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Citation Codes
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citation codes
Case Number
Judges
  • G. Mahalingam, Whole Time Member
Acts
  • SECTION 19 SECURITIES AND EXCHANGE BOARD OF INDIA ACT 1992
  • Section 12(3) of SEBI Act, 1992 read with Regulation 28(2) of SEBI (Intermediaries) Regulations, 2008. NOTICEE SEBI REGISTRATION
  • provisions of Regulation 54(5) of the SEBI(Depositories and Participants)Regulations, 1996 and clauses 2, 3 and 5(c) of the Code of Conduct
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Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Judges
  • G. Mahalingam, Whole Time Member
Acts
  • SECTION 19 SECURITIES AND EXCHANGE BOARD OF INDIA ACT 1992
  • Section 12(3) of SEBI Act, 1992 read with Regulation 28(2) of SEBI (Intermediaries) Regulations, 2008. NOTICEE SEBI REGISTRATION
  • provisions of Regulation 54(5) of the SEBI(Depositories and Participants)Regulations, 1996 and clauses 2, 3 and 5(c) of the Code of Conduct
See more information ...
Smart Summary

Summary of Order: Securities and Exchange Board of India v. Purva Shareregistry (India) Pvt. Ltd. (SEBI WTM/GM/EFD-2/78/2020-21)

Factual and Procedural Background

(This section summarizes the factual matrix and procedural steps as stated in the provided opinion.)

SEBI granted registration to Purva Shareregistry (India) Pvt. Ltd. ("Noticee" / RTA) as a Registrar to an Issue and Share Transfer Agent (Category I RTA) under the SEBI (Registrar to an Issue and Share Transfer Agent) Regulations, 1993.

SEBI carried out an inspection of the Noticee on November 25-26, 2014 and January 28-29, 2015 to examine compliance for the period April 1, 2012 to September 30, 2014 (Inspection Period). The inspection recorded deficiencies relating to maintenance of specimen signatures and to processing of requests for dematerialisation, rematerialisation, transmission, transfer and issue of duplicate share certificates.

SEBI initiated enquiry proceedings under Chapter V of the SEBI (Intermediaries) Regulations, 2008 and appointed a Designated Authority (DA) by order dated July 10, 2017. The DA submitted an Enquiry Report dated October 31, 2018 recommending suspension of the Noticee's certificate of registration for six months. Thereafter, SEBI issued a post-enquiry show cause notice (P‑SCN) dated December 17, 2018 under Regulation 28(1) of the Intermediaries Regulations, enclosing the DA's report and inviting reply within 21 days.

The P‑SCN alleged, inter alia, non-maintenance of specimen signatures, processing of transfer requests without proper signature verification and processing of dematerialisation requests without adequate verification or within required timelines.

The Noticee filed a reply dated January 20, 2021 and availed a personal hearing on January 21, 2021 before the Whole Time Member, where it was represented by counsel and a director. The matters relied upon by the Noticee and the DA were considered by the adjudicating authority, and the Order was issued on March 09, 2021.

Legal Issues Presented

  1. Whether the Noticee failed to maintain specimen signature cards for shareholders of physical folios as required under Regulation 14(3)(c) of the RTA Regulations read with Instruction 2(vii) of RRTI Circular No.1 (94-95) dated October 11, 1994.
  2. Whether the Noticee improperly processed dematerialisation requests for physical folios without independently verifying genuineness (relying on issuer company instructions) and whether delays in processing demat requests amounted to a breach of applicable obligations (including Regulation 54(5) of the Depositories and Participants Regulations and clauses of the Code of Conduct under Regulation 13 of the RTA Regulations).
  3. Whether the Noticee processed share transfer requests in contravention of norms (including RTI Circular No.1 (2000-2001) dated May 09, 2001) by effecting transfers where specimen signatures were not available, without following prescribed objection procedures and without exercising independent professional judgment as mandated by the Code of Conduct.

Arguments of the Parties

SEBI / Enquiry Report - Allegations and Regulatory Case

  • The DA's enquiry and SEBI's inspection report alleged that the Noticee had not maintained specimen signatures for a majority of companies serviced (inspection reported varying degrees of specimen-signature availability across companies).
  • SEBI alleged that the Noticee processed transfers and dematerialisation requests where signatures were not available or materially different, sometimes processing transfers prior to completion of the 15-day seller notice period, and in some cases relying solely on company instructions without independent verification.
  • As per the DA's recommendation, the Noticee's certificate of registration ought to be suspended for six months for the alleged contraventions.

