Registrar and Transfer Agents: An Introduction
Registrar and Transfer Agents play a crucial role in the Indian financial markets. They provide a host of different services to both investors and the entities issuing the various financial instruments.
If you’re planning to invest in the financial markets, you need to be aware of what an RTA is and its roles and responsibilities. Continue reading to find out all about these entities and the kind of services they provide.
What is a Registrar and Transfer Agent?
A Registrar and Transfer Agent (RTA), also known as a Registrar and Share Transfer Agent, is an entity that maintains accurate and updated information about the investors of a company or a mutual fund. In addition to record-keeping, RTAs also take care of activities like the issue and transfer of securities and investor grievance redressal, among others.
Since handling all of these roles and responsibilities can drain a lot of resources, companies and mutual fund houses appoint RTAs to act as an intermediary between them and their investors. By outsourcing investor relation activities to an entity like a Registrar and Transfer Agent, organisations can save costs and focus on more important things like running their day-to-day operations.
What are the Roles and Responsibilities of a Registrar and Transfer Agent?
As an investor, understanding the role of an RTA in the Indian financial markets is important. Here’s a detailed overview of some of the key responsibilities that the Registrar and Transfer Agents are tasked with.
Issuance of Securities
Whether it is stocks or mutual funds, the Registrar and Transfer Agent plays a vital role in their issuance. Whenever an Initial Public Offering (IPO) or New Fund Offer (NFO) is announced, the RTA works closely with the organisation and ensures that the issue of the respective security is carried out smoothly. In fact, when you apply for a mutual fund or an IPO, it is the RTA that determines your eligibility and credits the shares or mutual fund units into your demat account.
Transfer of Securities
In addition to issuing securities, the RTA also handles transfer and transmission requests from investors. When you sell stocks or mutual funds in the secondary market, the Registrar and Share Transfer Agent ensures the smooth transfer of ownership by debiting your demat account and crediting the account of the buyer. In the case of manual transfer requests, you’re required to lodge them with the RTA, who in turn processes the request and affects the transfer.
Maintenance of Investor Records
The Registrar and Transfer Agent is responsible for maintaining accurate and up-to-date records of all of the investors of the company or the AMC (Asset Management Company). The entity maintains a comprehensive database containing extensive investor information. This includes the names and addresses of investors, their contact information and the number of securities held by them. These records are updated as and when there’s a change, enabling issuing entities to track ownership details at any point in time.
Dividend and Interest Payments
Whenever a company or an AMC declares a dividend, the transfer agent determines the investors eligible for receiving it based on the record date. The RTA also makes sure that the appropriate dividend is credited to the investors on time and in compliance with the existing legal and regulatory policies in place.
Executing Other Corporate Actions
The Registrar and Transfer Agent also plays a critical role in ensuring that the various corporate actions declared by the issuing entities are successful. Special actions like mergers, acquisitions, rights issues, bonus issues, stock splits, share buybacks and reverse stock splits would not be possible without the assistance of an RTA.
Investor Relations and Services
Since RTAs act as an intermediary between the issuing entity and the investors, they’re also tasked with the responsibility of redressing investor queries and grievances. This includes replying to various inquiries, disposing of requests, addressing concerns and informing investors about updates relating to their investments.
What Kind of Services Does an RTA Provide AMCs?
Asset Management Companies (AMCs) are entities that pool funds from multiple investors into a special investment vehicle known as a mutual fund. The pooled funds are then invested in a basket of different assets, which can be stocks, bonds or a combination of both.
Since AMCs generally have multiple mutual funds, managing the sheer volume of investors and their various requests in-house may not be feasible. By appointing a Registrar and Share Transfer Agent, AMCs can offload a majority of their responsibilities and redirect their resources and focus towards managing the funds.
In addition to the roles and responsibilities specified above, RTAs also provide the following additional services to AMCs.
- Processing of transactions like scheme switches, redemptions, Systematic Investment Plans (SIPs) and Systematic Withdrawal Plans (SWPs)
- Sales and marketing of mutual funds managed by AMCs
- Calculation of the Net Asset Value (NAV) of mutual funds at the close of a trading session
- Accounting functions like expense management, transaction reconciliation and maintenance of financial records
- Providing technological support to mutual fund distributors
- Know Your Customer (KYC) verifications
What Kind of Services Does an RTA Provide Mutual Fund Investors?
Registrar and Transfer Agents provide a plethora of other services to mutual fund investors. As a prospective investor, you need to know what they are before you invest in a fund. Here’s a glimpse of some services that RTAs provide investors of mutual funds:
- Processing mutual fund purchase and redemption requests including SIPs and SWPs
- Generation of statements like Consolidated Account Statement (CAS), capital gains statement and transaction statement, among others
- Administrative services like change or updation of bank mandates, nominations, consolidation of multiple folios and other material account information changes
- Dematerialisation of mutual fund units held in the physical form
- Rematerialisation of mutual fund units held in the demat form
As you can see, Registrar and Transfer Agents are an integral part of the Indian financial markets. They are critical to the smooth and effortless functioning of the markets as a whole. As an investor, the RTA is your primary point of contact for all kinds of investment-related queries and grievances. If you’re unaware of who the Registrar and Share Transfer Agent assigned to manage your investments are, you can find the relevant information on the investor section of your company or AMC’s website.
What is the primary function of a Registrar and Transfer Agent?
The primary functions of an RTA include issuance of securities, handling redemption and transfer requests and maintenance of accurate investor records.
Why do companies and AMCs use Registrar and Share Transfer Agents?
Since investor-related activities including administration and record-keeping require highly experienced personnel and a lot of resources, companies and AMCs outsource these tasks to Registrar and Share Transfer Agents.
Who should investors contact in the case of an investment-related query or a grievance?
Ideally, investors should get in touch with the Registrar and Transfer Agent to get queries and grievances related to their investments answered.
What to do if the Registrar and Transfer Agent fails to carry out their duties and responsibilities?
If the assigned RTA fails to provide a proper solution or reneges on their duties and responsibilities, consider lodging a grievance with the company or the AMC. If you still don’t receive any satisfactory resolution, you may file a complaint with the SEBI using the SCORES portal.
What is the role of a Registrar and Transfer Agent in the case of a bonus share issue?
In the case of a bonus issue, the Registrar and Share Transfer Agent are responsible for determining eligible investors as of the record date and transferring the bonus shares to their demat accounts on time.