SEBI Revises LODR Framework for Securities Transfer and Transmission

Transfer and transmission procedures moved outside Schedule VII

The Securities and Exchange Board of India has amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 to change where listed entities must look for procedural requirements governing the transfer and transmission of securities.

The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2026 were notified as Notification No. SEBI/LAD-NRO/GN/2026/312 on 10 July 2026 and came into force on their publication in the Official Gazette. SEBI placed the Second Amendment Regulations, 2026 on its website on 14 July 2026.

The amendment is narrowly focused. It revises Regulations 40(7) and 61(4) and removes clause C of Schedule VII. Its operational importance, however, extends beyond the small number of textual changes: listed entities will now have to track SEBI’s directions issued from time to time instead of treating Schedule VII as the complete procedural source for these matters.

What changes under Regulation 40(7)

Regulation 40 deals with the transfer, transmission and transposition of securities. Before the July amendment, Regulation 40(7) required a listed entity to comply with the procedural requirements specified in Schedule VII for the transfer and transmission of securities.

The amended provision instead requires the listed entity to comply with the procedural requirements concerning transfer and transmission as specified by SEBI from time to time. The substantive obligation to follow prescribed procedures therefore remains, but the source of those procedures changes.

This is not merely a drafting substitution for compliance teams. When an operational rule is embedded in a schedule to regulations, a team can generally map the relevant regulation and schedule into a fixed compliance matrix. A framework based on requirements specified by SEBI from time to time requires continuing surveillance of circulars, directions, master circulars and subsequent clarifications.

Company secretaries and compliance officers should consequently check whether internal LODR manuals still reproduce Schedule VII as the sole governing procedure. Any such reference should be revised so that the control points to the latest SEBI-prescribed framework and assigns responsibility for monitoring later changes.

Regulation 61(4) aligned for listed debt and preference securities

The amendment also revises Regulation 61(4), which concerns transfer and transmission in the context of non-convertible debt securities and non-convertible redeemable preference shares.

The earlier provision referred to transfer and transmission procedures, including procedural requirements specified in Schedule VII. The amended formulation replaces that reference with requirements specified by SEBI from time to time.

This alignment is relevant to issuers whose compliance systems are divided between equity-listing obligations and debt-listing obligations. The same underlying change in regulatory architecture now applies in both areas: the operative procedures must be identified from SEBI’s currently applicable directions rather than assumed from the text formerly contained in Schedule VII.

Debt-listed entities should therefore include the amendment in their review even if they do not have listed equity shares. Entities with both specified securities and listed debt or preference securities should ensure that their equity and debt compliance teams are working from the same current procedural framework.

Clause C of Schedule VII omitted

The third textual change is the omission of clause C from Schedule VII. The amendment should be read together with the changes to Regulations 40(7) and 61(4): procedures previously located in the schedule are being shifted to requirements that SEBI may specify and update separately.

The practical effect is that a historical copy of Schedule VII, or an internal standard operating procedure built around it, may no longer be sufficient evidence that the entity is following the currently applicable process. Compliance teams will need to identify the relevant SEBI directions, record their effective dates and ensure that later circulars or clarifications are incorporated promptly.

Immediate review for listed entities

The first task should be a source-mapping exercise. The company secretary or compliance officer should identify every policy, checklist, board note, investor-service manual and regulatory tracker that cites Regulation 40(7), Regulation 61(4) or clause C of Schedule VII. References should then be checked against the amended text and the latest applicable SEBI directions.

Second, listed entities should review their arrangements with the registrar and transfer agent. Operational work may be performed by the RTA, but the LODR obligation remains that of the listed entity. Service agreements, responsibility matrices and escalation protocols should make clear who monitors new SEBI requirements, who changes the operating process and how the listed entity verifies implementation.

Third, investor-service workflows should be tested. This includes the intake of requests, scrutiny of documents, communication of deficiencies, maintenance of audit trails, approval controls and reporting of pending matters. The review should cover both routine requests and exceptional cases, because procedural failures frequently arise where documentation is incomplete, ownership has changed through succession, or records do not match.

Fourth, entities should maintain a controlled repository of applicable SEBI instruments. The repository should identify the issuing authority, reference number, date, effective date, subject and the internal process affected. A named owner should be responsible for checking new circulars and updating procedures, rather than leaving the task to informal regulatory monitoring.

Governance and assurance implications

Audit committees and senior finance teams may not need to supervise individual investor-service requests, but they should obtain assurance that the control framework has been updated. A concise compliance note can explain the amendment, identify affected processes, state which SEBI directions have been mapped and record any change required in the company’s RTA arrangements or internal procedures.

Internal audit or secretarial audit programmes should also be reconsidered. A test that asks only whether Schedule VII was followed may now be incomplete. The test should establish which SEBI requirements were applicable during the review period, whether they were incorporated by the entity and its RTA, and whether the relevant cases were processed under the correct version of the procedure.

Evidence of implementation will be important. Listed entities should retain updated standard operating procedures, change approvals, communications with the RTA, staff instructions and sample testing results. This will help demonstrate that the entity did more than note the amendment in a regulatory tracker.

A continuing rather than one-time compliance exercise

The July amendment does not itself create a broad new corporate-governance code or a new periodic filing. Its significance lies in relocating procedural detail to a more adaptable SEBI-specified framework.

That approach enables the regulator to revise operational requirements without repeatedly amending the schedule. For listed entities, the corresponding obligation is to build a process capable of identifying and implementing such revisions as they occur.

Accordingly, the compliance response should not end with a one-time amendment to the LODR checklist. It should establish continuing ownership, version control and coordination among the company secretary, compliance officer, finance team, legal team and RTA.

Key takeaway

SEBI’s July 2026 amendment shifts the transfer and transmission procedures referenced in Regulations 40(7) and 61(4) from Schedule VII to requirements specified by the regulator from time to time and omits clause C of that schedule; listed entities should update their compliance manuals, regulatory-monitoring controls and RTA oversight accordingly.