Noticee's Submissions

  • The alleged lapses pertain to the Inspection Period (2012–2014) and since then the Noticee has been providing services without adverse regulatory observations; the regulatory environment and processes have materially changed (including prohibition of fresh physical transfers after March 31, 2019).
  • The Noticee has taken corrective steps in response to post-inspection circulars and LODR provisions and contends that suspension (as recommended by the DA) would be disproportionately harsh and prejudicial to stakeholders.
  • The Noticee argued that specimen signatures not being available was largely due to companies (clients) not handing over records when appointing the RTA; its client agreements (in SEBI‑approved format) make clear that the company's responsibility to hand over records precedes the RTA's responsibility to maintain them.
  • For transfers where signatures were not available, the Noticee asserted it exercised due care: transfers were approved by companies' transfer committees, practicing company secretaries verified transfers, confirmations were sought from issuer companies, seller notices were sent, and only a small number of seller replies (16) were received; no investor grievances had arisen out of these transfers.
  • With respect to dematerialisation delays, the Noticee submitted that most delayed requests preceded its appointment or related to unlisted companies or late receipt from Depository Participant; only a very small fraction of demat requests (34 out of 31,909) had delays attributable to the Noticee.
  • The Noticee emphasized KYC and PAN requirements, argued that transferees were traceable market participants and that rejecting transfers would have caused greater injustice to transferees who had paid consideration.
  • The Noticee maintained that it had made reasonable efforts to procure specimen signatures through investor outreach and client engagement, with negligible investor response.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Order systematically considered the DA's Report, the P‑SCN, the Noticee's written and oral submissions and supporting documents. The adjudicator analyzed three core issues and reached findings grounded on regulatory provisions and the inspection record.

Issue 1 — Non‑maintenance of specimen signatures:

  • The adjudicator observed the SEBI circular of October 11, 1994 (RRTI Circular: No.1 (94-95)) required RTAs to maintain specimen signature cards (Instruction 2(vii)).
  • Inspection findings showed specimen signatures were not available in full for a majority of companies serviced by the Noticee (the inspection reported availability categories and counts). The opinion records that the Noticee had specimen signatures for 100% of folios only for 80 companies (the text elsewhere refers to 287 companies in one paragraph; the inspection tables report other totals).
  • The Noticee's explanation—that many clients did not hand over records when the Noticee was appointed and that it had sought specimens thereafter—was noted, but the adjudicator held that the regulatory mandate required the RTA to call for and obtain specimen signature cards; despite efforts, the Noticee could not obtain full records and therefore contravened Regulation 14(3)(c) read with the RRTI instruction.

Issue 2 — Processing of dematerialisation requests:

  • The inspection found that the Noticee processed demat requests for physical folios without specimen signatures on the basis of issuer company instructions, and that there were delays in processing 1,432 demat requests during the Inspection Period.
  • The Noticee did not dispute the factual findings but contended it acted on issuer instructions and that many delays arose from requests generated before the Noticee's appointment. The adjudicator rejected the argument that appointment timing absolved the Noticee: the calculation of delay for such cases includes the period from the demat request to the confirmation date and includes the period before the Noticee's appointment; thus the Noticee could not avoid responsibility for delays by reference to appointment date.
  • Given clauses 2, 3 and 5(c) of the Code of Conduct under the RTA Regulations (specifically clause 3 requiring due diligence and independent professional judgment), the adjudicator concluded that the Noticee failed to exercise independent verification and proper care when processing dematerialisation requests based solely on company instructions, and that its conduct did not comply with the Code of Conduct.

Issue 3 — Processing of share transfer requests:

  • Inspection showed 18,040 transfer requests were received; for 9,931 of these no signatures were available; a substantial number of requests were processed without signatures and in some instances before the 15‑day seller notice period lapsed. The inspection also noted instances where the Noticee only sent no‑objection notices and did not take further steps to check genuineness.
  • The adjudicator referred to RTI Circular No.1 (2000-2001) dated May 09, 2001 (Norms for objection) which prescribes that where there is a material signature difference the STA must send an objection memo to the transferee and a copy to the transferor, requesting specified documents (affidavit, etc.) to record fresh specimen signatures.
  • The adjudicator held that the Noticee should have followed the objection procedure and obtained specimen signatures before effecting transfers where signatures were not available, rather than relying solely on company confirmations or processing transfers prematurely. Clause 3 of the Code of Conduct was invoked to underline the requirement to exercise independent professional judgment and not blindly follow company instructions.
  • The adjudicator noted four specific transfer requests where a complete mismatch existed but transfers were effected on the basis of company confirmation—this was highlighted as inconsistent with obligations to exercise independent judgment.

