NATIONAL SECURITIES DEPOSITORY LIMITED
Participant Interface
Circular
Circular No. NSDL/POLICY/2006/0031
Date: August 9, 2006
Sub : Operating guidelines on SEBI circular providing clarifications on PAN
Attention of Participants is invited to circular no. NSDL/POLICY/2006/0007 dated March 3, 2006 regarding SEBI directive on PAN and Circular No. NSDL/POLICY/2006/0030 dated July 24, 2006 intimating the Participants about SEBI clarifications on PAN vide SEBI Circular no. MRD/DoP/Dep/Cir-09/06 dated July 20, 2006.
Further to the clarification issued by SEBI (given in italics below), Participants are advised to take note of the following additional operating guidelines /clarifications with respect to capturing of PAN details:
(I) 4.1 All entities registered with SEBI under Section 12 of the SEBI Act, 1992 and having some difficulty in producing PAN card for verification at the time of opening the Beneficiary Owner (BO) account may be permitted to open a BO account without producing the PAN card. However, such entities would be required to submit the PAN card to the Depository Participants (DPs) within a period of 30 days from the date of opening of the BO account for verification, failing which the DPs shall freeze such accounts as "Suspended for Debit" till such time the PAN card is produced for verification.
NSDL's operating guidelines:
If a SEBI registered entity expresses its inability to produce the PAN card at the time of opening the BO account, Participants are required to obtain a photocopy of SEBI Registration Certificate and verify the same with the original, open the account, capture the description "INTERMEDRY" under the PAN field and enable the PAN flag.
If the entity does not submit the PAN card within 30 days from the date of opening the account, Participants are advised to disable the PAN flag and suspend the account for debit.
If the entity submits the PAN card, Participants should :
Verify the PAN details as per the laid down procedure and enable the PAN Flag in the DPM Application Software (DPMAS); and
Remove the suspension.
(II) 4.2 As regards proof of address of FIIs/sub-accounts, a copy of the Power of Attorney (POA) given by the FIIs/FII sub-accounts to the Custodians (which are duly notarized and/or apostiled or consularised) that gives the registered address of the FIIs/sub-accounts can be accepted as proof of address.
No further guidelines in this regard.
(III) 4.3 The NRIs/PIOs would be required to comply with the mandatory requirement of producing PAN Card at the time of opening a BO account. However, such NRIs/PIOs who are not able to obtain PAN for one reason or the other but are holding securities in physical form and desire to sell the same, may be permitted to open a "limited purpose BO account" without PAN. The operation of such BO accounts shall be subject to the following conditions :
These accounts will be "suspended for credit", which means, only credits arising out of corporate benefits and demat of physical certificates will be permitted.
These accounts cannot be used for getting credit from IPOs, off-market transactions or any secondary market transactions, etc.
These accounts can remain operational only for a limited period of 6 months from the date of opening of the account. Meanwhile, the account holders may be permitted to convert the account into a normal BO account subject to complying with the PAN requirements. If the Account holder fails to produce the PAN card within the stipulated period of 6 months, the DPs shall freeze such BO accounts.
The account holders shall be permitted to sell the securities lying in these accounts only through a registered broker on the stock exchange.
NSDL's operating guidelines:
If NRIs/PIOs express their inability to produce the PAN card at the time of opening of a BO account, Participants may open the account, capture the description "NRICATEGRY" under PAN field and enable the PAN flag. Also, standing instructions should not be enabled for such accounts.
If the entity does not submit the PAN card within the stipulated time of six months from the date of activation of accounts, Participants are advised to disable the PAN Flag and suspend the account for debit.
If the entity submits the PAN card, Participants should :
Verify the PAN details as per the laid down procedure and enable the PAN Flag in the DPMAS;
Enable the standing instructions, as per the request of the entity; and
Remove the suspension.
(IV) 4.4 U.N. entities/multilateral agencies which are exempt from paying taxes/filing tax returns in India are exempted from the mandatory requirement of PAN. The exemption, however, would be subject to the DPs collecting documentary evidence in support of such claim of the investors.
