Capital markets regulator Sebi on Tuesday announced a centralised mechanism for reporting and verification through the KYC Registration Agency in case of the demise of an investor. Also, the regulator has put in place operational norms, including the obligations of regulated entities and registered intermediaries that have interfaces with investors or account holders who are natural persons.
The new framework will come into effect from January 1, 2024, the Securities and Exchange Board of India (Sebi) said in a circular.
Sebi said that listed companies wishing to provide beneficial access to such a centralized mechanism to their investors holding securities in physical form can establish connectivity with KRA through their RTAs.
After receiving intimation about the demise of an investor, the concerned intermediary will have to obtain the death certificate along with the PAN from the notifier or nominee and verify the death certificate through online or offline mode.
If the concerned intermediary, after receiving information about the demise of the investor from the notifier or nominee, is not in a position to obtain the death certificate, then it will have to inform the nominee that the KYC status of the deceased investor has been flagged off as “On Hold” and require them to furnish the death certificate of the concerned investor.
After verification of the death certificate, the concerned intermediary will have to, on the same day of verification, submit a KYC modification request to the KRA that “information on death of investor received; death certificate verified” and also upload the relevant documents. Besides, the intermediary will have to block all debit transactions in the account or folios of the deceased investor.
In case the death certificate is not received, the concerned intermediary will have to, by the next working day of the intimation, submit a KYC modification request in the KRA system — “information on death of investor received; confirmation awaited”.
Spelling out the obligations of the KRA, Sebi said that KRA, following the receipt of a KYC modification request from the intermediary will carry out an independent verification by the next working day of receipt of such request.
Following the validation of the death certificate, the KRA will have to update the KYC record as ‘blocked permanently’ in the system and intimate this updation to all linked intermediaries.
In order to have uniformity for operationalising the mechanism, Sebi asked stock exchanges, depositories and industry associations like the Association of Mutual Funds in India (AMFI), Registrars Association of India (RAIN), in consultation with stakeholders, including KRAs, to put in place common SOP (Standard Operating Procedures). The SOP will be made available on their websites as well as that of the intermediaries.