Consideration of mitigating facts and consequences:

  • The adjudicator recorded mitigate facts: there were no pending investor grievances in respect of any requests processed without strict compliance with norms, and no adverse remarks leading to initiation of enforcement proceedings after a 2019 inspection.
  • On balancing the contraventions with the actual impact on investors and the Noticee's post‑inspection conduct, the adjudicator found that the DA's recommendation (suspension for six months) was not commensurate with the defaults observed.

Holding and Implications

Holding: The adjudicator declined to accept the DA's recommendation of suspension for six months and instead issued a more limited restraint. The Order, invoking powers under Section 19 of the SEBI Act, 1992 read with Regulation 28(2) of the SEBI (Intermediaries) Regulations, 2008, directs the following:

Core Ruling: Purva Shareregistry (India) Pvt. Ltd. is restrained from onboarding new clients for a period of one month from the date of this order.

The Order explicitly states it comes into force with immediate effect and is dated March 09, 2021 (Place: Mumbai; G. Mahalingam, Whole Time Member).

Implications:

  • Direct effect on parties: The Noticee is prohibited from onboarding new clients for one month from the date of the Order; no suspension of its registration was imposed.
  • Regulatory findings remain recorded: the Noticee was found to have contravened regulatory requirements (non‑maintenance of specimen signatures, inadequacies in processing demat and transfer requests, and failure to adhere to objection norms and the Code of Conduct). These findings form part of SEBI's administrative record against the Noticee.
  • No broader legal precedent is announced in the Order beyond application of the cited regulations and circulars to the facts of this case; the Order does not state that it establishes a new precedent. (The opinion notes absence of investor grievances and no subsequent enforcement actions post a 2019 inspection, which influenced the proportionality assessment.)

End of summary. This HTML summary is prepared strictly on the basis of the content of the provided SEBI order and does not add or infer facts beyond what the order records.

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    Order in the matter of Purva Sharegistry (India) Pvt Ltd

    WTM/GM/EFD-2/78/2020-21 SECURITIES AND EXCHANGE BOARD OF INDIA ORDER Under Section 12(3) of SEBI Act, 1992 read with Regulation 28(2) of SEBI (Intermediaries) Regulations, 2008. NOTICEE SEBI REGISTRATION NO Purva Shareregistry (India) Pvt. Ltd. INR000001112 Background

    1. Securities and Exchange Board of India (SEBI) granted a certificate of registration as a Registrar to a Issue and Share Transfer Agent (Category 1 RTA) to Purva Shareregistry (India) Pvt. Ltd. (Purva/Noticee) in accordance with the provisions of SEBI(Registrar to an Issue and Share Transfer Agent) Regulations, 1993 (RTA Regulations).

    2. SEBI conducted an inspection of the Noticee on November 25 and November 26, 2014, and January 28 and January 29, 2015, to ascertain the level of compliance with the regulations and directions issued by SEBI for the period April 01, 2012 to September 30, 2014 (Inspection Period).

    3. Pursuant to the inspection, it was noted that Noticee had allegedly violated SEBI regulations and circulars pertaining to maintenance of specimen signatures in relation to processing requests for dematerialization, rematerialization, transmission, transfer and issue of duplicate share certificate.

    4. Based on the above, SEBI initiated enquiry proceedings against the Noticee under Chapter V of the SEBI (Intermediaries) Regulations, 2008 ("Intermediaries Regulations") and appointed a Designated Authority ("DA") vide order dated July 10, 2017 to enquire into alleged violations of the Noticee.

    5. Upon completion of the enquiry, an Enquiry Report (DAs Report) dated October 31, 2018, was submitted by the DA to the Designated Member (DM) recommending that the Certificate of Registration of the Noticee be suspended for a period of six months.