NSDL's operating guidelines:
After the Participants are satisfied that such entities are exempt from paying taxes/filing tax returns in India, Participants are advised to capture the description "EXEMPTCATG" under the PAN field and enable the PAN flag in DPMAS.
(V) 4.5 Any investor who has PAN but not having the PAN card may be permitted to open BO Accounts subject to producing the PAN allotment letter. However, such investors would be required to produce the PAN Card on or before September 30, 2006 failing which the DPs shall freeze such accounts as "Suspended for Debit" till PAN card is produced for verification.
NSDL's operating guidelines:
Participants may open the BO account based on the PAN allotment letter issued by the Income Tax Department (ITD) and after due verification with the ITD website as per the procedure mentioned in NSDL circular no. NSDL/POLICY/2006/0007 dated March 3, 2006, capture the description "ALOTMNTLTR" under PAN field and enable the PAN flag. Further, Participants should call for any additional documents and / or clarification to ascertain and satisfy itself about the identity of the entity, as clarified in the SEBI circular.
If the entity does not submit the PAN card before September 30, 2006, Participants should disable the PAN flag and suspend the account for debit.
If the entity submits the PAN card, Participants should :
Verify the PAN details as per the laid down procedure and enable the PAN Flag in the DPMAS; and
Remove the suspension.
(VI) 4.6 In case of HUF, Association of Persons (AoP), Partnership Firm, Unregistered Trust, etc. - though the BO account would be in the name of natural persons, PAN of the respective HUF, AoP, Partnership Firm, Unregistered Trust, etc shall be obtained.
No further guidelines in this regard.
(VII) 4.7 As regards Registered Trust, Corporate Bodies and minors, PAN of the respective entities shall be obtained when accounts are opened in their respective names.
No further guidelines in this regard.
(VIII) 4.8 In case where there is difference in the maiden name and current name of the investor (predominantly in the case of married women), DPs can collect the PAN card proof as submitted by the account holder. However, this would be subject to the DPs verifying the veracity of the claim of such investors by collecting sufficient documentary evidence in support of the identity of the investors as provided in the SEBI Circular No. MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004.
NSDL's operating guidelines:
This guidance given by SEBI may also be used whenever there is a minor difference in the name mentioned in the PAN Card and the name in which the account is opened / sought to be opened.
Photograph of person appearing on the PAN card can be compared with the account holder and/or the photograph submitted by the account holder alongwith the application form. Father's name if available on the application form can be compared with the father's name appearing on the PAN card of the account holder.
Participants should call for any additional documents and / or clarification to ascertain and satisfy itself about the identity of the entity, as clarified in the SEBI circular.
An illustrative list of minor difference in the names is enclosed.
(IX) 4.9 In the light of the observations of the Honble High Court of Sikkim in its Order dated March 31, 2006 as forwarded by the Sikkim Chamber of Commerce vide their letter No.See/52/06-07 dated May 11, 2006, the investors residing in the State of Sikkim are exempted from the mandatory requirement of PAN. However, this would be subject to the DPs verifying the veracity of the claim of the investors that they are residents of Sikkim, by collecting sufficient documentary evidence in support of their address as provided in the SEBI Circular No.MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004.
NSDL's operating guidelines:
Participants should ascertain that the entity resides in the state of Sikkim and if satisfied, capture the description "SIKKIMCATG" under the PAN field and enable the PAN flag.
If an entity makes a request for capturing the correspondence address as default address or submits a request for change of address and the address in both these situations is not of Sikkim, in such a case, the entity must comply with the PAN requirements and till such time should disable the PAN flag and suspend the account for debit .
If the entity submits the PAN card, Participants should :
Verify the PAN details as per the laid down procedure and enable the PAN Flag in the DPMAS; and
Remove the suspension.
For and on behalf of
National Securities Depository Limited
sd/-
S. Gopalan
Vice President
Encl : a/a
