- Lavanya Goinka
Shares and stock exchanges are tremendously essential in the economic world. Previously, when an investor purchased stocks, they received a physical share certificate. Transfer agents are increasingly issuing shares in book-entry form, which is an electronic method of registering securities ownership. Investors execute activities such as buying and selling, changing bank mandates, swapping units, and so on, when their investment in mutual fund schemes, publicly traded firms, and other publicly accessible high-yield return products grows. Mutual fund companies engage registrars and transfer agents to keep accurate records of these transactions.
Who are registrars and transfer agents (R&TA)?
• R&TA stands for registrar and transfer agent.
• R&TAs, or registrar and transfer agents, are SEBI-registered middlemen.
• Between a mutual fund company and its investors, registrars and transfer agents serve as intermediaries.
• RTAs are hired by mutual fund companies because of their experience processing information on investor transactions and changes in personal information.
• Their knowledge of how to manage data on a professional level helps to save costs and time spent on data maintenance.
• The transfer agent is in charge of buying and selling mutual fund shares, while the registrar is in charge of keeping track of everything.
• SEBI recognises a total of 79 RTAs.
In mutual fund houses, the registrar and transfer agent play important roles:
Their main purpose is to act as a back-end solution for mutual fund companies, easing the data management process. RTAs have a broad network of offices in Tier 2 and Tier 3 cities, which makes them more accessible to low- and middle-income investors and helps mutual funds gain more business from these locations. Investors can use them as a single-window solution even if they have invested with multiple AMCs.
RTAs have a variety of functions:
Registrars or transfer agents are organisations that register and retain full records of investor transactions for mutual fund providers’ convenience, according to the SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993.
SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993, Regulation 2(f) Registrar to an Issue
• To gather investor applications for a particular offering.
• Maintaining a good record of the application and any funds collected from investors or paid to the securities seller
• In consultation with the stock exchange, assisting a corporation or group of individuals in deciding the basis of allotment.
• Putting the finishing touches on the list of those who are eligible for allocation.
• In relation to an issue, processing and transmitting allocation letters, reimbursement orders or certifications, and other connected papers.
Regulation 2(g) of the SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 defines a share transfer agent.
• Transfer agents act on behalf of any body corporate in matters relating to the transfer and redemption of the body corporate’s securities.
• Replace the name and certificate of the shareholder who sold the securities with the name and certificate of the new shareholder.
• Notify investors about new fund opportunities.
• Securities transmission, consolidation, and sub-division.
• Investors’ securities are transferred and their records are kept.
R&TAs are hired by mutual fund companies for a variety of reasons:
Buying, selling, and moving units are just a few of the transactions that mutual fund investors make on a daily basis. Aside from financial activities, they also do non-financial transactions such as changing bank account information, contact information, or residence. Each such request must be documented, and the fund house is responsible for keeping track of all such transactions.
Most MFs outsource this task because they do not want to invest in these processes and do not have the skills to handle these large transactions professionally. They are assisted in their task by the registrar and transfer agents (R&T agents).
The advantages of having a registrar and transfer agent for a mutual fund house are numerous:
Shareholders have the right to know the truth about their investments. Due to their lack of data handling expertise, mutual fund firms conduct hundreds of transactions per day, and keeping and maintaining a trustworthy record of these transactions can take a long time. While some fund houses prefer to act as their own transfer agents, others prefer to hire or outsource the record-keeping service to registrars and transfer agents since it is more convenient and relieves them of the load.
The following are some of the other benefits of choosing a registrar and transfer agent:
• Assists in keeping track of investor transactions such as purchasing and selling, changes in personal information, bank mandates, and so on.
• Helped a mutual fund deal with a shortage of experienced personnel.
• It aids in the generation of business from cities in tiers two and three.
• Provide a single-window solution, if possible.
• It can help you save time.
• Investors are kept up to date on their investments on a regular basis.
• Assist in filling out details about their investment, such as applications, paperwork, and so on, for investors who are not investment aware.
• RTAs allow investors to invest in a variety of mutual fund schemes without having to deal with each fund house separately.
• Annual reports and the company’s audited financial statement are distributed via transfer agents to shareholders.
• Maintains records of investor transactions such as buying/selling, personal information changes, bank mandates, and so on.
• Helped a mutual fund deal with a shortage of qualified personnel.
• It assists in the generation of business from tier 2 and tier 3 cities.
• Provide a solution with a single window
• Saves time and effort.
• Investors are kept up to date on their investments in a timely manner.
• Assist in filling out facts about their investment, such as applications and forms, for investors who aren’t investment smart.
• RTAs let investors to invest in a variety of mutual fund schemes without having to deal with each one individually.
• Annual reports and the audited financial statement are distributed to shareholders by transfer agents.
Registration is subject to a capital adequacy requirement:
A condition antecedent is necessary for registration under Regulation 7 of the SEBI (Registrar to an issue and share transfer agent) Regulation 1993. All securities market-related institutions are regulated by the Securities and Exchange Board of India. The applicant must have a capital adequacy of Rs 50 lakhs for Category 1 and Rs 25 lakhs for Category 2 before filling out the application form. After achieving this condition, Registrars and transfer agents can submit Form A applications to SEBI in either of the two categories, together with non-refundable fees of Rs. 6 lakhs for Category 1 and Rs. 2 lakhs for Category 2.
• Category I: to carry on the activities as a registrar to an issue and share transfer agent.
• Category II: to carry on the activity either as a registrar to an issue or as a share transfer agent.
