SEBI (Registrar to an issue and Share Transfer Agents) Regulations,

SEBI (Registrar to an issue and Share Transfer Agents) Regulations, (Part 1)

Definition: A Registrar to an issue is a person appointed by a body corporate to carry out activities such as collecting applications from investors, maintaining records, and assisting in the allotment of securities.
Share Transfer Agent: A Share Transfer Agent is a person who maintains records of security holders and deals with matters related to the transfer and redemption of securities on behalf of a body corporate.

Registrar to an Issue and Share Transfer Agent (RTA): RTAs are responsible for various activities, including collecting applications, maintaining records, and assisting in the allotment of securities.
Qualified RTAs (QRTAs): QRTAs are RTAs that service more than 2 crore folios and are required to formulate and implement a comprehensive policy framework.
Comprehensive Policy Framework: The framework includes aspects such as:
- Risk Management Policy: Identifying, assessing, monitoring, and managing risks.
- Business Continuity Plan: Maintaining a plan to ensure continuity of operations in case of service failure.
- Manner of keeping records: Maintaining accurate and up-to-date records.
- Wind-down Plan: A plan for transferring operations to an alternative RTA in case of insolvency or inability to provide services.
- Data Access and Data Protection Policy: Ensuring data integrity and protection.
- Ensuring Integrity of Operations: Maintaining adequate human resources, systems, and processes.
- Scalable infrastructure: Upgrading infrastructure and technology to ensure smooth functioning.
- Board of Directors (BoD) / Committees of BoD of QRTAs: Approving policies and overseeing operations.
- Investor Services and Service Standards: Providing investor services, including online capabilities and complaint redressal mechanisms.
- Insurance against Risks: Taking adequate insurance to protect investors' interests.

Code of Conduct: RTAs must abide by the Code of Conduct specified in Schedule III.
Registrar to an Issue not to act as such for an associate: RTAs cannot act as registrars for issues of securities of associate companies.
Maintaining proper books of accounts and records: RTAs must maintain proper books of accounts and records, including balance sheets, profit and loss accounts, and auditor's reports.

Maintenance of Records: Every registrar to an issue and share transfer agent shall maintain records including:
- Basis of allotment of securities to investors
- Terms and conditions of purchase of securities
- Allotment of securities
- List of names of allottees and non-allottees
- Refund orders dispatched to investors
Share Transfer Agent Records: Every share transfer agent shall maintain records including:
- List of holders of securities
- Names of transferor and transferee and dates of transfer
Intimation to SEBI: Every registrar to an issue and share transfer agent shall intimate SEBI about the place where books of accounts, records, and documents are maintained.
Submission of Documents: Every registrar to an issue and share transfer agent shall furnish copies of balance sheet, profit and loss account, and other documents to SEBI after the close of each financial year.
Preservation of Records: The registrar to an issue or share transfer agent shall preserve books of accounts and other records for a minimum period of eight years.
Appointment of Compliance Officer: Every registrar to an issue and share transfer agent shall appoint a compliance officer to monitor compliance with the Act, rules, and regulations.

Key Principles: The code of conduct includes principles such as:
- Maintaining high standards of integrity
- Fulfilling obligations in a prompt, ethical, and professional manner
- Exercising due diligence and independent professional judgment
- Ensuring adequate care and caution in dematerialization of securities
Prohibited Activities: The code of conduct prohibits activities such as:
- Misrepresentation
- Conflict of interest
- Unfair competition
- Divulging confidential information
Disclosure Requirements: The code of conduct requires registrars to an issue and share transfer agents to make disclosures such as:
- Interest in securities
- Possible sources of conflict of interest
- Change in registration status or penal action taken by SEBI

Disclosure Requirements: RTAs shall disclose the Investor Charter on their websites, through email, and at prominent places in their offices.
Complaint Redressal: RTAs shall take necessary steps to redress complaints against them or against issues dealt by them.
SEBI Requirements: The disclosure requirements are in addition to those already mandated by SEBI.

Fraudulent Activities: Sharepro's management committed fraud in respect of the transfer, transmission, buyback/redemption of securities, printing of share certificates, and maintenance of records.
Securities Misappropriation: The total value of securities misappropriated amounted to Rs. 60,45,74,718.15 as of October 10, 2016.
Non-Maintenance of Records: Sharepro failed to maintain proper records and destroyed records, compromising internal checks and balances in their systems.
Falsification and Manipulation: Sharepro engaged in massive falsification and manipulation of records maintained at the RTA's end.
Non-Cooperation with SEBI: Sharepro deliberately attempted to mislead SEBI and failed to cooperate with the investigation.

Key findings and actions taken by SEBI include:

Restraining Order: SEBI restrained Sharepro and its senior management from accessing the securities market for 10 years.
Cancellation of Registration: SEBI canceled Sharepro's certificate of registration as a Registrar to an Issue and Share Transfer Agent due to lack of integrity and failure to respond to the post-enquiry SCN.
Importance of Institutional Integrity: SEBI emphasized the need for registered intermediaries to uphold institutional integrity, fairness, and professionalism to maintain public trust in the securities market.

Review questions and answers:

Registrars to an Issue are primarily responsible for finalizing the list of persons entitled to allotment of securities after an issuance process.
An RTA servicing more than 50 lakh folios is known as a Qualified RTA.
An RTA or its employees must disclose their interest in a security while rendering investment advice.
The Registrar and Share Transfer Agent must maintain books of accounts and documents for 8 preceding financial years.