SEBI to introduce centralised mechanism for verification in case of demise of investors

Capital markets regulator SEBI on Tuesday announced a centralised mechanism for reporting and verification through the KYC Registration Agency (KRA) 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 centralised mechanism to their investors holding securities in physical form can establish connectivity with KRA through their Registrar and Transfer Agents (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 with "information on the 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 submit a KYC modification request in the KRA system, "information on the death of investor received; confirmation awaited" by the next working day of the intimation.