Authored by Anish V
The Securities and Exchange Board of India (“SEBI”), vide its circular dated 30 January 2026 (HO/38/13/(3)2026-MIRSD-POD/I/3763/2026) (“Circular”), has introduced a significant ease-of-doing-business measure by doing away with the requirement of issuance of a Letter of Confirmation (“LoC”) for credit of securities arising out of various investor service requests. The Circular mandates direct credit of securities into the demat account of the claimant investor subject to diligence by RTAs/ Listed Entities, thereby simplifying procedures and reducing timelines.
Background and Existing Framework
SEBI had earlier prescribed the procedure for credit of securities pursuant to investor service requests (such as issuance of duplicate certificates, transmission, transposition, claim from unclaimed suspense account, and corporate actions) in demat mode under the Master Circular for Registrars to an Issue and Share Transfer Agents (“RTAs”) dated 23 June 2025 (“Master Circular”). The relevant provisions governing such credit mechanisms were contained in paragraphs 13, 20, 22 and 23, read with Annexure-7, Annexure-15 and Annexure-20 of the Master Circular.
One of the procedural requirements under the Master Circular (now being done away with under the Circular) was the issuance of an LoC by the RTA or the Listed Entity to the claimant investor, which was then required to be submitted by the claimant investor to their Depository Participants (“DPs”) for dematerialisation, only after which, credit of securities was given to the claimant investors demat account.
Removal of LoC Requirement
With a view to simplifying the process and reducing the risk of loss associated with physical documents, SEBI has decided to do away with the requirement of issuance of LoC altogether. To operationalise this change, SEBI has directed that the Depositories shall develop a system wherein RTAs/ listed companies are enabled to credit securities directly into the demat account of the claimant investors, after completion of necessary due diligence from their end.
Under the revised framework, every investor service request must be accompanied by a copy of the latest Client Master List (“CML”) of the demat account. Such CML shall not be older than two months and shall be duly attested by the DP. This requirement replaces the earlier LoC-based confirmation mechanism.
Amendments to the Master Circular
To give effect to the above changes, SEBI has amended multiple provisions of the Master Circular, as set out in Annexure-A to the Circular, as follows:
1. The Master Direction now requires submission of Form ISR-4, along with original physical certificates (where applicable) and latest DP-attested CML and demat conversion request form.
2. RTAs/issuer companies have been mandated to process requests and credit securities directly into the demat account within 30 days of receipt of complete documentation.
3. In cases of transmission of securities held in single name and physical form, provision has been made for direct transmission of securities into the claimant investors’ demat account, within 30 days of receipt of complete documents.
The Circular shall come into force with effect from 2 April 2026. Any LoC issued prior to 2 April 2026 may continue to be used by claimant investors for dematerialisation, provided it is submitted within 120 days from the date of issuance of such LoC.
Thus, the process is made investor friendly by bringing in the facility to enable RTAs and Listed Companies to directly credit securities instead of the claimant investor taking up the additional burden of collecting and forwarding the LoC to the DP.
