SEBI issues model tripartite agreement between the issuer company, existing share transfer agent and new share transfer
2 min read 25 May 2023, 09:31 PM ISTA model tripartite agreement for the issuing firm, the current share transfer agent, and the new share transfer agent has been issued on Thursday by the market regulator Sebi.
PremiumA model tripartite agreement for the issuing firm, the current share transfer agent, and the new share transfer agent has been issued on Thursday by the market regulator Sebi. In collaboration with various issuing firms and the Registrar Association of India (RAIN), a model Tripartite Agreement has been established.
“In case of any change or appointment of a new share transfer agent, the listed entity shall enter into a tripartite agreement between the existing share transfer agent, the new share transfer agent and the listed entity, in the manner as specified by the Board from time to time," said SEBI under the new norms.
According to the market regulator, Share Transfer Agents (RTAs) are advised to publish the format of tripartite agreement on their respective websites and comply with the condition. RTAs have been notified that they must present proof of compliance with the regulation by June 1 along with a link to their websites that include the tripartite agreement's format.
SEBI said, RTAs have been advised to make necessary amendments to the relevant bye-laws, rules and regulations, operational instructions, as the case may be, for the implementation of the above circular.
Pratapsingh Nathani, chairman and MD at Beacon Trusteeship said “SEBI has come up with a Model Tripartite Agreement On Change In Share Transfer Agent to provide a framework for the change of share transfer agent (STA) for listed companies. The agreement is intended to ensure that the change of STA is smooth and efficient, and that the interests of all stakeholders are protected.The agreement sets out the responsibilities of the listed company, the existing STA, and the new STA. The listed company is responsible for selecting the new STA, and for notifying the existing STA and the exchanges of the change. The existing STA is responsible for providing the new STA with all necessary information and documentation, and for ensuring a smooth transition of services. The new STA is responsible for taking over the responsibilities of the existing STA, and for providing the listed company and its shareholders with the same level of service."
“The agreement also sets out the dispute resolution mechanism in case of any disagreements between the parties. The agreement is a valuable resource for listed companies, STAs, and exchanges, and it is expected to help to ensure that the change of STA is a smooth and efficient process. Its an excellent move on part of SEBI as It provides a framework for the change of STA, which can help to ensure that the process is smooth and efficient. Moreover it protects the interests of all stakeholders, including the listed company, the existing STA, and the new STA. Besides the above it provides a dispute resolution mechanism, which can help to resolve any disagreements that may arise during the change of STA," Pratapsingh Nathani further added.
CA Manish Mishra,Virtual CFO commented on the development that “Sebi on Thursday came out with model tripartite agreement for issuer company, existing share transfer agent and new share transfer agent. In case of any change or appointment of new share transfer agent the listed entity will have to enter a tripartite agreement. The agreement has to be signed by all three parties viz -a-viz existing transfer agent,new share transfer agent and listed entity. Model tripartite agreement has been prepared in consultation with Registrar association of India (RAIN) and some issuer companies."
