Detailed Procedure for Grant or Renewal of RTA Certificate by SEBI

Registrar and Share Transfer Agent (RTA) is an organization that is designated to operate as an intermediary between investors and mutual fund houses. Registrar & Share Transfer Agent regulates all financial and non-financial processes like maintaining investor’s transaction records, processing those records for further reporting to the authorities, granting various application forms and assistance related to mutual fund investments. Mutual fund houses deal with investor’s daily transactions whereas RTA manages the records of such transactions on behalf of the mutual fund house associated with it.   

SAG RTA Registrar and Share Transfer Agent, CAMS, and Karvy are some of the prominent RTA service providers in India who serve investors as well as mutual fund houses with utmost care and responsibility. With their widespread branches, these RTA service providers can reach out to their clients present anywhere in the country. 

Investors can reach out to RTA for assistance related to security dematerialization by major depositories (NSDL or CDSL), issuing share transfer certificate, updating name, address or signature, dividend payouts and lot more.

SAG RTA, Registrar and Transfer Agent Services, is capable of solving investor’s issues and introducing them to various profitable mutual fund schemes and offers. 

 

All the RTA service providers operating in India are certified by the Security Exchange Board of India (SEBI). RTAs operating in India adhere to the guidelines listed in the Security Exchange Board of India (SEBI) Regulations 1993. 

Requisites for Qualifying as an RTA Service Provider from SEBI

Initially, the applicants must fill Form A along with the fees of Rs. 6 Lakhs  (non-refundable) for category 1, for category 2 the fees is Rs. 2 Lakhs (non-refundable). 

 

After filing the form, the board asks for additional information (not mentioned in Form A) as per the preset criteria. Even the applicant himself needs to appear in the board office before the board giving approval for performing RTA Services to the applicant.  

 

In case of any default, the board is authorized to reject the application. It will provide the statement mentioning all the errors and will give another chance to the applicant for fulfilling all the requirements within a given time limit.

Detailed Registrar and Transfer Agent Registration Procedure with SEBI

1 Applying for Certificate of Registration via Form A

The very first step towards becoming a SEBI registered RTA service provider is filing an application with the help of Form A to SEBI.   

2. Categories under which one can apply to become Registrar and Share Transfer Agent 

RTA services are divided into two categories either of which can be chosen by the applicant: 

• Category I: Carrying out services as both Registrar to an issue and share transfer agent.
• Category II: Carrying out services either as a registrar to an issue or as a share transfer agent. 

3. The applicant needs to provide further information to SEBI

The Board may ask the applicant to provide additional information necessary which is not mentioned in Form A and is required for issuing the certificate for Registrar and Transfer Agent registration. The board may ask the applicant or concerned principal officer to walk up to the board office for personal representation before the Board.   

4. Re-apply if the board rejects your application

As per the sub-regulation (2) of regulation 3 of the SEBI Act 1992, the board has the authority to disapprove Form A based on some errors in the information or non-adherence to the instructions. The Board will give a second chance to furnish form A within a given time limit. One must make sure that all the conditions mentioned in Form A should be fulfilled.

5. Scrutiny of the Candidate’s Application

Before granting the approval to work as a certified RTA, SEBI will thoroughly inspect all the aspects and make sure that everything favors a successful approval.

SEBI will make sure of the following points before granting approval:

1. The applicant must have sufficient infrastructure, the latest equipment/techniques and an expert team to effectively handle RTA processes.  
2. The applicant must have knowledge related to RTA services. 
3. The applicant must not be related (directly/indirectly) to a person who has been earlier rejected by the SEBI board to operate as an RTA. 
4. The applicant must have adequate capital to perform as RTA, 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 officer has been found guilty for an economic offense, involving moral turpitude. 
6. Is a fit or proper person (mentioned in schedule II of securities and exchange board of India (intermediaries) Regulation, 2008.

6. Capital Adequacy as suggested by SEBI

The capital sufficiency requirement for an applicant to get certified as an RTA as per SEBI guidelines: 

• Category 1: the net worth for an applicant should be min Rs. 50 lakh and can go beyond.
• Category 2: the net worth of the applicant must be min Rs. 25 lakh.

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

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 an Registrar & Transfer Agent, according to the sub-regulation (1) of regulation 3 of SEBI.