    6. Pursuant to this, a post enquiry SCN(P-SCN) dated December 17, 2018 was issued to the Noticee, under Regulation 28 (1) of SEBI (Intermediaries) Regulations, 2008, to show cause as to why action, as recommended by the DA or any other action as considered appropriate should not be taken against the Noticee. A copy of the DAs Report was also forwarded to the Noticee along with an advice to file reply, if any, within 21 days from the date of receipt of the notice. The allegation raised in the P-SCN were as under, - Non Maintenance of Specimen signatures

    7. It was observed during the inspection conducted by SEBI that the Noticee had not maintained complete specimen signature records for majority of the companies serviced by them. Out of the 278 companies serviced by the Noticee, it was observed that for 147 companies, the specimen signatures were not available for any of the folios. The status of availability of specimen signature observed during the inspection is given below,- Table 1 % of signature available Number of Companies

    1. 100% signature 80

    2. <50% signature 17

    3. > 50% signature 34

    4. no signatures available 147 Total 278

    8. In view of the above, it was alleged that the Noticee did not have or only partially had specimen signatures for the physical folios maintained by it in respect of the majority of the companies serviced by it and thereby the Noticee had not complied with Regulation 14(3)(c) of the SEBI RTA Regulations read with Instruction 2(vii) of the RRTI circular: no.1(94-95) dated October 11, 1994. Processing requests for transfer of shares

    9. It was noted that during the course of the inspection period, the Noticee had received 18040 transfer requests. Out of the said requests, no signatures were available for 9931 transfer requests. The details of the non-compliance observed in respect of transfer of shares is given below,- Table 2 No of transfer requests received 18040 (187 companies) No. of requests were signatures were not available 9931(187 companies) No of requests processed without signatures by sending seller notice based on companys instructions before the completion of 15 days seller notice 8265(69 companies) No of requests processed without signatures by sending seller notice without companys instructions before the completion of 15 days seller notice

    637 (19 companies) Total no. of requests processed without signature before the completion of 15 days sellers notice 8265 + 637 = 8902

    10. It was also observed by the Inspection team that in case of transfer requests where the signatures were not available or where the signature on the transfer deed varied substantially from the signature on record, Noticee only sent no objection requests in certain cases to the sellers and did not make any further attempt to check genuineness of the share transfer request. It was also noted during the inspection that the Noticee had been processing transfer requests even prior to the completion of the 15-day period of the No objection letter issued to the sellers. It was therefore alleged that the Noticee had violated the provisions of RTA circular no.1 (2000-2001) dated May 09, 2001, and clauses

    2 and 3 of the Code of Conduct prescribed under Regulation 13 of RTA Regulations. Processing of requests for dematerialisation of shares

    11. It was observed during the inspection that the Noticee had processed demat request in cases where the specimen signatures were not available based on the letters provided by the Company. It was also noted that the Noticee processed demat requests based on the Companys approval even in cases where the Demat Request Form was not available with the Company. The inspection team also noted that there was a delay in processing 1432 out of the 31909 demat requests processed by the Noticee during the Inspection Period.

    12. In view of the above, it was alleged that the Noticee had violated the provisions of Regulation 54(5) of the SEBI(Depositories and Participants)Regulations, 1996 and clauses 2, 3 and 5(c) of the Code of Conduct prescribed under Regulation 13 of RTA Regulations. Investor Complaints regarding Jay Energy and S Energies Ltd. (JSEL)

    13. I note that this particular allegation was not considered by the DA for the reasons recorded in DAs Report and therefore was also not a ground in the P-SCN. HEARING AND REPLY

