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SEBI Framework for Direct Credit of Securities to Demat Accounts

February 12, 2026

A. Introduction

    SEBI has notified a circular dated January 30th, 2026[1] (“said circular” or “2026 circular”) providing the process that materially alters how securities are credited in demat mode pursuant to common investor service requests (duplicate certificate, transmission/transposition, claim from unclaimed suspense account, and certain corporate actions).

    The change is simple in concept: the “Letter of Confirmation (LOC)” step is being removed, and RTAs/issuer companies will instead credit securities directly to the investor’s demat account through a depository-enabled workflow, after prescribed due diligence.

    B. Background

    Previously, when investors requested services such as the issuance of duplicate certificates, transmission, or transposition for physical shares, the process involved a “Letter of Confirmation” (LOC). Under the Master Circular dated June 23, 2025, RTAs would issue this LOC to the investor, who then had 120 days to submit it to their Depository Participant (DP) to have the shares credited to their demat account. This two-step process often led to delays and increased the risk of document loss.

    This newsletter provides following:

    1. Existing Provisions vs. New Provisions
    2. Step-by-step procedure as per said circular
    3. Practical scenario-based question for submitting requests for duplicate certificates.
    4. Process of transmission under new regime and important points to be noted

    C. Existing Provisions vs. New Provisions

    FeatureExisting Provisions (Master Circular 2025)New Provisions (2026 Circular)
    Confirmation ModeRTA issued a physical Letter of Confirmation (LOC) to the investor.Doing away with the LOC requirement entirely.
    Credit MechanismInvestor had to manually submit the LOC to their DP within 120 days.Direct credit of securities into the investor’s demat account initiated by the RTA/Issuer.
    DocumentationRequired submission of various physical forms and confirmation of receipt.Use of Form ISR-4; investors must provide a Client Master List (CML) not older than two months duly attested by DP.
    Transmission of Shares – Detailed process for transmission is explained towards end of this write upShares were credited in demat mode only after receiving a demat request from the claimant based on the LOC.RTAs/Issuers shall transmit securities directly to the claimant’s demat account within 30 days of a valid request.
    Failure to ClaimIf LOC was not submitted within 120 days, shares moved to a “Suspense Escrow Demat Account”.Process is streamlined to reduce such stages through direct RTA-Depository coordination

    D. Step-by-step procedure as per said circular (new regime: direct credit to investor’s demat)

    Step 1: Preparation of Mandatory Documents by the Investor

    Before submitting a service request (such as for duplicate certificates, transmission, or transposition), the investor must ensure they have a functional dematerialisation (“demat”) account. The investor must prepare:

    • Form ISR-4: The standardized form for service requests.
    • Client Master List (CML): A copy of the latest CML for their demat account, which must not be older than two months and must be duly attested by the Depository Participant (DP).
    • Demat Conversion Request Form[1]: A duly filled form for converting the physical securities into electronic form.

    Important:
    1. Investors to have demat account.
    2. Format of Form ISR-4 has been modified in the said circular, listed companies shall modify the form published on its website.

    Demat Conversion Request Form[2]: A duly filled form for converting the physical securities into electronic form.

    Step 2: Submission to the RTA/Issuer

    The investor submits the Form ISR-4, the attested CML, and the demat conversion request form to the Registrar to an Issue and Share Transfer Agent (RTA) or the Issuer Company.

    For requests involving renewal, exchange, endorsement, splitting, consolidation, transmission, or transposition, the investor must also submit the original physical securities certificate(s).

    Step 3: Verification and Due Diligence

    The RTA or Issuer Company verifies the documents and processes the service request. They are responsible for performing the necessary due diligence to ensure the genuineness of the request.

    Step 4: Direct Demat Credit Initiation

    Once the request is verified and any objections are removed, the RTA/Issuer Company does not issue a physical letter. Instead, they initiate a demat conversion request directly in the depository system.

    • The securities are credited directly into the demat account of the holder or claimant.
    • This entire process must be completed within 30 days of receiving the valid request.

    Step 5: Treatment of Physical Certificates

    After processing the request and initiating the credit:

    • The RTA retains the original physical securities (if available).
    • The certificates are defaced with a stamp stating: “Securities issued in dematerialised form”.
    • In cases where the certificate was lost (e.g., duplicate request), there is no requirement for defacing since the physical certificate is unavailable.

    Step 6: Intimation to the Investor

    Following the confirmation of the demat credit, the Depositories, RTAs, or listed companies send an intimation to the security holder or claimant confirming the successful dematerialisation of the securities.

    Additional Notes

    Lock-in Securities: If the securities are subject to a lock-in period, the RTA must incorporate the lock-in details and its duration in the depository system while crediting the securities.

    E. Effective date and transition

    Effective Date: This new procedure officially comes into force on April 02nd, 2026. Any LOCs issued before this date remain valid for submission to a DP within their original 120-day validity window. After this transition window, the LOC route will be fully phased out.

    F. Practical scenario-based question:

    What is the step-by-step procedure and mandatory documentation a shareholder must follow to request a duplicate share certificate under the amended provisions effective April 02, 2026, following the removal of the Letter of Confirmation (LOC) requirement?

    1. Ensure You Have a Demat Account

    2. Prepare the Mandatory Documents

    You must submit the following documents to the RTA of Listed Company:

    Form ISR-4: The standardized form for investor service requests.

    Latest Client Master List (CML): A copy of your CML that is not older than two months and is duly attested by your Depository Participant (DP).

    Demat Conversion Request Form: A duly filled form to facilitate the electronic credit.

    3. Provide Security-Specific Documentation[3]

    The documentation required for the duplicate request depends on the value of the securities (calculated based on the closing price at a recognized stock exchange the day before submission):

    • Value up to Rs. 10,000: You only need to submit a simple undertaking on plain paper in the specified format.

