SEBI proposes uniform framework for smooth transfer of securities to legal heirs
The aim of these changes is to make the securities transmission process easier and smoother, while avoiding unnecessary tax-related complications.
SEBI stated that a nominee who acts as a trustee of the securities of the original holder may be assessed for tax when transmitting these securities to the legal heir, despite provisions under the Income Tax Act that do not consider such transmission a transfer.
The market regulator said that the payment of capital gains tax by the nominee in such cases may not be appropriate, given that the securities ultimately belong to the legal heir and are merely being transmitted by the nominee.
SEBI has proposed that a standard reason code TLH be used by reporting entities when reporting the transmission of securities from nominee to legal heir to the Central Board of Direct Taxes (CBDT). This would help ensure proper application of the provisions of the Income Tax Act, 1961.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
an hour ago
- Mint
Mint explainer: Sebi moots reboot of 1992 broker rulebook
The Securities and Exchange Board of India (Sebi) has issued a consultation paper proposing a ground-up rewrite of the 1992 Stock Brokers Regulations to simplify compliance, codify key circulars, and align the rules with today's tech-driven markets. It has invited public comments until 3 September. Mint breaks down what changes most for brokers, investors, and markets. What are the proposed definitions? Sebi has included definitions of 'algorithmic trading', which is order generated using automated execution logic and 'execution only platform (EOP)', a digital/online platform that facilitates subscription, redemption and switch transactions in direct plans of mutual fund schemes. Sebi also deleted the definition of a 'small investor' as the threshold of ₹50,000 was considered an outdated classification. Legal experts who advise brokers believe the proposed definitions may be too broad or missing out on spelling out exceptions. Sonam Chandwani, managing partner of KS Legal, said the proposed algorithmic trading definition is so broad that it risks capturing everything from basic order-routing tools to high frequency trading (HFT). 'This approach could subject low-risk participants to disproportionate compliance obligations designed for far more sophisticated and potentially disruptive trading systems." Chandwani said. How will registration and governance change? Sebi's consultation paper has specified that at least one designated director must be resident in India (182+ days per financial year) for broker-companies at registration consideration. It also specified that brokers must intimate Sebi (via an exchange) and other market infrastructure institutions (MIIs) of any 'material change" in registration information, not just change in control. Change-in-control approvals are to be routed through an exchange. Lawyers said the new 'material change" intimation will raise compliance overhead and may trigger disputes unless Sebi/exchanges clearly define scope, timelines, and formats through circulars. 'What is material change has not been defined in the proposed regulations. This additional requirement may increase the compliance burden on brokers, and the absence of a clear definition for 'material change' could lead to differing interpretations and potential disputes," said Akshaya Bhansali, managing partner at Mindspright Legal. What is changing for large brokers designated as QSBs? Sebi has proposed to rely on size/scale metrics only for Qualified Stock Brokers (QSB) designations. The metrics will now include active clients, client assets held with the broker, trading volumes, end-of-day client margin obligations, and proprietary trading volumes. Compliance and grievance scores, Sebi suggested, will not be qualifying criteria, as it puts additional burden of compliance on an aspect that is already monitored. Experts said this move is essential. 'While these requirements do increase compliance and operational costs, the large customer bases and high transaction volumes handled by QSBs make it essential for ensuring transparency and maintaining the credibility of market intermediaries," said Prakarsh Gagdani, chief executive officer (CEO) at Torus Digital. However, Narinder Wadhwa, managing director & CEO of SKI Capital Services Ltd, said the debate of compliance burden for QSBs being proportionate or overly stringent remained, potentially affecting competitiveness. How is recordkeeping and digitisation being streamlined? Sebi has proposed permitting electronic maintenance of books or records, essentially removing physical-security-era requirements, which includes paper contract note copies. Brokers must inform exchanges (not Sebi directly) where books/records are maintained, Sebi said, aligning submissions and communication through the exchanges. 'Changes in documentation, compliance technology, and reporting structures could require significant investment. There could be possible shifts in client onboarding norms, record-keeping formats, and real-time reporting obligations", Wadhwa said. How will fees and net worth requirements change? The consultation paper removes references to the outdated 1990s transition-year and has standardised fee payment processes and timelines through exchanges and online gateways. Exchanges collected these fees segment-wise. Sebi also proposed to remove the fixed base net worth and the formula-based variable net worth in the current regulations tied to client cash balances at brokers. The regulator reasoned that the provisions became less relevant after it introduced the mandatory upstreaming of client funds to clearing corporations. Through this, the investors' clear credit balances are transferred by the broker to the clearing corporation every day. Experts said the absence of clarity on how 'variable net worth" will be computed created uncertainty for capital planning. 'The shift of variable net worth to circulars means Sebi can change the formula quickly. Helpful if upstreaming lowers balances, but risky if they widen what counts. Large brokers can absorb swings; smaller ones may face sharper, less predictable capital demands", Ajay Kejriwal, executive director at Choice Equity Broking, said. What is the new power to relax strict enforcement? The regulator proposed an enabling provision to relax strict enforcement in specified circumstances such as undue hardship, procedural or technical issues, factors beyond control, and non-relevance for a class. It proposed including a mechanism for confidential treatment of requests or responses for up to 180 days. Legal experts said the discretion seemed inherently subjective. 'Without clearly defined parameters, market participants may challenge decisions as being arbitrary. Further, the provision allows for confidential treatment of such requests and Sebi's responses. So, such relaxations will not be in the public domain for up to 180 days (or not at all if withdrawn)", Bhansali said. Chandwani echoed the view and said that without precise criteria and published interpretive guidance, this flexibility could fuel interpretational uncertainty and litigation. Will inspections increase or be better coordinated? Beyond Sebi's inspection powers, recognised stock exchanges, clearing corporations, and depositories may conduct inspections as per their by-laws, the consultation paper said. Sebi and MIIs will be allowed to conduct joint inspections, aiming to avoid multiple duplicative checks. Lawyers said without a clearly defined jurisdictional hierarchy, regulated entities could be subjected to overlapping inquiries into the same issues. 'This not only creates procedural inefficiency but also heightens the risk of conflicting conclusions between authorities", Chandwani said. What timelines and operational impact should brokers expect? Industry sources note that adaptation windows for paperwork/policy updates could be a few months, with longer lead times for tech/algo controls and full QSB governance uplift; Sebi historically staggers implementation via circulars and master circular updates. 'Most brokers could adapt in six months for paperwork and policy updates, nine months for tech/algo compliance, nine months for full QSB governance upgrades, with likely phased timelines for any new net worth formula, giving smaller brokers extra breathing room", Kejriwal said.