    14. Noticee submitted its reply vide letter dated January 20, 2021. Subsequently, an opportunity of personal hearing was given to the Noticee on January 21, 2021. At the hearing, Mr. Prakash Shah, Advocate and Ms. Purva Shah, Director, represented the Noticee. Summary of the submissions made are given below,- a. The alleged violations pertain to the period 2012 2014, and the Noticee has been seamlessly rendering services to their clients since then without any adverse observations or remarks from the Regulator. Further, the rules governing transfer of shares have drastically changed since then and after 31.03.2019, no fresh physical transfer of shares are allowed. In view of the same, suspension of registration as recommended by Enquiry Officer is too harsh, unwarranted, unjustified and will cause great harm, loss and damage to all stakeholders. b. Post the Inspection Period, SEBI has come out with various clarifications and circulars including revised SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015, Circulars dated 20-04 2018 and 06-11-2018 regarding the process to be followed in such cases and the Noticee has promptly complied with the same and also has taken all corrective steps and remedial measures as required to ensure that lapses, if any, observed during inspection conducted for the period from 01.04.2012 to 30.09.2014 are not repeated thereafter. c. On consideration of the Noticees track record post inspection, the direction to suspend our certificate of registration is too harsh, unwarranted and unjustified. d. Noticee provides services to a large number of Companies which includes listed and unlisted Companies and at present handles close to 1.5 million folios. Noticee is ranked amongst top 5 for many of the years by Prime Database in the yearly data released for IPOs. e. Between 2011 to 2020, out of more than 300 listed companies for whom the Noticee has provided RTA and related services, only 341 complaints were filed on SEBI SCORES. All such complaints have been satisfactorily resolved and closed as on date. Specimen Signature f. Specimen Signatures that have been provided to the Noticee by the companies (clients) have been properly preserved and no lapse has been found regarding the same. Thus the allegation about non-availability of specimen signature basically lies with the companies and not the Noticee. g. As per the agreement executed with the companies, they are required to hand over all records including records of specimen signature. However, companies whose trading was suspended for a long period of time were not in a position to hand over such records and even other RTAs were also faced with similar situation. Therefore, the matter was referred to SEBI through Registrar Association of India (RAIN). Thereupon under SEBI LODR, 2015 specific mention was incorporated about process to be followed in cases where signature records are not available with RTA. h. For transfer of shares where signature records were not provided by the respective Companies, the Noticee has followed proper due care and diligence such as ensuring bonafides of the buyer, seeking confirmation from the client companies etc. In view thereof, no seller has raised any grievance against Noticee for any erroneous transfer carried out till date.

    i. Noticee and their client companies have made all reasonable efforts to get updated recent signature from the investors by sending letters to investors, appealing to investors in the annual reports etc. However, not even 1 % of investors have responded to the said appeal. Agreement with clients j. Noticee has entered into agreement with all the client companies. Pursuant to the said agreement with the client companies, the companies had agreed to provide the Noticee with all the shareholders records. Importantly the said agreement executed with all the client companies were as per the format approved by SEBI. One of the clauses of the agreement as per the SEBI prescribed format provides as under: "The company will ensure that all records /reports/ documents are handed over to the Transfer Agents after its appointment. The responsibility of the Transfer Agency will commence on receipt of records/reports/documents." k. Thus, it was company's responsibility to maintain signature records over period of time and hand over to RTA after appointment. The responsibility of the RTA starts only when RTA receives the signature records. If the records of the signatures, were not maintained by the company, RTA cannot be held liable for action of the company. An agent cannot be penalized for records not handed over by the principal to the agent. Submission with respect to transfer of shares where no signature records were available

    l. In the regular course, all the transfer of shares effected by the Noticee were approved by the share transfer committee of the respective company. Further practicing Company Secretary of every company routinely visited their office and verified that all the transfers were carried out properly and in timely manner. Every such company has submitted half yearly report to the Stock Exchange as required under clause 47 of listing agreement issued by their Company Secretary. Further records of all the transfers were included in their Annual Return filed with MCA. Hence, belatedly no adverse inferences ought to be drawn against the Noticee on execution of such transfer of shares since all transfers were approved and accounted for by the company. m. To further substantiate facts with respect to obtaining approval from the issuer company for transfer of shares, Noticee also asked their client companies to furnish the confirmation letters in respect of transfers. n. In the Enquiry Report, it is alleged that out of the 18040 share transfer requests received, Noticee had processed 9931 share transfer requests wherein the signatures were not available or the signatures on the transfer deeds varied substantially from the signature available on record. In this regard, it was submitted that the Noticee had carried out its obligation in a prompt, ethical and professional manner as stipulated u/r 13 of the "Code of Conduct". They have received only

    16 complaints out of 18040 requests and the same were resolved to the satisfaction of the complainant. o. It was further submitted that the due diligence done by the Noticee in such cases includes the following: (a) To check whether the Transfer deed is valid (b) Proper details have been filled on the transfer deed by transferor (c) Transfer form is duly witnessed and name, address and signature exists. (d) Execution date is within one year of presentation date. (e) Transferee details are properly filled in and signed by all transferees. (f) Consideration amount is filled and proper stamp duty has been paid. (g) PAN card of the transferee is attached and hence he is KYC compliant. Further it is also verified as to whether he can be contacted in the event of any objection by the transferor even at a later date. (h) Genuineness of Certificates.

    (i) Common Seal of the company was affixed on the share certificate. (j) The name of the transferor was printed on the share certificate. (k) No complaint was received by the company regarding the loss of share certificates from the transferor.

