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Paperless trades panacea for ills, says Waterhouse
Vivek Law
Mumbai, Dec 29: Dematerialisation is the only viable long-term solution to the problems of share-transfer delays and bad paper that currently threaten the industry. However, this will take a few years since the government has not made the process mandatory, a Price Waterhouse report says.In the interim, several measures need to be taken to eliminate the growing problems of bad paper and transfer delays, it says. The report has called for empowering registrar and share transfer agents with the power to effect transfers of share certificates which will lead to a significant cut in the time taken to transfer a share. "Section 113 of the Companies Act requires that transfers need to be effected within 60 days, including the delivery, and the power to transfer rests with the board of directors of the comp-any. Although it is within the law for the board to delegate the approval process, boards are generally not inclined to delegate the power of transfer to their R&T agents," the report says. "In many cases, R&T
agents do not even have the power to authenticate endorsements. However, in-house transfer agents and their affiliate transfer agents do carry this power. If the power of transfer is delegated to the R&T agent, the time required to complete a transfer could be reduced to 15 days. In countries like the UK, the transfer of securities is approved by the registrar and not the company. In order to manage risks arising out of such a blanket power, companies can stipulate safeguards to be implemented by their transfer agents," it says. Price Waterhouse has suggested that RAIN should persuade Sebi to impose stricter entry barriers for potential entrants.
Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.
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