Excerpts in form of FAQs – NSDL and CDSL webinar on PAN freezing held on September 24, 2023 – Relevant for companies newly listed entities who are doing PAN freezing at designated depository level for the first time - MMJC

Q.1. From when is PAN freezing required to be done?

Even if the company closes the trading window from any date prior to end of quarter  automated freezing at the Designated depository will start from  first day of every quarter only. Company will continue to have to track trading of days starting from window closure till first day of every quarter. E.g., company has practice of closing trading window on 20th day of last month of quarter then from 20 till 1st there will be no automated freezing. Company shall continue to track trading.

Company can do automated freezing any time prior to 28th (T-2) of end of every quarter. NSDL and CDSL have asked companies not to postpone freezing till last day i.e., 28th. Even if company freezes PAN early pdf. intimation to stock exchanges about window closure can be given till quarter end (i.e., 30 or 31).

Q2. Whether it is mandatory to freeze PAN of immediate relatives of designated persons also?

PAN of immediate relatives of designated persons can be freeze voluntarily.

Q3. As per SEBI PIT timing for re-opening of trading window shall be determined by compliance officer after considering factors including the UPSI becoming generally available and being capable of being assimilated by the market which in any event shall not be earlier than 48 hours after information becomes generally available. So, it is upto compliance officer to determine re-opening date of trading window. Will this date only be considered by CDSL and NSDL for the purpose of re-opening of trading window?

OR  

Whether trading window re-opening date as determined by compliance officer and as determined by designated depository needs to be same?

Designated depositories seek date of closing of trading window and re-opening of trading window. It does not specifically seek date of board meeting. E.g. for quarter ended September 2024 start date of trading window closure would be October 1 and if trading window re-opening date is inserted as November 3, then it will be considered that October 31 was board meeting date

Q4. Once a company puts a board meeting date, window closure end date will be automatically counted, or it will have to be inserted on the designated depository portal?

Once a company puts a board meeting date window closure end date will be automatically counted. E.g., if we put October 13 as board meeting date as per designated depositories system window will remain close till oct 15.

Q5. In the absence of PAN what details needs to be given for the purpose of PAN freezing with designated depositories?

In case PAN is not there then demat account details needs to be given for including Hon’ble President of India, foreign nationals, and Sikkim residents.

Q6. Security level PAN freezing will happen in all demat accounts associated with PAN?

Yes. Security level PAN freezing will happen in all demat accounts associated with the PAN and having that particular security for which freezing is being done. E.g. if Mr A holds shares of ABC ltd in one demat account with his father as second holder and one demat account where his mother is first holder then both these demat accounts will have security level PAN freeze as his PAN is associated with two demat accounts.

Once PAN of DP or his immediate relative is entered all demat accounts associated with that PAN would come under purview of freezing even if DP is first, second or third holder.

Q7. Whether it is necessary to fix board meeting date before the end of quarter in order to mention ‘start date’ and ‘end date’ of PAN freezing at security level with NSDL or CDSL?

The board meeting date need not be fixed before the end of the quarter. Tentative date can be mentioned for automated freezing. But this tentative date needs to changed well in time on NSDL and CDSL portal. E.g., if tentative BM date is mentioned on NSDL and CDSL portal as October 20 and then there is a change in date of board meeting to November 14, then this revised date needs to be updated with CDSL and NSDL on or before October 18 (i.e. T-October 20) otherwise October 20 would get freeze as board meeting date.

Q8. How will the designated persons or their immediate relatives become aware about security level PAN freezing?

An email and a normal text message are sent to DPs or immediate relatives whose PAN is frozen.

Q9. How will PAN freezing be done on the joining of a new person or resignation of an employee?

In case of change in designated persons freezing of PAN at security level will start once his credentials are uploaded on CDSL or NSDL portal. If any designated person joins the organisation then PAN freezing will start two days after his name is entered on NSDL or CDSL portal. All data for automated freezing would be taken from system driven disclosures data posted on designated depositories portal. Hence joining and cessation shall be promptly updated in system driven disclosure database.

Q10. Will exercise of ESOP be allowed during PAN freezing?

Exercise of ESOP is not allowed during automated freezing. Allotment of shares under ESOP is allowed through corporate action even during PAN freezing period.

Q11. Can pledge of securities or repledge of securities be done during security level PAN freezing?

Release of pledge or repledge allowed during freezing by giving exemption only if the pledge was created prior to trading window closure (i.e., October 1).

Q12. Whether a list of DPs whose security level PAN freezing is done would be available?

Yes. A list of DPs whose accounts are frozen would be available in downloadable format. NSDL and CDSL have released an operational circular for guidance on automated freezing.

Q13. If due to some reason company is unable to conduct board meeting within 45 days from end of quarter, then how will PAN freezing work?

If the company wants to conduct a board meeting on November 30. (i.e., post 45 days) then entry in designated depositories for the same can be made till Nov 15 and not post that. This needs to be confirmed on a case-to-case basis with NSDL and CDSL.

Q14. Can exemption be granted to certain DPs or their immediate relatives from security level PAN freezing?

Exemption from this automated freezing can only be given for reasons mentioned in PIT regulation (i.e., where window closure will not apply). These reasons given in the system would be recorded and shared with exchange and SEBI.

Q15. Whether partly paid-up shares and rights entitlement are subject to security level PAN freezing?

The list of ISIN to be freeze in provided by exchanges to depositories. So, if ISIN of partly paid-up shares and rights entitlement is generated before trading window closure period then ISIN of partly paid-up shares and rights entitlement would also be freeze but if they are generated post trading window closure then freezing would not be done.