must inform the nominee that the KYC standing of the deceased investor has been flagged off as “On Maintain” and require them to furnish the demise certificates of the involved investor.

After verification of the demise certificates, the involved middleman must, on the identical day of verification, submit a KYC modification request to the KRA that “info on demise of investor acquired; demise certificates verified” and in addition add the related paperwork. Moreover, the middleman must block all debit transactions within the account or folios of the deceased investor.

In case the demise certificates will not be acquired, the involved middleman must, by the following working day of the intimation, submit a KYC modification request within the KRA system — “info on demise of investor acquired; affirmation awaited”.

Spelling out the obligations of the KRA, Sebi stated that KRA, following the receipt of a KYC modification request from the middleman will perform an impartial verification by the following working day of receipt of such request.

Following the validation of the demise certificates, the KRA must replace the KYC file as ‘blocked completely’ within the system and intimate this updation to all linked intermediaries.

With a purpose to have uniformity for operationalising the mechanism, Sebi requested inventory exchanges, depositories and business associations just like the Affiliation of Mutual Funds in India (AMFI), Registrars Affiliation of India (RAIN), in session with stakeholders, together with KRAs, to place in place widespread SOP (Customary Working Procedures). The SOP will likely be made obtainable on their web sites in addition to that of the intermediaries.

(With Company Inputs)