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SEBI Opens 1-Year Window for Old Physical Shares, Scraps LOC Rule

SEBI has introduced a special one-year window starting February 2026 to help investors transfer and dematerialise physical securities that were stuck due to procedural issues before April 2019. Simultaneously, the regulator has abolished the mandatory Letter of Confirmation (LOC) for crediting securities to demat accounts. This change allows listed companies and registrars to credit shares directly after due diligence, drastically reducing the processing time. These reforms aim to enhance investor convenience, operational efficiency, and protection in the securities market.

Key Points: SEBI 1-Year Window for Physical Securities Demat, LOC Removed

  • Special 1-year window for old physical securities
  • Regularises shares stuck since pre-April 2019
  • Letter of Confirmation (LOC) requirement scrapped
  • Demat credit timeline slashed from 150 to 30 days
  • Measures effective from early 2026
2 min read

SEBI to open special 1-year window for transfer, dematerialisation of physical securities

SEBI announces a special window to dematerialise old physical shares and eliminates the Letter of Confirmation requirement to cut processing time from 150 to 30 days.

"This initiative is aimed at improving ease of doing investment, enhancing operational efficiency and strengthening investor protection. - SEBI"

Mumbai, January 31

The Securities and Exchange Board of India has announced a special one-year window allowing investors to transfer and dematerialise physical securities that could not be processed before April 1, 2019, due to various reasons, including procedural or documentation-related challenges.

In a statement, SEBI said it has opened a special window from February 05, 2026, to February 04, 2027, to enable such investors to regularise and complete the transfer cum dematerialisation of securities. The move will take effect on February 05, 2026.

This step would facilitate these investors' rightful access to their property.

The window shall also be available for such transfer requests that were submitted earlier and were rejected/returned/not attended to due to a deficiency in the documents/process/or otherwise, the markets regulator said.

Also, separately, SEBI has done away with the requirement for issuing a Letter of Confirmation (LOC) for the credit of securities to investors' dematerialisation accounts, a move aimed at simplifying processes and sharply reducing timelines.

In a circular, the markets regulator said listed companies and registrars will now directly credit securities to investors' demat accounts after completing due diligence, eliminating the need for an LOC to be routed through depository participants.

At present, listed companies and Registrars to an Issue and Share Transfer Agents (RTAs) issue a Letter of Confirmation (LOC) to investors, which is submitted to the Depository Participant for credit of securities. This process typically takes around 150 days.

"In order to enhance investor convenience and reduce timelines and risks, SEBI has decided to do away with the requirement of issuance of LOC," SEBI said.

Under the revised framework, RTAs and listed companies shall directly credit securities to the demat account of the investor, after carrying out necessary due diligence. This measure is expected to reduce the timeline for credit of securities from approximately 150 days to 30 days, while also mitigating risks associated with loss or pilferage of LOC.

The new provisions shall come into force with effect from April 02, 2026. Any LOC issued prior to this date may continue to be used by investors for dematerialisation within the prescribed timeline.

"This initiative is aimed at improving ease of doing investment, enhancing operational efficiency and strengthening investor protection," SEBI said.

- ANI

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Reader Comments

S
Sarah B
As someone who works in finance, simplifying the LOC process is a massive efficiency gain. Reducing timelines from 150 to 30 days is phenomenal. It shows SEBI is serious about modernizing India's capital markets infrastructure. This will boost confidence among NRI investors too.
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Arjun K
Finally! The paperwork for physical shares was a nightmare. My uncle passed away and transferring his shares to legal heirs was stuck for years due to "procedural challenges". SEBI should also run awareness campaigns in regional newspapers so that small town investors know about this window.
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Priyanka N
While the intent is good, the implementation will be key. I hope the RTAs and companies are properly equipped to handle the direct credit system. Past experience says new systems often face initial glitches. SEBI must ensure a smooth rollout with strong grievance redressal.
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Vikram M
Reducing the timeline from 150 days to 30 is a game-changer. The LOC process was archaic. This is a solid step towards ease of doing investment, as SEBI says. Hope other regulators take note and simplify their processes too. Bharat's markets are getting future-ready! 💹
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Karthik V
Good move, but why such a long wait? The window opens in Feb 2026 and new rules start in April 2026. That's almost two years away. For people with pending issues, this delay is frustrating. Couldn't they have started the window sooner? The relief feels postponed.

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