August 1, 2023

Model Tripartite Agreement between the Issuer Company, Existing Share Transfer Agent

What is a tripartite settlement? 

A tripartite agreement is a prison record or settlement concerning 3 events. It establishes the rights, responsibilities, and duties of every birthday celebration involved. Tripartite agreements are usually utilised in diverse contexts, together with real estate transactions, production initiatives, and economic preparations. It is a felony device that clarifies the rights and responsibilities of all events involved in a particular association, ensuring transparency and minimising potential disputes. The specifics of a tripartite agreement can vary relying on the character of the transaction or relationship being installed. 

Why a tripartite agreement between Registrar and Share Transfer Agent and organisation? 

A tripartite agreement among a registrar, proportion switch agent, and an agency normally outlines the jobs, obligations, and duties of each birthday celebration worried in dealing with and facilitating the transfer of shares within an organisation. While the unique info and provisions may additionally range, right here are a few not unusual factors that such an agreement may also cover:

 1. Parties: The settlement will without a doubt identify the 3 parties involved: the registrar, the proportion switch agent, and the enterprise. 

2. Scope of Services: It will outline the offerings to be furnished by the registrar and proportion transfer agent. This might also consist of preserving the percentage register, processing percentage transfers, updating shareholder information, issuing new percentage certificates, dealing with dividend bills, handling proportion buybacks, and offering reviews to the organisation. 

3. Obligations of the Registrar: The agreement will specify the registrar’s duties, along with accurately maintaining the percentage register, ensuring compliance with relevant legal guidelines and guidelines, presenting timely updates to the organisation and shareholders, and preserving confidentiality of shareholder records.

4. Obligations of the Share Transfer Agent: The settlement will define the obligations of the share transfer agent, which might also encompass processing share transfers, verifying and approving transfer requests, updating shareholder statistics, issuing new percentage certificates, and dealing with any necessary communications with shareholders. 

5. Obligations of the Company: The settlement may additionally define sure duties of the employer, such as supplying necessary facts and documentation to the registrar and share transfer agent, cooperating within the switch system, making sure the supply of finances for dividend payments, and reimbursing any reasonable costs incurred by means of the registrar and percentage switch agent. 

6. Fees and Compensation: The agreement will specify the charges and compensation payable to the registrar and proportion transfer agent for his or her offerings. It may additionally define the fee phrases, frequency, and another applicable information related to financial arrangements. 

7. Confidentiality and Data Protection: Given the sensitive nature of shareholder statistics, the settlement can also include provisions regarding the confidentiality and protection of records, making sure compliance with relevant facts safety and privateness laws.

 8. Indemnification: The agreement may also comprise provisions for indemnification, outlining the responsibility of each birthday celebration in case of any claims, losses, or liabilities springing up from their respective roles and movements. 

9. Term and Termination: The agreement will specify the duration of the settlement, renewal terms, and conditions for termination by using either birthday celebration. 

10. Dispute Resolution: In case of any disputes or disagreements, the agreement may additionally define the methods for resolving conflicts, which include through negotiation, mediation, or arbitration.

Why has SEBI prescribed a version of tripartite settlement? 

A model settlement refers to a standardised template or a pre-drafted agreement that serves as a starting point or a manual for growing legal contracts or agreements between parties. It gives a framework and structure that can be custom designed and tailored to suit the specific wishes and circumstances of the parties concerned. There is a version of settlement prescribed for exchange in RTA. Hence such model agreements have been customised as in step with RTAs. There were instances where, because of the lapse of RTA organisation, they had to undergo a penalty. Lapses had been related to maintenance of records, KYC files, sample signatures etc. Due to the alternate RTA fixing of obligation for such lapses became in dispute.

What is actionable?

RTAs and listed companies are advised to publish the format of tripartite agreements on their respective websites. RTAs are advised to submit compliance with the direction given in para 4.1 above to SEBI via email at latest by June 01, 2023, along with the link to their website containing the format of a tripartite agreement.


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