Registrar and Share Transfer Agent Registration in SEBI

Who is a Registrar & Share Transfer Agent (RTA)?

RTA is an authorized trust or entity which handles the responsibility of maintaining detailed records of all the investor transactions at mutual fund houses or other financial institutions for their convenience. Mutual fund houses are responsible for processing the investor transactions wherein RTA manages all the data generated under such transactions as a part of their RTA Services.

SAG RTA, CAMS, and Karvy are some of the leading RTAs in India that provide top-quality Registrar & Transfer Agent Services to clients, i.e., investors, mutual fund houses, distributors, etc . through their country-wide network.

From the investor's point of view, RTAs serve as a single-window solution by assisting them in the share certificate transfer process (buying or selling records), security dematerialization via NSDL and CDSL depository, email processing, name & address update at mutual fund houses, dividend payout through ECS transfers, and much more.

RTAs such as SAG RTA under the sphere of its Registrar & Transfer Agent (RTA Services) also maintain regular communication with investors in order to inform them about new mutual fund schemes, offers, etc.

RTA Agent also provides the latest information to the investors based on changes in the procedure, market fluctuations or any offers available for them to avail.

RTA agents are primarily governed by the SEBI, i.e. the Securities and Exchange Board of India. SEBI is responsible for designating RTA its work assignment based on the guidelines encoded in the Securities and Exchange Board of India (Registrars to an Issue and share transfer agent) Regulations,1993.

Here is the Step-by-Step Registrar and Transfer Agent Registration Procedure with SEBI:

To get registered with SEBI, the applicants at the initial step are required to file the registration form, i.e., Form A, along with the non-refundable fees of INR 6 lakhs for category one whereas, for category two registration, the applicants must deposit INR 2 lakh fees.

After filing the registration form, the approval board require some information as per the preset criteria. The approval board also require the applicant to appear in person at the board office before giving approval.

In the last step, the board also hold the authority to reject the application of the RTA candidate on the basis of the identification of some errors in the application. Although, the board might give a second chance to the candidate to reapply after fulfilling all compulsatory criteria within a given time limit.

Detailed RTA Registration Procedure with SEBI

1 Application for Issuing a Certificate of Registration

To operate as an authorized registrar and transfer agent, the applicants must file an application with the help of Form A to the SEBI.

2. Registrar and Share Transfer Agent Application Category

There are two categories under which an applicant can apply to operate as a Registrar Transfer Agent to the SEBI:

Category I: To carry out activities or operate as both registrar to an issue and share transfer agent

Category II: To operate either as a registrar to an issue or as a share transfer agent.

3. Board-Detailed Information Requirements

3.1 The applicant must be asked to provide further information about the activities or matters that are necessary for approving the application for the grant of a certificate for RTA registration by the SEBI Board.

3.2 The Board (SEBI) also have the authority to ask the applicant or its principal officer to appear in person for personal representation before the Board, if deemed necessary.

4. Reapplication for meeting the Board Requirements

As per sub-regulation (2) of regulation 3 of the SEBI Act 1992, SEBI Board can reject the RTA candidate application on the basis of non-fulfilment of the conditions or instructions that have been given in Form A.

Although, the applicants are also given an opportunity by the Board to fulfil all the mandatory conditions or requirements that have been given in Form A and reapply for RTA registration with SEBI within a given time period.

5. Consideration for Application

Before approving the application for a grant of certificate to operate as a Registrar and Transfer Agent, the Board may check all the necessary aspects of information that it might consider necessary for successful approval.

These necessary aspects include whether the applicant:

1. Has adequate infrastructure such as excellent office premises, top-notch IT equipment, and manpower.
2. Has prior experience related to services of RTA.
3. Or any person directly/indirectly associated with him has been earlier rejected by the SEBI board to operate as a Registrar and Share Transfer Agent under the SEBI Act.
4. Fulfil the capital adequacy requirements, mentioned in regulation 7 under SEBI regulations
5. Is under the radar of any disciplinary proceedings as per the SEBI Act for any of the director/applicant partner/principal officers has been found guilty of an economic offence, involving moral turpitude.
6. Is a fit or proper person (as per the criteria encoded in schedule II of Securities and exchange board of India (intermediaries) Regulation, 2008.

