Day: February 27, 2013

Currently, many investors—especially senior citizens—who have physical shares are finding it difficult to convert them into demat form. These investors are also struggling to claim their bonus shares and split shares issued by their respective companies. A large number of investors still hold shares in physical form.

 

Most of these shares were purchased by investors as long term investment. Also, they didn’t intend to trade or sell their shares. Hence these investors didn’t convert their shares to demat form and pay for demat or annual maintenance charges of depository participants.

 

For these investors, bonus shares, rights or splits are issued in physical form. Investors often complain that the bonus, rights or split shares are lost in transit after the companies claim to have mailed them. When that happens, the process of getting duplicate share certificates is very tedious and complicated. The investor has to a lodge an FIR (first information report) along with many documents since there are chances that the share certificate would be misused—leading to a financial loss.

 

Heena Thakkar, a Mumbai-based investor—who had lost her physical share certificates recently—said, “To obtain duplicate share certificates, an investor has to prepare an affidavit, surety and indemnity bond agreement. The investor needs to publish a general notice in a government gazette declaring the loss of share certificates. The cost of the publication of the general notice is normally borne by the shareholder.”

From: Goverdhan Binani <gd_binani@yahoo.com>
To: Mr.U K SINHA <chairman@sebi.gov.in>
Sent: Saturday, November 17, 2012 12:01 PM
Subject: Request to consider sympathetically the proposal being submitted herewith

Dear Sir,

                           Subject: Pl. extend your support to senior citizen / investors

 As we all know presently – very small quantity of issued shares in old companies are still held in physical form mostly i.e. 95% by senior investors [ due to age ] which they got either due to IPO / FPO allotment OR on buying from the secondary market in their early age ] and due to so many reasons these could not be converted into electronic mode i.e dematerialised.

 In order to minimise further issue of physical shares to these small retail shareholders SEBI should make it mandatory for co. who intends to issue Bonus shares or shares arising due to merger / demerger / amalgamation / split / consolidation etc.etc.to obtain consent by inviting / forwarding suitable format with a choice to furnish their demat a/c details within working fifteen days [ i.e. excluding holidays ] of receipt either over email  or submitting hard copy.

 Further as every one knows there are very few companies who call back physical shares at the time of issuing shares due to split,amalgamation,merger or demerger whereas mostly issue without calling back physical shares and in both the cases old scrips become non tradable and requires to be destroyed. In first scenario there are numerous example where these old guys suffer when they fail to surrender their holdings as duplicate issue norms is not only time consuming but also cumbersome.To lodge an FIR is not an easy job for lay investors and especially for senior citizens who don’t have the stamina to follow the lengthy process of getting the duplicate scrips.This is highly tiring for senior citizens.

 In view of above pl.consider to rectify the present process replacing with a simple investor friendly process i.e. scrips should be released only on execution of an indemnity bond  as this method certainly not only help these old guys but also help in reducing physical shares from market holding – as now a days SEBI is not permitting companies to issue shares in physical mode except ag. right,Bonus and on merger/demerger /amalgamation – that is also only to those who hold physical holding.

 Further due to  amendment in clause 5A of the Equity Listing Agreement for dealing with unclaimed shares in physical form – it is requested to pay your sympathetic consideration and extend your active support so that it gets implemented without any further delay which in turn will provide a great relief to these senior investors [ citizens ].

 Awaiting your action taken response.

 G D Binani

 BIKANER