Newsletter: SEBI Opens Special Window for Re-lodgement of Transfer Requests of Physical Shares

Introduction

SEBI, through its circular no SEBI/HO/MIRSD/MIRSD-PoD/P/CIR/2025/97 dated July 2, 2025, has issued a special window for the re-lodgement of transfer requests of physical shares. It stands as a relief for investors who missed crucial deadlines stated for the transfer of their physical securities. The circular was issued inter alia in light of numerous representations received from investors, RTAs, and listed companies on behalf of investors who had been rendered helpless, unable to complete the share transfer process within the specified time.

This intervention of the regulator continues with SEBI’s commitment towards enhancing the ease of investment opportunities in the Indian securities market while upholding investor interests. This particular circular addresses those investors who had initiated the transfer processes for their physical shares before the time demanded but were unable to complete them due to deficiencies or issues that arose from the processes involved. This measure goes to show that the regulator takes a very responsive approach whenever genuine investor grievances need to be addressed, bearing in mind the integrity of the securities transfer system.

Legal Framework and Regulatory Background

The basis for this circular is the regulatory powers conferred upon SEBI by Section 11(1) of the Securities and Exchange Board of India Act, 1992. It is issued under the authority of regulation 102 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and the SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993. Together, these provisions empower SEBI for the protection of investor interests and for the development and regulation of the securities markets.

The regulatory timeline paving the way for this circular started with the discontinuance of physical mode transfers of securities with effect from April 1, 2019. This was perhaps the most significant moment that paved the way for the full-fledged dematerialisation of securities in the Indian capital markets. But, as investors faced practical difficulties, SEBI had initially provided that transfer deeds lodged before the April 1, 2019, deadline that had been rejected or returned because of document deficiencies could be re-lodged with the requisite documents.

In the aftermath, SEBI had determined March 31, 2021, to be the last date for re-lodgement. This deadline was given so that investors would have adequate time to complete their pending transfer formalities, but it would signify the end of days of the physical transfer system. On actual implementation, however, several transferees could not meet this extended deadline either because of a lack of awareness or documentation or due to procedural complexities.

The process of arriving at the current circular involved a very wide consultation with stakeholders. SEBI received representations from a cross-section of stakeholders, including investors, RTAs, and listed companies, regarding the continuing plight of investors who had missed the March 31, 2021, deadline. Considering such issues in a holistic manner, SEBI constituted a Panel of Experts comprising RTAs, listed companies, and legal experts. The deliberations of this Panel and the recommendations thereon constitute the basis for the current regulatory intervention.

Important Amendments and Provisions

The circular introduces a special window exclusively for re-lodgement of transfer deeds that were originally lodged prior to April 1, 2019, but were subsequently rejected, returned, or not attended to due to deficiencies in documents, processes, or other reasons. This special window will continue for six months, starting from July 7, 2025, and ending on January 6, 2026. The time limitation of such a window emphasises SEBI’s intent to grant a final opportunity as a bolt closure to the legacy physical transfer issues.

A very important facet in the new mechanism is the stipulation that all securities re-lodged for transfer during this period shall be issued only in Demat mode. This provision is aligned with SEBI’s larger objective of inculcating dematerialisation and ensuring that the investors get their securities in the safest and most efficient form. The transfer-cum-demat process shall be carried through due to procedural requirements so as to comply with existing regulatory stipulations.

For prompt processing of requests, these circulars require RTAs and listed companies to form dedicated teams handling the transfer requests. The idea behind this dedicated resource allocation is to help process the requests quickly without compromising on quality and compliance. Furthermore, RTAs and listed companies are to submit monthly reports to SEBI covering publicity and share re-lodging for transfer-cum-demat in the specified SEBI format.

The reporting framework is to entail detailed parameters such as the number of requests received during the month, requests processed, approved requests, rejected requests, and the average time taken for processing requests in days. Such an exhaustive reporting mechanism would empower SEBI to gauge the special window’s effectiveness and intervene in overseeing it if the need arises.

Conclusions

The special window’s introduction is an example of the SEBI maintaining a balanced approach in redressing investors’ grievances while focusing on regulatory efficiency. The six-month window hence gives ample time to eligible investors to pursue their pending transfers, while the January 6, 2026, cut-off date puts a firm closure on other entailed physical transfer issues. Mandatory dematerialisation symbolises SEBI’s roadmap towards modernising the securities transfer system to protect the investors.

From an implementation angle, the detailed reporting will become an insightful tool for tracing the special window’s effectiveness and measuring the quantum of pending transfer issues in the market. The monthly reporting will actually allow real-time rendering of intervention support or course correction if necessary. In the interest of transparency for all stakeholders, SEBI has made the circular available on its website under the ‘Legal → Circulars’ category.

Such regulatory intervention corroborates the wider SEBI agenda of facilitating ease of doing business in India while providing sound mechanisms for investor protection. The special window serves as a bridge between the legacy physical transfer system and the modern dematerialised framework so that no genuine investor is hurt due to procedural or timing factors. As the Indian securities market seeks to further progress along the digital and efficient path, such targeted measures depict the regulator’s responsiveness to challenges at the grassroots level, while not losing sight of the over-arching goal of market development and investor protection.