News18
an hour ago
- News18
Electrum launches AIF, targets Rs 500 cr corpus in 2 years
Agency: PTI Mumbai, Aug 14 (PTI) Boutique asset management firm Electrum Portfolio Managers on Thursday said it has launched an Alternative Investment Fund (AIF), Laureate, with a target to raise Rs 500 crore from high-net-worth individuals (HNIs) over the next two years. The fund, which brings the firm's flagship Laureate PMS strategy to a broader investor base in a more flexible AIF format, will follow a benchmark- and sector-agnostic approach using a bottom-up stock selection process based on the Growth at a Reasonable Price (GARP) style, Arpit Agarwal, Co-Founder & CIO, Electrum Portfolio Managers, said. Electrum looks to raise Rs 500 crore from HNIs under the AIF over the next two years, Agarwal said. 'As it is an open-ended fund, we plan to raise Rs 1,000 crore in three to four years," he added. Electrum had assets under management of Rs 790 crore as on June 30, 2025. The fund seeks long-term capital appreciation through a research-intensive approach designed to minimise emotional bias and navigate market volatility. It is open to HNIs, family offices and institutional investors, with a minimum investment of Rs 1 crore as mandated by Sebi norms. PTI HG MR view comments First Published: August 14, 2025, 17:00 IST Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
The Hindu
2 hours ago
- The Hindu
Tata Capital unveils pan-India phygital expansion
Tata Capital Ltd is deepening market penetration to serve it's customers better and will soon embark on pan-India network expansion as per filings in it's updated Draft Red Herring Prospectus (U-DRHP) with market regulator SEBI ahead of its mega IPO. In the filing the company has detailed it's expansion blueprints for scaling the business by ramping up its nationwide physical branch network with an ecosystem of external partners and digital platforms. In its U-DRHP document, the company has highlighted a calibrated omni-channel credit distribution layout, underpinned by a 'phygital model' that enables it to tailor credit offerings based on customer profiles, product types, and locations, thereby optimising reach and delivering a seamless customer experience. As of March 31, 2025, the company has incrementally scaled its physical footprint to 1,496 branches across 1,102 locations in 27 States and Union Territories, up from 867 in March FY 2024 and 539 in March FY 2023. This growth aligns with the company's commitment to deepening market penetration and enhancing customer access, the company said. To drive profitable expansion and targeted credit access, Tata Capital said it deploys geo-analytics and geospatial intelligence to map customer demographics, income clusters, and evolving credit demand. These data-led insights guide branch placement, particularly in high-potential Tier II and III cities, enabling the company to optimise resource allocation, enhance market penetration, and unlock scalable growth, it said. To complement the physical expansion the company has an external partner channels, comprising over 30,000 DSAs, 400 OEMs, 8,000 dealers, and more than 60 sourcing digital partners. Tata Capital said it's digital platforms, including its website, mobile apps, IVR, and partner-integrated interfaces further strengthen its omni-channel presence. As per the DRHP 97.8% of Tata Capital's customers were onboarded through digital platforms in fiscal 2025. It has built a digital infrastructure to improve efficiency, transparency, and customer experience across its lending ecosystem. Its Loan Origination System (LOS) automates the end-to-end loan process and integrates with CRM and loan management systems, enabling faster, data-driven decisions. Advanced technologies such as API-driven automation, multilingual GenAI virtual assistants, and AI-enabled email response systems further streamline onboarding, enhance service delivery, and support scalable growth, the company said. Following the filing of its updated DRHP, Tata Capital now moves closer to its proposed $2 billion IPO, which is expected to hit the market in the first half of September 2025. This will be one of the year's largest IPOs in the financial sector.