7. Process for further registration

SEBI, after working upon the eligibility criteria and finding candidates eligible for performing as an Registrar & Transfer Agent Services provider, is obliged to extend a notice informing the candidates about their eligibility and category under which they can serve as a certified Registrar Transfer Agent. It is indeed the responsibility of the board to inform the candidate about the eligibility criteria for grant of certificate in Form B, which also depends upon the fee payment given under regulation 12 of SEBI.

8. Criteria for RTA Certificate Renewal 

The registrar to an issue or share transfer agent must apply for the renewal of the RTA certificate three months before its expiry period. The RTA service provider can do so with the help of Form A.

8.1 The renewal application must be processed in a way similar to applying for a fresh RTA certificate stated under regulation 3 by the Board.  

8.2 Criteria for Certificate Renewal

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

• In case an applicant applies for status or constitution change, prior Board permission is required to operate with the same power post-change.
• A certain amount is paid by the applicant for the renewal of the RTA certificate. The amount is determined by the SEBI. 
• Capital adequacy will be re-examined by the authorities. The applicant must fulfill all the requirements under regulation 7 of SEBI from the grant of the certificate until its expiry.
• SEBI approved RTA service providers must not take more than a month to resolve all the grievances from investors, to continue working as an RTA 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 its activities as a registrar to an issue or share transfer agent before applying for a renewal. 

9. The procedure, in case, application for grant of certificate gets Rejected

9.1. In case the application for granting or renewing the RTA certificate fails to abide by SEBI guidelines then the Board has the right to disqualify the application but has to give the opportunity to re-apply fulfilling all the preset requirements by SEBI.

9.2 The Board informs the applicant about the rejection of his RTA certificate within three days from the date of applying for certificate along with the valid reason for the refusal.

9.3 Applicant can re-apply to the Board within thirty days from the date of getting a rejection notice from the Board post consideration, as per sub-regulation (2) of SEBI guidelines.

9.4 On receiving the application for reconsideration by an applicant, the Board will re-scrutinize the application and report the conclusions in a written format to the applicant. 

10. RTA Certificate (Grant or Renew) Refusal Consequences

Candidates whose application for granting or renewing the RTA certificate gets rejected by the Board, from the date of receiving the rejection notice are not eligible to perform any RTA related activities. Valid under regulation 2 of regulation 10 of SEBI.     

11. Payment Fees for a Grant or Renewal of RTA Certificate

11.1 The candidates, applying for a grant or renewal of RTA certificate in order to operate as a certified RTA agent should submit a certain amount as the processing fee to the Board within the specified time period and in a manner as given under Schedule II of SEBI regulations.

If the candidate fails to pay the renewal fees, the Board has the right to cancel or suspend his certificate, as a result, the registrar and share transfer agent will not be able to further extend its services to its clients as an RTA service provider or provide any RTA forms to the clients.   

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What are the Documents Required for Change of Registrar and Transfer Agent (RTA)?

A long list of certificates needs to furnished by companies or mutual fund houses to Central Depository Services Private Limited (CDSL) for their request against the change of Registrar and Share Transfer Agent.

Once such documents are received by CDSL, it verifies and authenticates the same to proceed with the change request. After completion of the verification process, execution agreement is passed on to the issuer company/RTA by CDSL.

Although, the entire process of Registrar & Share Transfer Agent change takes a long time for companies and also require them to submit multiple certified and accurate documents, which they are mostly unaware.

So. this article will provide an in-depth idea about the Registrar and Transfer Agent change procedure along with the mandatory documents that need to be furnished by companies to CDSL.

Below is a list of Key Documents whose Certified Copies Should be Submitted to CDSL by any Issuer/Company for Change of Registrar and Share Transfer Agent:

• Tripartite Agreement 

This document is signed by all the key parties, i.e., issuer/company, issuer’s RTA, and CDSL involved in the process to change of Registrar and Transfer Agent (RTA). This legal document also highlights the key roles, responsibilities, and obligations of all three parties. For the change of RTA, a fresh tri-partite agreement duly written on an INR 600/- stamp paper is required from any issuer company. This stamp-based tri-partite document should also carry authorized signatures of RTA and issuer/company.

• No Objection Certificate (NOC)

A NOC is a legal certificate that is issued by any company/entity indicating that it does not have any objection against the points or details mentioned in the NOC document signed by it. The companies looking for the change of RTA must furnish a no-objection certificate (NOC), issued by their current RTA, to CDSL. This NOC document should be written on the letterhead of the current Registrar & Transfer Agent of the issuer company.

• Document for Total Application Fee Charged By CDSL

Any particular company looking for a change of RTA should also submit the documents, reflecting the total fee charged by CDSL and any other outstanding issuer charges.

