|
MRD/DoP/Dep/SE/Cir-13/06
September 26, 2006
1. All Stock
Exchanges
2. NSDL
3. CDSL
4. All Custodians
Dear Sirs,
Sub: Mandatory requirement of Permanent
Account Number (PAN) – Issues and clarifications
1. This is further to SEBI Circular No.
MRD/DoP/SE/Cir-8/2006 dated July 13, 2006 making, inter-alia, PAN mandatory
for trading in the cash market with effect from October 1, 2006 and SEBI
Circular No. MRD/DoP/Dep/Cir-09/06 dated July 20, 2006 offering clarifications
pertaining to Mandatory requirement of PAN for operating Beneficiary Owner
Account (BO) in the depository system.
2. Subsequent to the issue of above-referred SEBI
Circulars, market participants have made further representations and
suggestions and sought clarifications on the various issues from SEBI.
3. The further representations made and
clarifications sought covered mainly the following aspects:
3.1. Exemption from the requirement of
verification with the original PAN Card in respect of the institutional
clients. Some of the brokers have expressed difficulty in verifying the PAN
of institutional clients with the original PAN card as they are dealing
through the custodians and not directly with their clients.
3.2. Some of the Investors have represented to
SEBI seeking exemption for the joint account holders from the mandatory
requirement of PAN.
3.3. Requests have also been received from
various market participants for extending the present deadline of September
30, 2006 due to the following reasons:
Some of the BOs
have PAN but not the PAN Card.
Many others have
PAN Allotment Letter and have applied for duplicate PAN Card as earlier PAN
card was reportedly not issued by the Income Tax Department.
Many investors
have applied for PAN but have not received the same.
In respect of
many investors, PAN has been captured, but verification is in process.
3.4.Further, brokers have requested that
clarifications issued by SEBI vide SEBI Circular No.MRD/DoP/Dep/Cir-09/06 dated
July 20, 2006 may be made applicable to trading in the cash market also.
4. Upon
careful consideration of the representations and discussions with the
market participants, the clarifications are as under :
4.1. In view of the difficulties expressed by the
stock brokers in verifying the PAN of the institutional clients with the
original PAN card, the custodians are advised to verify the PAN details of
the institutional clients with the original PAN card and provide copy of
such verified PAN details to the brokers duly certified. This would be
applicable in respect of institutional clients, namely, FIIs, MFs, VCFs,
FVCIs, Scheduled Commercial Banks, Multilateral and Bilateral Development
Financial Institutions, State Industrial Development Corporations, Insurance
Companies registered with IRDA and Public Financial Institution as defined
under section 4A of the Companies Act, 1956.
4.2. In the light of the practical difficulties
expressed by various market participants as detailed above in adhering to
the present deadline of September 30, 2006, the present deadline has been
extended to December 31, 2006, as a one time measure.
4.3. The clarification contained in para 4.1 of
the SEBI Circular No. MRD/DoP/Dep/Cir-09/06 dated July 20, 2006 providing a
grace period of 30 days to the entities registered with SEBI u/s 12 of the
SEBI Act, 1992 stands withdrawn.
4.4. The clarifications as contained in Paras 4.2
to 4.9 of the SEBI Circular No. MRD/DoP/Dep/Cir-09/06 dated July 20, 2006
are also applicable to trading in the cash market. A copy of the said
circular is enclosed as Annexure I.
5. The Depositories are advised to:-
5.1. Bring the provisions of this circular to the
notice of the DPs of the Depositories and also to disseminate the same on
the website;
5.2. Include the aforesaid clarifications, as
applicable, in the advertisement campaigns released by them from time to
time for better understanding of the investors;
5.3. Make amendments to the relevant bye-laws,
rules and regulations for the implementation of the above decision
immediately, as may be applicable/necessary;
5.4. Communicate to SEBI the status of the
implementation of the provisions of this circular in the Monthly
Development Report.
6. The Stock
Exchanges are advised to :
6.1 Make necessary amendments to the relevant
bye-laws, rules and regulations for the implementation of the above
decision immediately.
6.2 Bring the provisions of this circular to the
notice of the member brokers/clearing members of the Exchange and also to
disseminate the same on the website.
6.3 Communicate to SEBI, the status of the
implementation of the provisions of this circular in Section II, item no.
13 of the Monthly Development Report.
7. This circular is being issued in exercise of
the powers conferred by Section 11 (1) of Securities and Exchange Board of
India Act, 1992 to protect the interest of investors in securities and to
promote the development of, and to regulate, the securities market.
Yours faithfully,
V.S.
SUNDARESAN
Encl: As above
Annexure I
GENERAL
MANAGER
MARKET
REGULATION DEPARTMENT
MRD/DoP/Dep/Cir-09/06
July 20, 2006
|
The Chairman & Managing Director
National Securities Depository Ltd.
Trade World,
Kamala Mills Compound,
Senapati Bapat Marg, Lower Parel,
Mumbai – 400 013
|
The Managing Director & CEO
Central Depository Services (India) Ltd.
Phiroze Jeejeebhoy
Towers,
Dalal Street, Fort,
Mumbai 400 023
|
Dear Sirs,
Sub: Mandatory requirement of Permanent
Account Number (PAN) – Issues and clarifications
1. This has reference to NSDL Circular No.
NSDL/POLICY/2006/0007 dated March 03, 2006 and CDSL Communiqué No.
CDSL/OPS/ DP/657 as well as CDSL/OPS/DP/666 dated February 07, 2006 and
March 08, 2006, respectively, on the captioned subject.
2. During the course of implementation of the
aforesaid requirement, certain operational issues have arisen and
accordingly, the market participants have made representations and
suggestions and sought clarifications on the various operational issues
from SEBI.