    (l) The share certificates were not flagged for "STOP TRANSFER" instructions in their database. (m) The folio no., certificate no., distinctive no. and no. of shares were printed on the share certificate. (n) The details were matched with the master data of the company. (o)15 days' notice was sent to transferor giving him an intimation that his shares were received for transfer and in case of any objections he may contact the Noticee. (p) In case any objection was received, Noticee immediately stopped the transfer and asked transferor to lodge a police complaint and get stay order from appropriate court. It was submitted that only 16 transferors replied to seller notices sent by the Noticee till date. Further, even when such sellers were provided the copy of transfer deed and asked to get stay order from appropriate court, they did not go ahead and only after not receiving any response from the seller, the Noticee transferred those shares in transferee's names. p. Noticee was of the view that if they had rejected the transfers, it would have resulted in double advantage to the Transferor who would even after having sold the shares, would be receiving the corporate benefits attached to those shares. Further, such transferors would not be ready to cooperate with the procedure of registering their signature again by incurring extra costs of affidavit, bank attestation, etc. since it was not their fault that the company had lost their signature and the shares would have continued to remain in their names. q. The rejection would amount to gross injustice to the transferee since even after paying due consideration to the transferor, the shares could not be transferred in his name and would lose out on corporate benefits like dividend, rights, bonus, etc. r. Post the introduction of LODR, Noticee has clearly followed the rules, regulations and guidelines prescribed in the LODR which can be proved by the inspection carried out by SEBI March 2019 wherein no deviation from the rules was found. s. Since 2009, SEBI has made PAN card of the transferee compulsory. Besides these shares could not be sold at any stock exchanges in physical form since shares had to be traded compulsorily in dematerialized form. KYC of the transferees was available with the DP hence these transferees were not fly by night investors who could misuse the system and run away. The SEBI registered intermediaries viz. brokers and the DP only after knowing these transferees would allow them to trade on stock exchange. They could always be traced and legal action could be taken against the transferee even if it was found at later date that the transaction was not genuine and fraudulently transferred. t. With regards to the allegation that Noticee transferred shares even before completion of 15 days from sending the no objection letter to the seller, it was submitted that in the year 2012 vide SEBI circular dated 05.07.2012 bearing Reference No. CIR/MIRSD/8/2012, SEBI had reduced the time frame for effecting transfer of shares from 30 days to 15 days. Due to the same, it was not possible for the Noticee to comply with the requirement of providing 15 days notice as the same would have led to the Noticee breaching the 15 days limit prescribed for processing such requests. u. The Noticee has not gained any unfair advantage by doing such a practice and has always followed the practice where the buyer or the seller do not get into an advantageous position over the other. Delay with respect to dematerialisation

    v. Delay noted in the SCN were caused due to reasons beyond the Noticees control and were still a small proportion of the total requests processed by the Noticee. It was further submitted that out of the 1431 cases of delay pointed out in the SEBI inspection, 1098 requests were generated prior to the Noticee taking over the RTA activities in respect of those companies. Further, 212 requests were for unlisted companies and therefore not under the purview of SEBI and 94 requests were received late by the Noticee from the DP. Only in 34 requests out of the 31909 dematerialisation requests, which was less than .10% of the requests that were processed by the Noticee, there was any delay which could be attributed to the Noticee. Consideration

    15. I have considered the Report submitted by the DA, the Post-Enquiry SCN issued to the Noticee, oral and written submissions of the Noticee along with the documents contained therein and other material available on record. The provisions of the law which have been alleged to have been violated by the Noticee, in the SCN, are reproduced below,- SEBI (RTA) Regulations

    13. To abide by Code of Conduct. Every registrar to an issue and share transfer agent holding a certificate shall at all times abide by the Code of Conduct as specified in Schedule III. Schedule III Code of Conduct

    2. A Registrar to an Issue and Share Transfer Agent shall fulfill its obligations in a prompt, ethical and professional manner.

    3. A Registrar to an Issue and Share Transfer Agent shall at all times exercise due diligence, ensure proper care and exercise independent professional judgment.

