Sebi plans to issue norms for dealing with unclaimed funds of clients

Sebi plans to come out with a detailed procedure for dealing with unclaimed funds of clients lying with the stock brokers

New Delhi: Markets regulator Sebi plans to come out with a detailed procedure for dealing with unclaimed funds of clients lying with the stock brokers, whereby such trading members will make attempts to find out the whereabouts of the investors for return of money.

In case the end client is not traceable despite the efforts of the Trading Member (TM), the unclaimed funds would be transferred to investor protection funds of stock exchanges on a periodic basis, the Securities and Exchange Board of India (Sebi) said in its annual report for 2022-23.

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This will ensure that unclaimed funds of clients lying with the TMs are returned to the respective clients in a timely and efficient manner.

“It is proposed to have a detailed procedure for treatment of unclaimed funds of clients lying with the TMs, in which the TMs shall make efforts to find out the whereabouts of the clients for return of such funds,” Sebi said.

In September 2022, Sebi directed all entities, which have listed non-convertible securities, to submit information about unclaimed redemption and dividends amount.

In addition, Sebi would examine mandating digital assurance in respect of financial statements disclosed by listed entities.
“There is increasing availability of external information sources that provide information on the listed entity and its financial statements. An auditor may rely on such digital information, from external information sources in its routine nature of auditing,” as per the annual report.

In order to encourage and make the process easier for retail investors to participate in the voting on motions moved by listed companies, Sebi is looking to facilitate various channels for participation such as the website or app of the broker and depository participant.

Also, it is looking to explore the possibility of providing ease of access to reports of proxy advisors, for investors to make an informed decision.