3. The representations made and clarifications
sought covered the following aspects:
Exemption to
certain categories of entities registered with SEBI and verification of
documents for proof of address.
Exemption to
Non-Resident Indians (NRIs)/Persons of Indian Origin (PIOs).
Exemption to
persons having PAN but not the PAN card.
Exemption to UN
entities and multilateral agencies which are exempted from paying
taxes/filing tax returns in India.
Exemption to
investors residing in the State of Sikkim.
Verification of
PAN card details in respect of accounts opened for HUF, AoP, Partnership
Firm, Minor, etc.
Verification of
PAN card details wherever slight mismatch appears as well as where there is
a difference in maiden name and current name of the investors.
4. Upon careful consideration of the
representations and discussions with the market participants, the
clarifications are as under :
4.1. All entities registered with SEBI under
Section 12 of the SEBI Act, 1992 and having some difficulty in producing
PAN card for verification at the time of opening the Beneficiary Owner (BO)
account may be permitted to open a BO account without producing the PAN
card. However, such entities would be required to submit the PAN card to
the Depository Participants (DPs) within a period of 30 days from the date
of opening of the BO account for verification, failing which the DPs shall
freeze such accounts as "Suspended for Debit" till such time the
PAN card is produced for verification.
4.2. As regards proof of address of
FIIs/sub-accounts, a copy of the Power of Attorney (POA) given by the
FIIs/FII sub-accounts to the Custodians (which are duly notarized and/or
apostiled or consularised) that gives the registered address of the
FIIs/sub-accounts can be accepted as proof of address.
4.3. The NRIs/PIOs would be required to comply
with the mandatory requirement of producing PAN Card at the time of opening
a BO account. However, such NRIs/PIOs who are not able to obtain PAN for
one reason or the other but are holding securities in physical form and
desire to sell the same, may be permitted to open a "limited purpose
BO account" without PAN. The operation of such BO accounts shall be
subject to the following conditions :
These accounts
will be "suspended for credit", which means, only credits arising
out of corporate benefits and demat of physical certificates will be
permitted.
These accounts
cannot be used for getting credit from IPOs, off-market transactions or any
secondary market transactions, etc.
These accounts
can remain operational only for a limited period of 6 months from the date
of opening of the account. Meanwhile, the account holders may be permitted
to convert the account into a normal BO account subject to complying with
the PAN requirements. If the Account holder fails to produce the PAN
card within the stipulated period of 6 months, the DPs shall freeze such BO
accounts.
The account
holders shall be permitted to sell the securities lying in these accounts
only through a registered broker on the stock exchange.
4.4. U.N. entities/multilateral agencies which
are exempt from paying taxes/filing tax returns in India are
exempted from the mandatory requirement of PAN. The exemption, however,
would be subject to the DPs collecting documentary evidence in support of
such claim of the investors.
4.5. Any investor who has PAN but not having the
PAN card may be permitted to open BO Accounts subject to producing the PAN
allotment letter. However, such investors would be required to produce the
PAN Card on or before September 30, 2006 failing which the DPs shall freeze
such accounts as "Suspended for Debit" till PAN card is produced
for verification.
4.6. In case of HUF, Association of Persons
(AoP), Partnership Firm, Unregistered Trust, etc. –- though the BO account
would be in the name of natural persons, PAN of the respective HUF, AoP,
Partnership Firm, Unregistered Trust, etc shall be obtained.
4.7. As regards Registered Trust, Corporate
Bodies and minors, PAN of the respective entities shall be obtained when
accounts are opened in their respective names.
4.8. In case where there is difference in the
maiden name and current name of the investor (predominantly in the case of
married women), DPs can collect the PAN card proof as submitted by the
account holder. However, this would be subject to the DPs verifying the
veracity of the claim of such investors by collecting sufficient
documentary evidence in support of the identity of the investors as
provided in the SEBI Circular No. MRD/DoP/Dep/Cir-29/2004 dated August 24,
2004.
4.9. In the light of the observations of the
Hon’ble High Court of Sikkim in its Order dated March 31, 2006 as forwarded
by the Sikkim Chamber of Commerce vide their letter No.See/52/06-07 dated
May 11, 2006, the investors residing in the State of Sikkim are exempted
from the mandatory requirement of PAN. However, this would be subject to
the DPs verifying the veracity of the claim of the investors that they are
residents of Sikkim, by collecting sufficient documentary evidence in
support of their address as provided in the SEBI Circular
No.MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004.
5. The Depositories are advised to:-
5.1. Bring the provisions of this circular to the
notice of the DPs of the Depositories and also to disseminate the same on
the website;
5.2. Include the aforesaid clarifications in the
advertisement campaigns released by them from time to time for better
understanding of the investors;
5.3. Put up all such communications which may be
useful for investors at large on their websites;
5.4. Ensure that proof of address (POA) is
collected for all the account holders as is being done in the case of Proof
of Identity (POI).
5.5. Make amendments to the relevant bye-laws,
rules and regulations for the implementation of the above decision
immediately, as may be applicable/necessary;
5.6. Communicate to SEBI the status of the
implementation of the provisions of this circular in the Monthly
Development Report for the month of August, 2006.
6. This circular is being issued in exercise of the
powers conferred by Section 11 (1) of Securities and Exchange Board of
India Act, 1992 to protect the interest of investors in securities and to
promote the development of, and to regulate, the securities market.
Yours faithfully
V. S. SUNDARESAN
 
[ Eligibility Criteria ] [ Transferability ] [ Member Dealer List ] [ Fee Structure ] [ Circulars
]
|