    5. A Registrar to an Issue and Share Transfer Agent shall always endeavor to ensure that - c. transfer of securities held in physical form and confirmation of dematerialisation / rematerialisation requests and distribution of corporate benefits and allotment of securities is done within the time specified under any law

    14. To maintain proper books of accounts and records, etc. (3) Every share transfer agent shall maintain the following records in respect of a body corporate on whose behalf he is carrying on the activities as share transfer agent namely:- (a)list of holders of securities of such body corporate; (b)the names of transferor and transferee and the dates of transfer of securities; (c)such other records as may be specified by the Board for carrying out the activities as share transfer agents. SEBI(Depositories and Participants)1996 Manner of surrender of certificate of security. 54(5) Within 15 days of receipt of the certificate of security from the participant the issuer shall confirm to the depository that securities comprised in the said certificate have been listed on the stock exchange or exchanges where the earlier issued securities are listed and shall also after due verification immediately mutilate and cancel the certificate of security and substitute in its record the name of the depository as the registered owner and shall send a certificate to this effect to the depository and to every stock exchange where the security is listed : Provided that in case of unlisted companies the condition of listing on all the stock exchanges where earlier issued shares are listed, shall not be applicable. Instructions to Registrars to an Issue / Share Transfer Agents RRTI Circular: No.1 (94-95), dated 11-10-1994

    2. In pursuance of the powers conferred upon SEBI by regulation 14(2)(h) and regulation 14(3)( C) of the Regulations, it is hereby stipulated that in addition to the books, records and documents stipulated in regulation 14(1), 14(2) and 14(3) the following records and documents shall also be maintained by the RTI/STA in hard copy / magnetic media. Records and documents to be maintained by STA

    (vii) Specimen signature cards and transfer deeds. SCHEDULE I

    1. SPECIFIC ACTIVITIES After receipt of approval of transfer proposals by the transfer committee, transfer agent shall endorse on the back of the certificates authenticating the transfer of shares in the name of transferees. In case of endorsement by Transfer Agent, Companies shall authorize Transfer Agents to do so by passing a resolution in its Board Meeting. RTI CIRCULAR NO. 1 (2000-2001) DATED MAY 09, 2001 Norms for objection

    3. Reason for Objection: Material difference in signature/s of transferor/s on Transfer Deed/s vis-a-vis specimen signatures recorded with the Company/ STA Procedure to be followed by Cos. / STAs To send: 3.1 Objection memo alongwith documents as per General guideline 18, in the prescribed format in original marking the reason as "material signature difference" to the transferee 3.2 Simultaneously, a copy of the objection memo to the transferor/s with an advice to lodge documents as detailed hereunder to facilitate the Company/STA to take on record fresh specimen signature: 3.2.1 an affidavit with the Company / STA as per Annexure-07 OR 3.2.2 Where the signature difference is due to old age / sickness, to lodge an affidavit as per Annexure-07 supported with a medical certificate obtained from a registered medical practitioner. Note : Procedure under 3.2 .1 and 3.2.2 above shall apply for recording fresh specimen signature for entire holding under a folio. 3.2.1 an affidavit with the Company / STA as per Annexure-07

    16. Now, I move on to consider the issues on merit.,- Issue 1 Non Maintenance of Specimen signatures

    17. I note that the primary allegation levelled against the Noticee is that it had failed to maintain specimen signatures of the shareholders holding shares in physical form in the companies serviced by it. As reproduced above, Regulations 14(3)(c) read with Instructions to Registrars to an Issue / Share Transfer Agents issued vide RRTI Circular: No.1 (94-95), dated 11-10-1994, required all RTAs to maintain specimen signature cards in relation to physical folios processed by it.

    18. I note that it is an admitted fact that the Noticee had specimen signatures for 100% of the folios only in respect of 80 out of the 287 companies serviced by it. The details regarding percentage of folios for which the Noticee had specimen signatures available on record is given in table 1 of this order.

    19. I note that crosschecking with specimen signature while processing transfer/demat/duplicate share request of folios held in the physical form is an important safeguard against fraudulent transfer of securities held in the physical form.

    20. Noticee in its reply has stated that all the companies for which 100% of the specimen signatures were not available with it, had become their clients subsequent to their Initial Public Offering; and these companies had not provided complete specimen signatures at the time they were onboarded.

    21. I note that the SEBI Circular dated October 11, 1994 mandates the STA to maintain specimen signature cards and therefore the Noticee was bound to call for and obtain the specimen signature cards from the Company. I note that Noticee has submitted details of the efforts undertaken by it to obtain the specimen signatures in respect of folios where they were not available and the same is stated in para 13(i) above. However, despite such efforts, specimen signatures for all the folios maintained by the Noticee could not be obtained.