• Latest Certificates from Practising CA/CS

The company looking for the change in RTA should also provide the latest certificates from practicing company secretary/chartered accountant, which disclose details about the total issued capital to the issuer company, its annual balance with NSDL, CDSL and total physical share certificates according to the register of members. All such CA authorized certificates should be furnished by the companies to CDSL.

• Master Creation Form (MCF)

A Master Creation Form or Letter of Intent is used by companies to register as an issuer with CDSL. Registering as an issuer allow companies to offer Demat facility to its shareholders. The companies, through this form, also submit the securities to the CDSL in order to obtain an

International Securities Identification Number/s (ISIN/s) for the same.

During the change of RTA, master creation form also needs to be furnished to CDSL from the company end. This form should be duly signed and stamped by the authorized company signatories.

• Letter of Acceptance/Consent (LOA)

The companies should also submit Letter of Acceptance (LOA) to the CDSL while requesting for the change in RTA. Letter of Acceptance should be written on the letterhead of newly appointed RTA by the company. This LOA is a legal agreement reflecting that new RTA is ready to undertake all the share transfer responsibilities for the issuer company.

Note:- For in-house RTA, LOA is not required.

• Declaration Statement

Finally, the companies looking for the change in RTA should also furnish a declaration statement to CDSL, indicating that the company is ready to comply with all the necessary guidelines and procedures related to RTA change. The company will also be responsible for tackling all the grievances or complaints arising during RTA change process.

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Know Everything about Equity Shares, its Types, Advantages, Disadvantages and More

In the finance area, the term equity share is immensely popular among industry stakeholders. 

It is also popularly known as the ordinary share, stock or simply just company shares. The term itself gives a brisk idea to people about its definition.

But, you, along with a few other people, must be knowing that every shareholder is a part-owner of the company. 

Yes, it is true…!

Curious to know how it's possible? 

So, let's understand everything about Equity Shares in detail:

Definition: Equity Shares 

Let's start from scratch. 

In any company,
equity shares are the primary finance source. An equity share also gives company investors voting rights, earn profits in the form of a dividend, and claim assets when the company gets dissolved. 

Generally, the holders of the company shares are also ones with voting rights. They hold power to cast their votes in important company decisions like the appointment of board members, change in company policies, etc. 

In most cases, equity finance is the first source of capital that a company receives from the owners, investors or promoters of the company. 

Also, when any company is looking to expand or grow, it looks for potential investors in the form of friends, family members, venture capitalists, and small investors groups to issue them equity shares and raise capital.

Attributes of Equity Shares 

The main features of equity shares include:

• Equity shareholders are the actual owners of the company and also the ones who bear the highest risk of company failure. 
• Equity shares are also permanent in nature with no predefined maturity period. 
• Equity shares are also transferable in nature. The owners of company equity shares can transfer them to others with consideration with anyone. 
• Dividends paid out to holders of equity shares are proportionate to the profits earned by the company. 
• A fixed-rate of dividends is simply unavailable for owners of equity shares.
• The voting rights in important company decisions are also held by owners of equity shares. 
• The liabilities of equity shareholders are mostly limited to their own investment. 

Types of Equity Shares

Equity shares have numerous classes depending upon company norms. Here are some of the popular categories of equity shares: 

1. Sweat Equity Shares: These kinds of equity shares are held by the owners or directors of the company. These shares are issued at discounted prices or for consideration for another kind of non-monetary rewards to company personnel for their exceptional services. 

2. Bonus Equity Share: These types of shares are issued free of cost by a company to its existing shareholders. Instead of a payable dividend, the company issues bonus equity shares to its shareholders in some cases.

3. Right Equity Share: These kinds of shares are issued by the company to it's existing shareholders. Such shares are issued by the company to protect the ownership rights of the existing investors.

Equity Shares Price

Equity shares come with different prices at different places. Here are some of the important prices related to equity shares:

1. Par or Face Value: It refers to the value of equity shares maintained in any company's book of accounts.

2. Issue Price: It refers to the price at which the equity share is actually offered a company to the investors during Initial Public Offering (IPO).Generally, the issue price and face value of a share are the same for beginner companies. 

3. Share Premium and Share Discount Price: it refers to the price difference between the share issuance price and its face value. In the vice versa case, it is termed as a share discount price.

4. Book Value: The formula for the book value of equity share is:

(Reserves and Surplus + Paid-up Capital – Any Loss) / (The total number of equity shares of the company)

5. Market Value: It refers to the market value of a share of the on which it is currently traded in the market ( for stock market listed companies). It is also known as the stock price or share price.

