A. Introduction
Regulation 40(1) has been amended vide notification dated January 20th, 20261 to provide that, notwithstanding the general requirement for dematerialisation, registration of transfer of securities executed before April 01st, 2019 and held in physical form shall be permitted, subject to conditions specified by SEBI.
Now, on January 30th, 20262, SEBI issued a new circular (“said circular”) aimed at securing investor rights and providing framework for facilitating the transition of physical holdings into the dematerialized (demat) system.
SEBI’s circular dated January 30th, 2026 creates a new special window for transfer and dematerialisation of physical securities that were sold/purchased prior to April 01st, 2019, which will remain open for one year, i.e. February 05th, 2026 to February 04th 2027.
B. Background
Physical transfer discontinuation (April 01st, 2019): Transfer of securities in physical mode was discontinued w.e.f. April 01st, 2019.
Earlier relief route (re-lodgement): SEBI had clarified that transfer deeds lodged before April 01st, 2019, but rejected/returned for deficiencies, could be re-lodged with requisite documents; and a cut-off of March 31st, 2021 was fixed for such re-lodgements.
SEBI recorded representations that some investors missed the March 31st, 2021 timeline, leading to the first special window in July 02nd, 2025 (re-lodgement only), and then a broader special window in 2026 (transfer + demat), both anchored to the pre- April 01st, 2019 transaction system.
C. The 2026 Amendment
Recognizing that a segment of investors still held physical securities purchased prior to the 2019 deadline but had not yet successfully transferred them, SEBI has now opened a broader special window. This new amendment (Circular dated January 30th, 2026) expands the scope beyond mere “re-lodgement” to include fresh lodgements of physical securities sold or purchased prior to April 01st, 2019.
For clarity with regard to applicability of this proposal, below matrix may be referred to:
| Execution Date of Transfer Deed | Lodged before 01-04-2019? | Original Share Certificate Available? | Allowed in the proposed window? |
| Before 01-04-2019 | No (it is fresh lodgement) | Yes | ✔ |
| Before 01-04-2019 | Yes (it was rejected/ returned earlier) | Yes | ✔ |
| Before 01-04-2019 | Yes | No | ✘ |
| Before 01-04-2019 | No | No | ✘ |
This amendment creates a statutory exception to the otherwise mandatory dematerialisation regime, limited to:
· Transfer deeds executed prior to April 01st, 2019; and
· cases where securities continue to be held in physical form
· special window for this purpose shall start from February 05th 2026 to February 04th, 2027.
D. Comparison of Provisions: 2025 Window vs. 2026 Window
| Feature | 2025 Special Window (July 2025 Circular) | 2026 Special Window (Jan 2026 Circular) |
| Primary Focus | Re-lodgement of deeds previously rejected/returned due to deficiencies. | Transfer and Dematerialisation of physical securities. |
| Eligibility | Only requests lodged before April 01st, 2019, and subsequently rejected. | Includes fresh lodgements for transfers executed prior to April 01st 2019 and previously rejected/unattended. |
| Window Duration | 6 Months (July 7, 2025, to Jan 6, 2026). | 1 Year (Feb 5, 2026, to Feb 4, 2027). |
| Lock-in Period | Not specifically mentioned | Mandatory 1-year lock-in from the date of transfer registration. |
| Mode | Mandatory Demat mode. | Mandatory Demat mode. |
| Key Documents | Requisite documents to fix prior deficiencies. | Original cert, deed, purchase proof, KYC, CML, and Undertaking-cum-Indemnity |
Under the new framework established by the SEBI Circular dated January 30th, 2026, the procedure for processing investor requests for the transfer and dematerialization of physical securities purchased prior to April 01st, 2019, follows a structured step-by-step process:
Step 1: Submission of Documents
The transferee must submit a request to the Registrar to an Issue and Share Transfer Agent (RTA) or the listed company with the following mandatory documents:
• Original security certificate(s).
• Transfer deed executed prior to April 01st, 2019.
• Proof of purchase by the transferee (as available).
• KYC documents of the transferee (as per ISR forms).
• Latest Client Master List (CML) of the transferee’s demat account, which must be less than two months old and duly attested by the Depository Participant (DP).
• A mandatory Undertaking-cum-Indemnity (as per the format in Annexure-A to the said circular).
Step 2: Verification of Identity and Signature
The RTA or listed company performs a rigorous verification process:
• Identity Verification: PAN, identity proof, and address proof of both the transferee and transferor must be verified.
• Name Mismatch: If the name on the PAN card differs from the transfer deed, the investor must submit additional documents (e.g., Gazette notification or Officially Valid Documents) to explain the difference.
• Signature Verification: If signatures are missing or do not match, the procedure follows the guidelines laid down in the Para B of Schedule VII of SEBI (LODR) Regulations, 2015.
Step 3: Handling Untraceable or Uncooperative Transferors
If the transferor is untraceable, uncooperative, or required documents from them are unavailable:
• The company must publish a newspaper advertisement (one in an English daily and one in a regional language daily at the transferor’s last known address).
• The company must wait 30 days from the date of the advertisement for any objections before proceeding with the transfer. Copy of advertisement shall be posted on website of listed company.
• The investor may be charged a minimal fee for this advertisement. Transfer shall be effective after expiry of 30 days.
Step 4: Processing Timeline
The listed company and RTA are mandated to complete the processing of the transfer request within 70 days from the date they receive the complete documentation from the transferee.
Step 5: Registration and Demat Credit
Once the request is approved:
• Mandatory Demat Mode: Securities can only be credited to the transferee in demat mode.
• Direct Credit: The RTA/Company initiates a demat conversion request in the depository system for direct credit to the investor’s account.
• Defacing Certificates: The physical certificates are retained by the RTA and stamped with “Securities issued in dematerialised form”.
Step 6: Implementation of One-Year Lock-in
• The securities are subject to a mandatory lock-in period of one year from the date of registration of the transfer.
• The RTA must intimate the depository to ensure these securities cannot be transferred, pledged, or lien-marked during this period.
• Fraud Detection: If fraud is detected during the lock-in, the lock-in continues indefinitely until a court order is received.
| Important to note: 1. Cases involving disputes between the transferor and transferee are excluded from this special window and must be settled through the Court or NCLT process. 2. In the event of death of the transferee named in the duly executed transfer deed, the legal heir(s) shall be entitled to claim the securities upon submission of requisite documents in accordance with the prescribed transmission procedure. 3. At the time of crediting the securities to the transferee’s demat account, the listed company or its Registrar and Transfer Agent (RTA) shall intimate the concerned depository regarding the applicable one-year lock-in on such securities. 4. Transfer requests received under this framework shall be processed by the listed company / RTA within 70 days from the date of receipt of complete documentation from the transferee. 5. Listed companies, RTAs and Stock Exchanges are required to publicize the opening of the special window through appropriate media channels, including print and social media, at least once every two months during the one-year operational period. |
[1] https://egazette.gov.in/(S(aikxq4eqe4c4twzio5cgirft))/ViewPDF.aspx