    22. I, therefore, find that the Noticee has contravened this provision 14(3)(c) read with Instructions to Registrars to an Issue / Share Transfer Agents issued vide RRTI Circular: No.1 (94-95), dated 11-10-1994. Issue 2 Processing of requests for dematerialisation of shares

    23. I note from the SCN that it was observed during the inspection carried out by SEBI that the Noticee was processing requests for dematerialization in respect of physical folios where specimen signatures were not available based on instructions provided by the issuer companies. Further, it was also alleged that even in cases where the Demat Requests Forms were not available with the companies, the Noticee was processing demat requests based on the instructions received from the Companies. It was also alleged that there was a delay in processing 1432 demat requests received by the Noticee during the Inspection Period.

    24. Noticee in its reply has not disputed the finding in the inspection report and has only stated that in such cases the Noticee was complying with the instruction given by the issuer companies. I, therefore, note that the Noticee was not taking adequate steps to independently verify the genuineness of such requests and was processing such requests only based on the instructions of the issuer companies.

    25. In respect of the delay in processing the demat requests, it was submitted by the Noticee that in overwhelming majority of the such cases, the Noticee was appointed as the RTA after such requests were received and therefore the delay in such cases cannot be attributed to the Noticee. In this regard, it is however noted that delay in processing demat requests in cases where the RTA is appointed after the date when such request was made, is calculated as the difference between the confirmation date and the date of appointment of the new RTA. In view of the same, the submission made of the Noticee in this regard cannot be accepted.

    26. Clauses 3 of the Code of Conduct under the RTA Regulations provides that RTAs shall at all times exercise due diligence, ensure proper care and exercise independent professional judgement. In view of the above, I am of the view that the conduct of the Noticee in processing dematerialisation requests has not been in compliance with the Code of Conduct specified under the RTA Regulations. Issue 3 Processing requests for transfer of shares

    27. I note from the SCN that it was observed during the inspection carried out by SEBI that the Noticee was processing transfer of shares in respect of physical folios where specimen signatures were not available by sending no objection letter to the sellers and without making any further attempts to check the genuineness of the transfer requests.

    28. I note that as per point 3 of the Norms for objections as prescribed under RTI circular No. 1 (2000-2001), in cases of material difference in signatures of transferors in the transfer deed when compared to the specimen signature, the STA needs to send an objection memo to the transferee marking the reason for objection as material signature difference. A copy of the objection memo also has to be sent to the transferors with an advice to lodge documents to facilitate the STA to take on record fresh specimen signatures.

    29. In this regard, I am of the view that the Noticee should have adopted the above mentioned approach and obtained specimen signatures before processing transfer requests in folios held in physical form where specimen signatures were not available with the Noticee.

    30. It is further noted that in respect of 4 transfer requests where there was a complete mismatch of signature on the transfer deed with the specimen signature on record, transfer was effected by the Noticee only on the basis of the confirmation received from the Company.

    31. As noted above, Clause 3 of the Code of Conduct provides that RTAs shall at all times exercise due diligence, proper care and independent professional judgement and not blindly follow the instructions of the Company.

    32. In view of the above, I find that the Noticee has not strictly complied with the Norms of Objection prescribed under RTI circular No. 1 (2000-2001), point h of Schedule 1 of RRTI Circular dated October 11, 1994 and clauses 3 of the Code of Conduct under the RTA Regulations, while processing transfer requests where specimen signatures were not available.

    33. I, however, also note that there are no pending investor grievances in respect of any of the requests that have been processed by the Noticee without strictly complying with the norms laid down by SEBI. It is further noted that there were no adverse remarks leading to initiation of any enforcement proceeding post the inspection of the Noticee by SEBI in 2019. Order

    34. In view of the foregoing and considering the interests of the investors, I find that the action as recommended by the Designated Authority vide Report dated September 27, 2019 is not commensurate with the defaults, non-compliances, contraventions and violations committed by the Noticee.

    35. I, therefore, in exercise of powers conferred under Section 19 of the Securities and Exchange Board of India Act, 1992 read with Regulation 28(2) of the SEBI (Intermediaries) Regulations, 2008, hereby restrain Purva Shareregistry (India) Pvt. Ltd. (SEBI Registration No. INR000001112), from onboarding new clients for a period of one month from the date of this order.

    36. This Order shall come into force with immediate effect. Place: Mumbai G. MAHALINGAM Date: March 09, 2021 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA

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    Order in the matter of Purva Sharegistry (India) Pvt Ltd
    (Mar 9, 2021)