What is a Registrar and Share Transfer Agent (RTA)?

May 24, 2020

Author: Bhaskar Goyal

The Shares Dematerialization became necessary for share transfer in our country, and due to it, RTA plays an important role in mutual fund houses investors and shareholders. A Registrar and Share Transfer Agent like SAG RTA is the SEBI authorised institution that maintains the complete record of transactions and also keeps it up-to-date for any future activities.

The Mutual Fund Houses perform various transactions including digital and manual activities, which can be anything buying, selling, and switching shares. And RTA is responsible to maintain all the records of the transactions.

RTA also helps investors to change personal data which include investor’s addresses, names or bank details, and in email processing too. RTA also keeps their investors up-to-date with the changes in the process, market and offers to provide the best possible opportunity for investment.

By maintaining all the above work Registrar & Share Transfer Agent allow mutual fund houses to focus on their other important works.

The SEBI is an acronym for Securities and Exchange Board of India, It is the regulator of the securities and commodity market in India owned by the Government of India. SEBI is the authority that authorises RTA, it also takes care of work assignment and it is based on the SEBI Act,1993.

Procedure to Register and Transfer Agents with SEBI:

The Applicant has to use Form A to apply for the registration. The applicant also has to submit non-refundable fees, for category 1 the fee is INR 6 lakhs and for category 2 the fee is INR 2 lakhs.
After submitting the form and fee, the board will need some information and to provide the details the applicant also has to be present in person in the board office.
In the case of missing, misleading, incorrect details the board is authorised to cancel the application or give a second chance to do all the correction in a given time limit.

An applicant has to submit an application through a registrar to issue and share transfer agent to gain the certificate need to be submitted to SEBI Board by using Form A. It can be made for the following categories:

Category 1: Can perform the operation as registrar to an issue as well as share transfer agent
Category 2: Allowed to work as either registrar to an issue or share transfer agent

Contrary to all the relevant aspects covered in sub-regulation (1), an application filed by any registrar to any issue or share transfer agent before actualizing, such regulations must match the points mentioned in Form A. it also needs to be received as an application according to the sub-regulation (1)

The Board can ask about the activities and matters that are suitable for the application to provide the certificate.
The board can also ask the applicant or its principal officer to be present in the office if required.

If the submitted application failed to fulfil all the requirements as described in Form A then the board has the authority to reject it as per the sub-regulation (2) of regulation 3 mentioned in the SEBI Act 1992.
The board also has the right to provide an opportunity for the applicant to resolve all the issues within the given time.

The board has to consider all the guidelines, matters and activities before granting the certificate, especially they will check the facts such as.

Whether the applicant

has the mandatory infrastructure facilities such as proper space, equipment, and manpower;
Having experience in the relevant area;
or any other person, whose application has failed to get the registration earlier.
meets the capital adequacy needs, encoded in regulation 7;
has been charged with any offence for punitive action under the SEBI Act or any of its partner, director or principal officer, including a moral offence or condemned for any economic fraud.

Clause (d) of regulation 6 include a capital adequacy requirement, which doesn’t go below the net worth of the applicant that is mentioned in the sub-regulation (2).
The net worth for both categories are given below:
1. Category 1: Clause (a) of sub-regulation (2) of regulation 3 states that INR 50 lakh net worth for an applicant is required.
Category 2: Clause (b) of sub-regulation (2) of regulation 3 mentioned that the net worth of INR 25 lakh is required.
Sub-regulation (3) defines ‘net worth’ as if the applicant is a firm or individual or association of persons then the total value of capital by the applicant to these businesses along with the free reserves of any kind to their business can be considered as the total net worth. If the applicant is a corporate body then as per sub-regulation (1) of regulation 3 the value of free reserve, paid capital denoted in the account book at the time of submission of the registration form will be considered as the total net worth.

If ord found the applicant eligible then they have to inform the applicant about the category they found to be eligible to get the certificate. Additionally, giving the certificate in Form B also depends on the payment as per the regulation 12.

The Registrar can send an application to an issue or share transfer agent for the renewal of the certificate by utilizing the form A before 3 months of the expiry.
The renewal application will go through the same process as it was for granting the certificate as per the regulation 3.
Conditions of Registration: Below conditions will be applied on registration granted under the regulation 8 or renewal granted under regulation 9
1. To change its status or constitution, an applicant must have to get the permission of SEBI to maintain its work with the same power after the change.
2. The Applicant has to pay the fee for registration or renewal according to the SEBI regulation.
3. The applicants have to fulfil the capital adequacy requirements mentioned in regulation 7 of SEBI from the date of getting the certificate until its expiry.
4. It will take all the required action for resolving the problem of investors within a month and inform the board about complaint details and also how you dealt with them.
5. It will also comply with the rules and regulation mentioned in the Act in response to the work it performed while working as registrar.

If the application for registration and renewal failed to fulfil all the requirements as per the regulation 6, Sebi has the authority to reject the application after giving an opportunity.
The refusal response of the board for the application will be informed to the applicant within three days along with the valid reasons.
If the application is not satisfied with the decision of the board then he/she can re-apply as per sub-regulation (2) within 30 days from the date of getting a refusal response.
After getting the application request receipt as per the sub-regulation (3), the board has to reconsider it and inform about receiving in written format as soon as possible.

As per the sub-regulation (2) of regulation 10If the Application of renewal or grant of certificate is declined by the board then the applicant is not allowed to provide any services as RTA from the date when he received rejection receipt.

Each and every applicant who has applied for renewal or grant of the certificate has to submit a fee in a time limit as per denoted in schedule II.
If the applicant failed to pay the fee within the time limit as per denoted in sub-regulation (1), the board can reject the application and the applicant is not allowed to provide Registrar & Transfer Agent Services after it.