Advantages of Equity Shares

Equity shares are the first source of capital for a company. For investors, it stands list in their capital surplus list as they are the ones at maximum risk if the company faces loss.

Equity shares are also a source for prospective loan providers to check creditworthiness to the company. 

Investors, willing to take a bigger risk for higher ROI invest in equity shares the most. 

Dividend payment to equity shareholders is not compulsory, so there is no burden on the company.

A company can raise funds via equity shares easily without any change in its assets.

Democratic control over the management of the company is also exercised by holders of equity shares. 

Equity shares biggest advantage is that these are very liquid in nature and can be sold with ease by holders.

Disadvantages of Equity Shares

Equity shares are high-risk investment instruments for investors as they do not guarantee fixed or steady returns for a given period. 

The cost of raise capital via equity shares is generally higher than other sources. 

The lengthy administrative process in issuing equity shares is also a setback for many companies.

The earning and voting power of existing shareholders and promoters of a company gets diluted due to the issuance of additional equity shares.

Final Thoughts

Time and again, it has been proven in the past that equity shares are one of the best long-term investments for investors in the finance sector. When it comes to outperforming low-risk investment instruments like government bonds, fixed deposits, etc. equity shares are right up there in the financial market. 

Although equity shares don't guarantee fixed or steady returns for a long period as their prices can go up as well as down, so buying them is are not without risk for investors. But, with a longer period, they do provide high returns.

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Exclusive Appointment Scheme For Companies and Professionals: Services by SAG RTA

SAG RTA, revered as Rajasthan’s first & category first Registrar & Share Transfer Agent, is a discovery by SAG Infotech which has successfully broken new ground in RTA services. Certified by the Securities and Exchange Board of India (SEBI), SAG RTA has become the top-notch & renowned RTA software.

SAG Infotech, a Jaipur-based company well-known for its avant-garde in innovation, is well-pleased launching its Registrar & Transfer Agent Services in Rajasthan - the next step towards innovation.

SAG RTA is the ultimate and all-inclusive solution that duly meets all the requirements of investors which may vary from Dematerialisation of Securities via major depositories (NSDL & CDSL) to Issuance of Duplicate Share Certificate. SAG RTA  offers single-window facilities to diversified clients across the globe.

SAG RTA Registrar and Share Transfer Agent duly reflect the integration of intelligence, inventiveness, and expertise with the array of functions which the highly-proficient team of SAG RTA executes zealously. Let's have a look at the functions it carries out:

• Dematerialization of Securities i.e. conversion of physical shares into electronic form through NSDL and CDSL.
• Ensure the payment of dividends or interest through ECS directly into the investor’s bank account in conformity with the SEBI guidelines.
• Helps in the acquisition of the duplicate share certificate when the original one is lost or damaged.
• Expedites the dematerialization and Transfer Reporting for investors.
• Facilitates the transference of share certificate in a tangible/physical form which is accomplished through SH-4 share transfer form.
• Makes sure that the dividend is revalidated within the valid time-frame when the shareholder fails to encash the dividend warrant.
• Orderly and certainly reporting the data maintained under data management at regular time-frames on investors’ behalf.
• Expedites IEPF claim settlement by transmitting the unpaid or unclaimed amount to IEPF.
• The study, verify and maintain up-to-date records of all the essential data which includes personal information & transactions’ data such as sales, purchase under the supervision of proficients so that maximum money and time can be saved.
• Facilitates investors with changes in name, signature or address along with name deletion, transmission, transposition services.
• Holding or conducting meetings on behalf of investors for personal communication

SAG RTA delivers best-in-industry Registrar & Transfer Agent services to the investors and its dedicated team of experts works passionately & constantly towards catering the clients with the best pre and post-sales services.

Note:-  As per notification made by the Ministry of Corporate Affairs on 10/09/2018, it is mandatory for every UNLISTED PUBLIC COMPANY to Issue the Securities only in Demat form. According to SEBI, the transfer of securities in the Demat form shall be effective from April 1, 2019. So, every such Company would have to appoint an RTA.

Terms & Conditions:

• Charges levied by Professionals (CA/CS/Other) will be charged separately.
• RTA charges levied on other corporate activities will be charged separately.
• Depository charges levied by NSDL/CDSL will be charged separately.
• Customer Care Support will be available in office timing only.
• The offer is valid till.

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