6. Capital Adequacy Requirements

6.1 The capital adequacy requirement for applicants given in clause (d) of regulation 6 of SEBI guidelines under two different categories should not fall below the given value :

• Category 1: the net worth of an applicant should be INR 50 lakh or above.
• Category 2: the net worth of the applicant must be INR 25 lakh.

6.2 The term ‘net worth’ given here has been defined under the sub-regulation (3) of SEBI, which denotes:

In case, if the applicant is a firm or association of persons or any body of individuals, the total value of capital contributed to such business by the applicants, and free reserves of any kind to their business are accounted as net worth.

In the case of a corporate body, total net worth is the actual value of paid capital and free reserves that are registered in the application account books at the time of submission of application for grant of certificate to operate as a Registrar & Share Transfer Agent, according to the sub-regulation (1) of regulation 3 of SEBI.

7. Registration Procedure

The Board (SEBI) after assessing that candidate is eligible for a grant of a certificate of RTA is obliged to inform the applicant through notice/information about their eligibility and the category under which they can operate as an authorized RTA. The Board must also inform the candidate about their eligibility for a grant of certificate in Form B, which also depends upon the fee payment given under regulation 12 of SEBI.

8. Certificate Renewal Process with Necessary Conditions

The registrar to an issue or share transfer agent can also make an application with the help of Form A for RTA certificate renewal. Although, the Registrar & Transfer Agent must apply for renewal three months before the certificate expiry period.

8.1 The renewal application is required to be dealt with in a manner, similar to the application for the grant of a certificate under Regulation 3 by the Board.

8.2 Necessary Conditions for Certificate Renewal

The below-mentioned conditions get applied in case of renewal granted under registration 9 or any registration granted in accordance with regulation 8:

• In case an RTA applicant wishes for status or constitution change, prior Board permission to operate with the same power post-change should be obtained.
• Registration or renewal fees must be paid by the applicant as per the SEBI regulations or guidelines.
• Capital adequacy requirements given under regulation 7 of SEBI must be met by applicants from the grant of the certificate until its expiry.
• For redressal of grievances from investors, the SEBI-approved candidate to work as registrar and transfer agent should not take more than one month time period and subsequently inform all its stakeholder members about details like total complaints, etc.
• The candidate must comply with all the SEBI regulations while carrying out his activities as a registrar to an issue or share transfer agent before applying for a renewal.

9. Procedure, in case, the application for grant of certificate gets Rejected

9.1. In case the application for registration or renewal does not meet the preset requirements or SEBI guidelines, the Board is allowed to reject the application after giving a reasonable opportunity of being reheard.

9.2 Within a time period of three days, the Board inform the applicant about the rejection of his grant or renew the certificate application along with the valid reason for rejection.

9.3 Any applicant believing their rejection is unfair can re-apply to the Board within thirty days period, starting from the date of receiving the rejection receipt from the Board post consideration, as per sub-regulation (2) of SEBI guidelines.

9.4 Upon receiving the reconsideration applicant request receipt, the Board will reconsider the application and communicate the findings in a written format to the applicant.

10. RTA Certificate (Grant or Renew) Refusal Consequences

Those applicants whose application for grant or renewal of a certificate to work as registrar to an issue or a share transfer agent is rejected by the Board, shall on and from the date of receiving rejection receipt is not allowed to offer any kind of registrar and transfer agent services and All RTA Forms to investors as per sub-regulation (2) of regulation 10 of SEBI.

11. Registrar and Share Transfer Agent, Grant of Certificate Payment Fees

11.1 The applicants, applying for a grant or renewal of a certificate to work as a registrar and share transfer agent should submit a processing fee to the Board within the specified time period and in a manner as given under Schedule II of SEBI regulations.

11.2 In case, when an applicant fails to pay the fee, the Board holds the power to cancel or suspend the applicant certificate, afterwards which, the RTA cannot offer any kind of RTA services or RTA Forms to clients.