The Securities and Exchange Board of India (SEBI) has proposed new measures to make the transfer and dematerialisation of old physical share certificates easier for investors. The initiative aims to resolve long-pending transfer requests and simplify documentation, while reinforcing dematerialisation as the long-term goal for India’s capital markets.
Temporary Relaxation for Pending Share Transfers
In its latest consultation paper, SEBI suggested a one-time relaxation of existing norms to permit the transfer of physical shares lodged before April 1, 2019. The proposal will benefit investors who were unable to complete transfers earlier due to missing paperwork, untraceable sellers, or administrative delays.
This relaxation will be time-bound and governed by a sunset clause, ensuring continued progress toward full dematerialisation. Once the documents are verified by the company or its Registrar and Transfer Agent (RTA), the shares will be directly credited to the investor’s demat account, eliminating redundant manual steps.
SEBI May Eliminate the ‘Letter of Confirmation’ Process
Currently, when investors apply for share transfers, duplicates, or transmissions, companies issue a Letter of Confirmation (LOC), which must be submitted to the Depository Participant (DP) within 120 days to convert the shares into demat form. Missing this deadline results in shares being moved to a Suspense Escrow Demat Account (SEDA) — a system that often leads to further delays.
To streamline this, SEBI has proposed abolishing the LOC requirement altogether. Under the new system, companies and RTAs will directly credit verified shares to the investor’s demat account. Investors would only need to provide their Client Master List (CML) details when making such requests.
Revised Regulations and Extended Re-Lodging Window
SEBI also plans to amend the Listing Obligations and Disclosure Requirements (LODR) Regulations to accommodate these changes. Previously, the regulator had permitted investors who lodged transfer requests before April 1, 2019, to re-lodge them until March 31, 2021.
Acknowledging that many investors missed that opportunity, SEBI has now reopened a special re-lodgement window from July 7, 2025, to January 6, 2026, offering another chance for affected shareholders to regularise their holdings.
Summary:
SEBI’s latest proposal aims to simplify the transfer and dematerialisation of old physical shares by eliminating the cumbersome Letter of Confirmation process and allowing a temporary relaxation for pending transfers lodged before 2019. The move is expected to ease investor grievances, reduce administrative delays, and accelerate India’s transition toward a fully dematerialised market ecosystem.
Disclaimer:
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