SEBI’s 2026 Special Window: A Second Chance for Investors Holding Physical Shares

SEBI Move to Help Investors Regularise Pending Physical Securities (2026 Update)

Securities and Exchange Board of India (SEBI) has announced a special one-year window to help investors who are still holding physical share certificates that could not be transferred or dematerialised before April 1, 2019.

This move is a major relief for thousands of investors facing procedural hurdles, documentation deficiencies, or rejected transfer requests.

 What Has SEBI Announced?

Special One-Year Window

 Window Period:February 05, 2026 – February 04, 2027

Investors can now:

· Transfer physical securities

· Dematerialise (convert into electronic form)

· Re-submit previously rejected transfer-cum-demat requests

 This applies to cases that were:

· Rejected

· Returned

· Not processed

· Pending due to documentation deficiencies

Effective Date: February 05, 2026

Why This Move Is Important

Since April 1, 2019, SEBI mandated that transfer of securities can only be done in demat form. As a result:

· Investors holding physical shares faced difficulties.

· Many requests were rejected due to incomplete documentation.

· Some investors lost track of procedural requirements.

This special window restores their rightful access to property.

Major Reform: Removal of Letter of Confirmation (LOC)

SEBI has also eliminated the requirement of issuing a Letter of Confirmation (LOC) for crediting securities into demat accounts.

 Old Process (Time-consuming – 150 days)

1. Investor submits request.

2. Company/RTA issues LOC.

3. LOC submitted to Depository Participant.

4. Securities credited after multiple verifications.

Total time: Around 150 days

 New Process (Faster – 30 days)

· Listed companies & RTAs will directly credit securities to investor’s demat account after due diligence.

· No LOC required.

· Reduced paperwork.

· Lower risk of loss or pilferage.

 Effective From: April 02, 2026(LOC issued before this date remains valid within prescribed timeline.)

�� What Is Dematerialisation?

Dematerialisation (Demat) means converting physical share certificates into electronic form, held in a demat account with a depository.

In India, demat services are provided through:

· National Securities Depository Limited (NSDL)

· Central Depository Services Limited (CDSL)

�� Practical Examples

 Example 1: Rejected Transfer Before 2019

Mr. RAMA inherited physical shares of a listed company in 2018.He submitted transfer documents in March 2019.

Transfer rejected due to signature mismatch.After April 1, 2019, transfer in physical mode was disallowed.

 Under SEBI’s 2026 window:

· He can re-submit corrected documents.

· Transfer-cum-demat can now be completed.

 Example 2: Missing PAN/Aadhaar Details

Ms. LAKSHMI purchased physical shares in 2005.In 2019, her demat request was rejected due to missing PAN linking.

She did not follow up.

 Under the new window:

· She can update documentation.

· Complete dematerialisation.

· Gain access to dividends & corporate benefits.

 Example 3: Lost Letter of Confirmation (LOC)

Mr. JAIN received LOC in 2024 but misplaced it.Without LOC, demat credit was impossible.

 After April 02, 2026:

· LOC is no longer required.

· RTA can directly credit securities.

· Process completed in ~30 days.

 Example 4: Old Family Share Certificates

A family holds physical shares purchased in the 1990s.Certificates are intact but never dematerialised.

Under this window:

· They can submit transfer-cum-demat request.

· Shares will be directly credited electronically.

· Risk of certificate damage eliminated.

�� Timeline Comparison

Particulars	Old Framework	New Framework
LOC Required	Yes	No
Processing Time	~150 Days	~30 Days
Risk of Document Loss	High	Minimal
Operational Complexity	High	Simplified

Investor Protection Benefits

✔ Faster credit of securities✔ Reduced paperwork✔ Lower fraud risk✔ Less dependency on intermediaries✔ Easier compliance✔ Better ease of investing

SUPER SHORTS

· One-year special window: Feb 5, 2026 – Feb 4, 2027

· Covers rejected/unprocessed physical transfer cases

· LOC requirement abolished

· Demat credit timeline reduced from 150 days to 30 days

· Effective from April 02, 2026

· Aimed at strengthening investor protection & operational efficiency

Conclusion

SEBI’s move signals a continued push towards:

· Complete dematerialisation

· Modernised securities infrastructure

· Stronger investor protection

· Reduced legacy compliance burdens

For investors still holding physical shares, this is a rare second chance to regularise holdings and secure financial assets for the future