SEBI Simplifies Legacy Share Claims: Direct Demat Now Allowed Without Letter of Confirmation

India’s capital markets regulator, Securities and Exchange Board of India, has introduced a time-bound mechanism to help investors regularise legacy physical shareholdings and resolve long-pending transfer and demat issues linked to older transactions. 

Scope of the Special Demat Window 

SEBI has opened a one-year special window from February 5, 2026, to February 4, 2027, for transfer and dematerialisation of physical securities bought or sold before April 1, 2019. The facility applies to investors holding original share certificates with valid transfer deeds executed before the cut-off date. 

The window also covers cases where transfer requests were earlier rejected, returned or not processed due to documentation gaps or procedural deficiencies. Applications without original security certificates will not be considered. 

Demat Credit, Lock-in and Exclusions 

All securities processed under this facility will be credited only in dematerialised form to the transferee’s demat account and will carry a mandatory one-year lock-in from the date of transfer registration. During this period, the securities cannot be transferred, pledged, lien-marked or otherwise encumbered. 

Disputes between transferor and transferee are excluded and must be resolved separately through courts or the NCLT. Securities already transferred to the Investor Education and Protection Fund are also not eligible. 

Documentation Requirements and Implementation 

Applicants must submit original security certificates, pre-April 1, 2019 transfer deeds, proof of purchase where available, KYC documents, a latest Client Master List not older than 2 months attested by the depository participant, and an undertaking-cum-indemnity in the prescribed format.  

Registrars and transfer agents, stock exchanges and listed companies have been directed to ensure smooth implementation.The move follows a circular issued on July 2, 2025 that allowed temporary re-lodgement of physical transfer deeds. 

Removal of LOC Requirement and Effective Dates 

In a separate circular issued the same day, SEBI removed the requirement for issuing a Letter of Confirmation for credit of securities arising from investor service requests such as duplicate share certificates, transmission, transposition, claims from unclaimed suspense accounts and corporate actions. 

Registrars, transfer agents and listed companies will now directly credit securities to investors’ demat accounts after due diligence, without issuing an LOC. Depositories will enable direct credit systems.  

Investors must submit a Client Master List not older than 2 months, attested by the depository participant.These changes take effect from April 2, 2026. LOCs issued before that date may still be used for dematerialisation if submitted within 120 days of issuance. 

Read More: SEBI Sets Up Panel to Review Advisory and Distribution Frameworks! 

Conclusion 

The dedicated demat window for pre-2019 physical securities, along with the removal of the LOC requirement, aims to resolve legacy cases, simplify dematerialisation and improve investor access to securities. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.  

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.