Sebi Pushes for Mandatory Demat Issuance of Securities

Sebi aims to mandate listed companies to issue securities in demat form post stock split, consolidation, or mergers. This is to reduce fraud and enhance efficiency. For investors lacking demat accounts, issuer companies will open separate demat accounts. Feedback on the proposal is sought by February 4.

The Securities and Exchange Board of India (Sebi) has issued a proposal to enhance the transition of listed companies towards issuing securities solely in dematerialized form following events such as stock splits, face value consolidation, and corporate mergers or demergers.

To facilitate investors who still do not have demat accounts, the onus will be on issuer companies to open separate demat accounts or establish suitable ownership ledgers. This approach also aims to improve transparency, reduce fraud, and foster regulatory efficacy.

The rules, part of the proposed amendments to the Sebi (Listing Obligations and Disclosure Requirements) Regulations, 2015, intend to curb the fresh issuance of physical security certificates by listed entities while transforming existing ones into demat form. Stakeholder comments have been invited until February 4.

(With inputs from agencies.)