New Delhi, Markets regulator Sebi on Thursday proposed simplifying the documentation process for the transmission of securities following the death of an investor to make it easier for nominees and legal heirs to claim financial assets.
The regulator has also suggested revising the monetary thresholds for simplified documentation and introducing a straight-through processing (STP) mechanism for small-value claims to reduce paperwork and speed up claim settlements, according to its consultation paper.
“The existing limits for simplified documentation were set in time and there is a dire need to review the current limits given the exponential growth of the securities market and increased asset prices,” Sebi said.
“To keep up with this and as a measure to ease restitution of assets to survivors of deceased investors, the limits for availing simplified documentation for transmission are proposed to be revised,” it added.
Under the proposed framework, a verifiable death certificate may include the original certificate, a copy verified with the original by the nominee, a copy attested by a notary public or gazetted officer, or a certificate carrying a QR code.
A legal heirship certificate should be issued by a revenue authority not below the rank of a Tehsildar.
Sebi has also proposed revising the monetary thresholds for simplified documentation to reflect the growth in the securities market and rising asset values. A new STP mechanism has been proposed for very small claims where documentation costs could exceed the value of securities.
Under the proposal, the STP limit will be Rs 10,000 for physical securities and Rs 30,000 for demat securities, while the threshold for simplified documentation will increase to Rs 10 lakh for physical holdings and Rs 30 lakh for demat holdings. Listed entities may further enhance the Rs 10 lakh threshold for physical securities at their discretion.
The move aims to reduce paperwork and make asset restitution easier for survivors.
Where a nomination exists, the process will be simpler. The nominee will need to submit a transmission request form, the latest client master list (CML) of the demat account attested by the depository participant, a verifiable death certificate and a valid ID proof, the regulator suggested.
According to Sebi, this will allow intermediaries to settle claims faster, after which nominees can transfer the securities to legal heirs without attracting income tax.
However, in cases where no nomination or will exists, the process becomes more complex as intermediaries are required to ensure that securities are transferred to the rightful heirs, Sebi noted.
To address this, Sebi has proposed a risk-based approach with different documentation requirements depending on the claim value.
For low-value claims under STP, claimants will only need to submit a transmission request form, the latest CML, a verifiable death certificate, valid ID proof and an undertaking, the regulator suggested.
For simplified cases above the STP threshold but within the revised limit, additional documents such as a notarised indemnity bond and a no-objection certificate (NOC) from other legal heirs, or a family settlement deed, will be required.
For claims above the threshold, stronger legal documentation will be necessary. Claimants will need to submit the transmission request form, CML, death certificate, ID proof and a notarised affidavit from all legal heirs confirming ownership of the securities.
In addition, they should provide either a succession certificate, a letter of administration or a court decree; a copy of the will along with a notarised indemnity bond; or a legal heirship certificate along with an indemnity bond and NOCs from non-claimants.
The regulator has also proposed standardising claim submission procedures, whereby entities will be required to provide standard forms, make them available both physically and online, acknowledge receipt of claims and inform claimants about any missing documents at the earliest.
They may also offer an online facility for submitting and tracking claims.
Transmission cases should be processed within 21 calendar days from the receipt of all required documents, and any delay or rejection should be communicated to the claimant with reasons.
For cases involving the death of an investor outside India, Sebi has proposed additional modes for certifying proof-of-death documents.
Apart from certification by a court magistrate, judge, notary public, Indian embassy or consulate, or apostille, certification by authorised officials of overseas branches of scheduled commercial banks in India or foreign banks will also be accepted.
The Securities and Exchange Board of India (Sebi) has invited public comments on these proposals until April 2.
