Amendments to the Uniform Norms forGood/Bad Deliveries

Apr 16, 1997

Circulars

SECURITIES AND EXCHANGE BOARD OF INDIA
SECONDARY MARKET DEPARTMENT
Mittal Court, A Wing, Gr. Floor,
224, Nariman Point, Mumbai 400 021

SMD/POLICY/CIR/7-97

April 16, 1997

To.
The Executive Directors/ Managing Directors
of all Stock Exchanges

Dear Sir,

SUB : Amendments to the Uniform Norms for Good/Bad Deliveries

Please refer to the circular no. SMD/RCG/2796/96 dated July 16, 1996 and circular no. SMD/RCG/3811/96 dated August 19, 1996 on the Uniform Norms for Good/Bad Deliveries prescribed by SEBI and the subsequent amendments/additions made therein. Based on the various suggestions received and as discussed in the meeting of the Executive Committee of the Inter Exchange Coordination Group and committee on Good/Bad Delivery Norms, it has been decided to modify/amend the Good/Bad Delivery guidelines. You are requested to substitute the clauses mentioned below in place of those stated in the original Annexure.

No.	Description	Good/Bad
62A	Transfer deeds (dated June 1, 1997 and thereafter) bearing rubber stamps on the reverse thereof other than those of members of the stock exchanges/clearing house/clearing corporations, SEBI registered sub-brokers and Remisiers registered with the stock exchanges.	BAD
68	In case of fully convertible debentures, after the debentures have been converted into equity, if call money endorsement has been done only for the equity portion and not for the debenture portion or vice-versa.	GOOD
69	Call paid endorsements made by the Company with call amount and signature of the Authorized Signatory with or without the Rubber stamp of the Company and date of payment of the call.	GOOD
97	Validity period of Company Objection by the last buying broker to be notified to the exchange/introducing broker is 12 months from the date of the objection memo. In all other pending cases of company objections bearing a date prior to July 16, 1996, the validity period will be as per rules - of the respective exchanges - as existing prior to July 16, 1996.
100	Where the shares have been duly transferred by the company in the name of the transferee, and thereafter the company sends a letter informing transferee that the shares have been transferred based on fraudulent documents, such cases can be lodged as company objection subject to the following conditions and procedure : In cases where the company has transferred certificates which are fake and later sends a letter informing that the shares have been transferred on fraudulent certificates, such cases will NOT be treated as company objections and the company will be responsible for the transfer. In cases where the shares are under stop transfer, stay order, non-transferable (lock-in period) or shares are partly paid and the company has transferred the shares and later sends a letter informing that the shares have been transferred on fraudulent documents, such cases will NOT be treated as company objections and the company will be responsible for the transfer. In cases where the certificates are genuine but the transfer deed is forged (i.e. the company has transferred the shares in good faith) the shares can be accepted as company objection. In such cases the company should necessarily enclose the copies of both sides of the transfer deeds based on which shares were transferred by the company in favor of the holder and which later on has been found to be based on forged documents, and all subsequent transfers thereafter along with the objection. Procedure : (In order to simplify the understanding of the procedure, the following illustration has been used: A---> B ---> C ---> D---> X ---> Y ---> Z The shares were first sold through ‘A’ in the market. After passing through ‘B’ and ‘C’ the shares were lodged by ‘D’ to the company for transfer. After receiving the shares duly transferred from the company in his name ‘D’ sold the shares in the market. These shares after passing through ‘X’ and ‘Y’ are finally sent by ‘Z’ to the company for transfer in his/her name. After receiving the shares from the company duly transferred in his name, ‘Z’ has received a letter from the company stating that the shares transferred in the name of ‘D’ were based on fraudulent documents. ‘Z’ will report the objection along with the company objection against ‘D’. ‘D’ will rectify/replace the shares within 21 days as per the BDC procedures. ‘D’ may in turn lodge the bad delivery for rectification through the BDC against ‘A’. The validity period of reporting such cases will be 36 months from the date of latest transfer by the company (in the above example 36 months from the date the shares were transferred in the name of ‘Z’). The company will also furnish copies of both sides of transfer deed based on which shares were transferred in favor of ‘Z’ and ‘D’ along with the objection memo.
101	In case of joint holding, and in event of death of any of the holders, transfer can take place on the basis of death certificate accompanying the transfer deed only for a period of two years from the date of the death or ensuing book closure, whichever is later.
109	For reporting missing/lost/stolen shares as objection the following documents are required : A. If they are returned as objection from the company due to above reason: company objection memo stating that the shares are missing/lost/ stolen accompanied by a copy of Court Order or FIR or copy of acknowledged police complaint copies of both sides of the transfer deeds copies of both sides of the share certificates B. Otherwise one of the following documents are required : public notice given by the company /registrar notification from any stock exchange letter of intimation from the company to stock exchange

Yours faithfully,

O. P. GAHROTRA
SENIOR EXECUTIVE DIRECTOR
SECONDARY MARKET DEPARTMENT

cc to

a] Chairman’s Secretariat.
b] All Executive Directors, Division Chiefs and Regional Managers of SEBI.
c] All SEBI Nominee Directors on the Board of Exchanges.
d] All Division Chiefs requested to circulate to all their officers.

Note :

SMD Stock Exchange Administration Division to follow-up with the Exchanges for implementation of the decisions.

All the SEBI Nominee Directors on the Board of the Exchanges to follow-up the issues in the Board Meeting of the Exchanges.