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Informist, Thursday, Aug. 7, 2025

MUMBAI – The Securities and Exchanges Board of India Thursday proposed a framework to streamline various provisions for registrars to an issue and share transfer agents, enhancing their ease of doing business and introducing an institutional mechanism for risk management. The proposal is aimed at reviewing the regulatory framework for these entities amid their changing roles, the market regulator said in an consultation paper.

The paper proposes to introduce activity-based regulations for registrars, wherein services provided to listed companies will fall under SEBI's regulatory purview and those that pertain to unlisted companies shall be governed by the Ministry of Corporate Affairs. This is in light of an influx of unlisted securities in recent times, the regulator said. The demarcation of duties will ensure that investors in the unlisted market will also continue to have a regulatory protection.

SEBI also proposed to mandate that registrars to set up a separate business unit to provide their services to unlisted entities, with no overlap between services provided to listed and unlisted companies. These new units will be governed by the Ministry of Corporate Affairs, SEBI said. Entities serving mutual funds and alternative investment funds shall continue to be regulated by SEBI. The regulator proposed a timeline of 18 months for existing registrars and share transfer agents to set up the new unit.

The regulator also proposed to introduce a common definition for both registrars and share transfer agents from the separate definitions that currently exist. It proposes to define a registrar and transfer agent as an entity appointed for acting as an intermediary in initial public offers, follow-on public offers, open offers, buy backs, delisting offers, takeovers, and any such financial transactions. They will also carry out activities specified by exchanges, depositories, or the board of the corporate that appointed them. They are also to maintain the records securities issued by such corporate bodies.

This combined definition for the two entities come at a time when their roles have reduced due to high levels of dematerialisation, which has taken out the need for two separate bodies for keeping track of a financial transaction. They do not deal with transfer of securities, with their primary business being processing investor service requests and providing other services such as payment of dividend and resolution of investors' complaints. 

SEBI also proposed to use registrars and share transfer agents as a mechanism to protect investors from fraud. The regulator mooted for the senior management of these entities to put in place adequate and effective system of internal controls to prevent fraud. It proposed to mandate these entities to have robust surveillance systems and internal control procedures to detect potential fraud by promoters, employees, and directors among others.

The regulator has sought comments on these proposals by Aug. 28.  End

Reported by Akash Mandal

Edited by Akul Nishant Akhoury

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