The Securities and Exchange Board of India (“SEBI”) has amended Regulation 14 and 15 of the SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 on May 30, 2018 by increasing the period maintenance of records of books of accounts and documents by every registrar to an issue and share transfer agent from three years to eight years. It also directs the registrar to an issue and share transfer agent to preserve such records for a period of eight years.Regulation 14 of the General Obligations and Responsibilities under Chapter III of SEBI (Registrars to an Issue) Regulations 1993 previously provided for maintenance of books of accounts and documents in respect three preceding financial years by every registrar to an issue and share transfer agent. Vide the amendment, the period for maintenance of books of accounts and documents has been increased to eight years.
Registrar or Transfer Agents are the trusts or institutions that register and maintain records of transactions of investors for mutual fund houses. They are responsible for maintenance of records and registers including but not limited to copy of balance sheet and profit and loss account, copy of the auditor’s report, all the applications received from investors in respect of an issue, basis of allotment of securities to the investors as finalized in consultation with the stock exchange; terms and conditions of purchase of securities; allotment of securities etc.
These records are also required to be maintained by every share transfer agent in respect of a body corporate on whose behalf he is carrying on the activities as share transfer agent namely: – list of holders of securities of such body corporate; the names of transferor and transferee and the dates of transfer of securities; such other records as may be specified by the Board for carrying out the activities as share transfer agents.
Preservation of Records:
Regulation 15 previously directed the registrar to an issue or share transfer agent to preserve the books of accounts and other records and documents maintained under Regulation 14 for a minimum period of three years. Again vide amendment to the Regulations, the minimum period for which the books of accounts and other documents are required to be preserved for a period of eight years.
In addition to the SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993, Regulation 9 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR) provide for preservation of documents.
Preservation of Documents under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR)
Every Listed Entity is obligated to frame a policy for preservation of documents under Regulation 9 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR).
Regulation 9 of the LODR mandates that every listed entity should have a policy in place for preservation of documents, approved by its Board of Directors, classifying them in at least two categories:
a. Documents whose preservation will be permanent in nature;
b. Documents with preservation period of not less than eight years after completion of the relevant transactions.
The listed entity may keep the documents in electronic mode.
The documents preserved in terms of Regulation 9 includes documents required to be preserved by a listed entity in terms of securities laws, i.e. the Securities Contracts (Regulations) Act, 1956, the Depositories Act, 1996 and other provisions of the Companies Act, 1956 and Companies Act, 2013 and other laws and statutes applicable to such listed entity.
SEBI, vide this recent amendment has brought the two regulations at par, thereby rationalizing the compliances to maintain and preserve documents for a standard period of eight years. By deciding the period of preservation of records required by applicable laws and regulations and for other business purposes for a specified period will assure their availability when required.
These amendments adopted by SEBI aim at revamping old laws and streamlining procedures with regards to handling maintenance of documents, records. Further, it strengthens the existing guidelines for share transfer agents and registrars, issuers as well as companies by ensuring easier compliance.