The Securities and Exchange Board of India (SEBI) has mandated the reporting of investor demise by market participants and introduced a centralised reporting mechanism through know your customer (KYC) registration agencies.
The SEBI’s circular spells out operational norms for regulated entities, including registered intermediaries that interface with investors. This initiative is crucial; a growing retail investor base is demanding a systematic approach to handle scenarios where the investor has passed away.
Stockbrokers, depository participants and asset management companies are now obligated to report investor demises via a centralised mechanism within two working days. This is intended to simplify and accelerate the process of asset transfer and settlement, which previously lacked a standardised procedure.
A single-point interface established by the SEBI simplifies the reporting process. Market participants can report investor demises to the exchanges, with the information disseminated to all registered depository participants.
The circular also encourages investors to nominate individuals who will inherit their securities. This nominee registration facilitates the smooth transfer of assets and reduces the burden on legal heirs.
Financial institutions, including banks, are instructed to update their systems and procedures to handle such nominations efficiently. Additionally, the circular addresses heirs’ concerns by allowing for the easier transmission of shares to legal heirs and nominees. This streamlined process helps prevent disputes and ensures efficient transfer of the deceased investor’s assets.
No entity can withhold information, and timely dissemination of data is essential for swift processing. Apart from offering better protection to investors and their heirs through streamlined processes, the circular also signifies the need of estate planning among investors.