No New Folios Unless Documentations Complete: SEBI

The Securities and Exchange Board of India (SEBI) said in a circular on Thursday that no new folios/accounts should be opened unless all investor related documents including account opening documents, personal account number (PAN), know-your-customer (KYC) forms, specimen signature are available with asset management companies (AMCs)/registrar and transfer agents (RTAs).

SEBI said that the move is necessary to ensure that investors have unrestricted access to AMCs and fund houses provide prompt investor service including execution of investors’ financial or non-financial transactions.

The market regulator had earlier advised fund houses, through a circular issued on December 11, 2009, to confirm whether all investor related documents are available with them. It had also asked fund houses not to make any payment to distributors unless the documentation is complete.

However, SEBI said that it has not received any confirmation from trustees of fund houses and thus it draws conclusion that investors’ documents are not available with the AMCs. “It has been observed that due to such incomplete documentation investors’ rights to approach the AMCs directly are restricted and investors are forced to depend on the distributors for executing any financial or non-financial transactions,” the regulator said in the latest circular.

It has, therefore, asked the AMCs to update investor related documents including account opening documents, PAN, KYC, power of attorney (if applicable), specimen signature by November 15, 2010. A confirmation on completion of the said process be submitted by November 22, 2010.