SEBI’s Rescue Plan for Legacy Investors: New Window to Demat Pre-2019 Paper Shares

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SEBI has proposed a new framework to help investors stuck with pre-2019 physical share transfers that couldn’t be dematerialized due to regulatory changes. The plan includes a special demat window, simplified documentation, and company obligations to verify ownership. It aims to resolve long-pending investor grievances and clean up legacy paper holdings.

Unlocking Old Wealth: SEBI’s New Plan to Demat Pre-2019 Paper Shares

In a major relief for thousands of investors holding physical share certificates, the Securities and Exchange Board of India (SEBI) has released a consultation paper proposing a mechanism to recover and dematerialize shares transferred before April 1, 2019. These shares have remained in limbo due to a regulatory shift that barred physical transfers post-2019, leaving many investors unable to claim ownership despite valid transactions.

Key Highlights of SEBI’s Proposed Framework:

Special Demat Window for Legacy Transfers

SEBI proposes a one-time window for investors to dematerialize shares transferred before April 1, 2019, even if the transfer wasn’t recorded in the company’s books.

This is aimed at legitimate buyers who completed transfer deeds but were caught in the regulatory transition.

Simplified Documentation Process

Investors will need to submit transfer deeds, identity proof, and PAN to initiate the demat process.

In cases where sellers are deceased or unreachable, alternate verification methods will be allowed.

Company Obligations and Timelines

Companies will be required to verify ownership claims and respond within a stipulated timeframe.

If no objection is raised, the shares will be credited to the buyer’s demat account.

Investor Protection and Transparency

The move is part of SEBI’s broader push to digitize securities and resolve legacy issues.

It also aims to reduce legal disputes and enhance market integrity.

Public Feedback Invited

SEBI has opened the proposal for public comments until November 17, 2025, encouraging stakeholders to weigh in on the draft mechanism.

This initiative could unlock billions in dormant investor wealth, especially for those who unknowingly inherited or purchased shares before the demat mandate. It reflects SEBI’s commitment to inclusive market access and regulatory fairness.

Sources: The Hindu Business Line, SEBI Official Consultation Paper

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