RTA (Registrar and Share transfer Agent) Registration

Introduction

An establishment in the form of trust or institutions that records and maintains a complete record of transactions of investors for the benefit or convenience of mutual funds houses or listed entities are called share transfer agents.

Investors transaction means buying of securities, selling of securities, changes in personal data, exchanges, processing of email and related information which occur frequently that need to be maintained.

According to SECURITIES AND EXCHANGE BOARD OF INDIA (REGISTRARS TO AN ISSUE AND SHARE TRANSFER AGENTS) REGULATIONS, 1993

“Registrar to an issue” means the person appointed by a body corporate or any person or group of persons to carry on the following activities on its or his or their behalf:

1. Accepting and Collecting applications from investors in respect of an issue;
2. Maintaining a proper record of applications and monies received from investors or paid to the seller of the securities; and
3. Providing assistance to the body corporate or person or group of persons in:

(a) Fixing the basis of allotment of securities in consultation with stock exchange;

(b) Finalizing list of persons entitled to allotment;

(c) Preparing and sending of allotment letters, refund orders or certificates and other related documents in respect of an issue.

“Share transfer agent” means:

1. Any person who, on behalf of any company, keeps records of the securities holders issued by that company and deals with all matters relating to the transfer and redemption of its securities;
2.  A department or division, by whatever name it is named, of a company carrying out the activities referred to in sub-clause I if the total number of holders of its issued securities exceeds one lakh at any time;

As per the notification of ministry of corporate affairs, all public unlisted company has to issue securities only in dematerialized form from October 2018 onward. So every public listed and unlisted company has to mandatorily appoint Registrar & Share Transfer Agent (RTA).

Prerequisite conditions for registration under SEBI

SEBI will consider the application and grant the certificate in particular if the applicant

(a) Has the resources available, such as sufficient office space, equipment and manpower to carry out its activities effectively;

(b) Should have any past experience in the activities;

(c) Or any person directly or indirectly connected with him has not been granted registration by the Board under the Act;

(d) Must fulfil the capital adequacy requirement specified in the regulation;

(e) Should not be subjected to any disciplinary proceedings under the Act;

(f) And any of its director, partner or principal officer is or has at any time been convicted for any offence involving moral turpitude or has been found guilty of any economic offence.

(g) Should be a fit and proper person the criteria specified in schedule ii of securities and exchange board of India (intermediaries) Regulation, 2008]

Registration condition

(a) Where a registrar intends to change his status or constitution to an issue or a share transfer agent, he shall take prior approval from the Board to continue to behave as such after the change;

(b) Without regard to its obligations under any other statute, it shall enter into a legally binding agreement with the corporate body or the person or group of persons for or on whose behalf it serves as a registrar for an issue or a share transfer agent stating the allocation of duties and responsibilities between it and that corporate body or individual or group of persons, as the case may be;

(c) Pay the fees for registration, in the manner provided in these regulations

(d) Should maintain capital adequacy requirements specified in regulation at all times during the period of the initial registration or permanent registration;

(e) It shall take appropriate measures to resolve investor grievances within one month of the receipt of the complaint and shall keep the Board aware of the number, nature and other details of the complaints received and how those complaints were remedied;

(f) It shall comply with the regulations made pursuant to the Act as regards the activities carried out by it as a registrar to an issue or a share transfer agent.

(g) It shall inform the Board immediately, details of the changes that have occurred in the information submitted when seeking registration.

Capital Adequacy Requirements

Different categories of AIF have different Capital Requirements:

1. Category 1 RTA shall have a minimum Net Worth of INR 50 Lakhs;

2. Category 2 RTA shall have a minimum Net Worth of INR 25 Lakhs;

Here 'Net Worth' means:

1. In case, if the applicant is a firm or association of persons or any body of individuals, the total value of capital contributed to such business by the applicants, and free reserves of any kind to their business denote net worth.

2. In the case of a corporate body, the value of free reserves and paid capital mentioned in the account books of the applicant at the time of submission of application as per sub-regulation (1) of regulation 3 counts as the total net worth.

Restriction for RTA

Registrar to an Issue not to act as such for an associate.─

Registrar to an issue shall not be associated with body corporate for acting as registrar for any issue of securities of such body corporate. A person or body corporate will be deemed to be associated if:

(a) Holds directly or indirectly not less than 10 percent of the voting power of the body corporate; or,

(b) Appointed as director or promoter or any of his relative is appointed as director or promoter of the body corporate.

Role of Registrar and transfer agent

(1) Each registrar to an issue and share transfer agent as a corporate entity shall maintain and maintain the following accounts and documents of the eight preceding financial years, namely: -

(a) With respect to the registrar to an issue and share transfer agent being a body corporate

(i) Balance sheet and profit and loss account

(ii) Auditor's report

(iii) Capital adequacy requirements for each quarter.

(b) With respect to the registrar to an issue and share transfer agent not being a body corporate –

(i) Transaction book of all sums of money received and expended by them and the matters in respect of which the receipt and expenditure take place;

(ii) Assets and liabilities; and

(iii) Capital adequacy requirements for each quarter.

(2) Each registrar to an issue shall also maintain the following records with respect to:-

(a) Each and every application received from investors in respect of an issue;

(b) Each and every application of investors rejected and reasons therefor;

(c) The basis on which investors are allocated securities as decided in consultation with the stock exchange;

(d) Terms and Conditions of Buying Securities;

 (e) List of names of the investor to whom shares allotted and non-allotted individuals;

(g) Refund notices sent to investors for applications obtained from investors in response to a question;

(h) Any other records as may be required by the Board in order to carry on the activities as registrars to an issue.

Renewal of Registration

The RTA can apply in Form A for renewal of his Registration Certificate three months before the expiry of the term of the certificate. The Board (SEBI) shall treat the extension / renewal application in the same fashion as the application for a new certificate in accordance with Regulation 3. The SEBI undertakes same level of scrutiny and meticulous procedure as if it were granting a new registartion.