    • Value up to Rs. 10 Lakhs: You must submit an Affidavit-cum-Indemnity bond on non-judicial stamp paper of appropriate value (the value is the higher of the amount prescribed for an affidavit or indemnity individually).

    • Value more than Rs. 10 Lakhs: You must provide the Affidavit-cum-Indemnity bond AND a copy of an FIR (including e-FIR/Police complaint) containing details of the securities (folio number, certificate number, and distinctive numbers). Additionally, the company will publish a newspaper advertisement regarding the loss.

    4. Processing by the RTA/Company

    Once you submit your valid request:

    • The RTA/Issuer Company will verify your documents and perform necessary due diligence.

    • Direct Demat Credit: Instead of sending you a physical letter, the RTA will initiate a demat conversion request directly in the depository system to credit the shares to your account.

    • Timeline: The entire process must be completed within 30 days of the RTA receiving your valid request.

    5. Completion and Intimation

    • Retention of Old Certificates: If you have the physical certificates (e.g., they were torn or mutilated), the RTA will retain them and deface them with a stamp stating: “Securities issued in dematerialised form”. If the certificates were lost, no defacing is required.

    • Confirmation: Once the credit is successful, the Depositories, RTAs, or Listed Company will send you an intimation confirming the successful dematerialisation of your duplicate shares.

    Note for Transition: If you were issued a Letter of Confirmation (LOC) before April 02, 2026, that letter remains valid, and you must submit it to your DP within its original 120-day validity period to receive your shares.

    G. Process of transmission as per new regime:

    The following table details the step-by-step process for transmission requests in both nominee cases and cases where no nomination has been registered, based on the SEBI Master Circular[4] and updated guidelines as of January 30, 2026.

    Step-by-Step Transmission Process

    StepNominee Case (Single Holder Deceased)Other than Nominee Case (Single Holder Deceased)
    1. IntimationThe nominee informs the RTA/Issuer of the holder’s death and is informed of the claim procedure.Legal heirs inform the RTA/Issuer and are provided with document requirements and procedures.
    2. Primary DocumentsSubmit a duly signed Transmission Request Form (TRF) (Annexure 16), original or attested Death Certificate, and self-attested PAN card.Submit a TRF (Annexure 16) signed by all heirs, original or attested Death Certificate, and self-attested PAN cards of all legal heirs/claimants.
    3. Demat & Physical DetailsProvide original security certificates and a Client Master List (CML) of the claimant’s demat account (not older than 2 months and attested by the DP).Provide original security certificates and the CML of the claimant’s demat account (not older than 2 months and attested by the DP).
    4. AffidavitsGenerally not required for registered nominees.Submit a notarized Affidavit (Annexure 17) from all legal heirs regarding identity and claim of ownership.
    5. Legal Evidence of TitleN/AProvide copy of Succession Certificate, Probate of Will[5], or Letter of Administration. If using a Will, include a notarized indemnity bond (Annexure 18).
    6. Simplified Process (Low Value)N/AFor values up to ₹5 lakh (physical) or ₹15 lakh (demat), if legal evidence is unavailable, submit a notarized Indemnity Bond (Annexure 18) and NOC from all legal heirs (Annexure 19).
    7. RTA VerificationRTA verifies documents and must raise all objections, if any, in one single instance.RTA verifies documents and performs enhanced due diligence, including signature and KYC verification across all folios.
    8. Initiation of CreditRTA/Issuer initiates a demat conversion request in the depository system for direct credit; the requirement for a Letter of Confirmation (LOC) has been done away with.RTA/Issuer initiates a demat conversion request in the depository system for direct credit to the claimant’s account.
    9. Completion & IntimationSecurities are credited directly to the demat account within 30 days of receipt of request; claimant receives an intimation of successful credit.Securities are transmitted directly within 30 days of receipt of request; RTA/Issuer sends an intimation regarding the execution to the claimant.
    10. Scrip DefacementRTA retains physical securities and defaces them with a stamp: “Securities issued in dematerialised form“.RTA retains physical securities, defaces the certificates with the required stamp, and maintains records for at least 8 years.

    [1] https://www.sebi.gov.in/legal/circulars/jan-2026/ease-of-doing-investment-and-ease-of-doing-business-doing-away-with-requirement-of-issuance-of-letter-of-confirmation-loc-and-to-effect-direct-credit-of-securities-in-dematerialisation-account-o-_99421.html

    [2] https://nsdl.co.in/services/demat.php

    https://www.cdslindia.com/downloads/DP/currentDPs/DP%20%20Operating%20Instructions%20Annexures%20%20as%20on%20%20Sep%2030,%202020.pdf

    [3] SEBI Circular dated 30.01.2026 https://www.sebi.gov.in/legal/circulars/jan-2026/ease-of-doing-investment-and-ease-of-doing-business-doing-away-with-requirement-of-issuance-of-letter-of-confirmation-loc-and-to-effect-direct-credit-of-securities-in-dematerialisation-account-o-_99421.html

    SEBI Circular dated 24.12.2025 (Duplicate certificates) https://www.sebi.gov.in/legal/circulars/dec-2025/ease-of-doing-investment-review-of-simplification-of-procedure-and-standardization-of-formats-of-documents-for-issuance-of-duplicate-certificates_98668.html

    [4] Master circular- RTA (06.02.2026) https://www.sebi.gov.in/legal/master-circulars/feb-2026/master-circular-for-registrars-to-an-issue-and-share-transfer-agents_99567.html

    [5] As per amendment in section 213 of the Indian Succession Act 1913 submission of probate is no longer mandated by the provisions of the Act. Listed Companies or RTA may ask for probate as an additional document voluntarily.