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How can I avail the service of a depository?

A depository interfaces with the investors through its agents called Depository Participants (DPs). If an investor wants to avail the services offered by the depository, the investor has to open an account with a DP. This is similar to opening an account with any branch of a bank in order to utilise the banks services. Suggestions on how to select a DP are given in later part.

How can I dematerialize my securities certificates?

In order to dematerialize certificates, you need to open a demat account. Once the demat account has been opened, you need to fill up a Dematerialization Request Form in prescribed form and submit it to your DP along with the security certificates. Your DP will forward the demat request to the concerned issuer company or its Registrar and Transfer Agent for further processing. Once the request is confirmed by the concerned issuer company or its Registrar and Transfer Agent, it results in credit of electronic securities in the demat account of the respective investor.

How can I shift or transfer my demat account from one DP to another DP?

For shifting or transfer of a demat account, you need to first open a new demat account where you want the balances to be transferred to (if you already have another demat account, then you may use it for this purpose, instead of opening a new account). Then you need to submit duly filled and signed ‘Account Closure Form’ to your existing DP. In the form, you should mention the details of the other demat account where you want the balances to be transferred. After verification of your request, your DP will arrange to transfer the balances to the desired account and then close the source account.

How can I subscribe to Sovereign Gold Bonds (SGB) in demat form?

The SGB offers a superior alternative to holding gold in physical form. Option to hold SGB in demat form makes it even better and convenient. The process to buy or subscribe to sovereign gold bonds in demat form is quite easy. All you need to do is to mention your DP ID and Client ID in your subscription form. Some banks offer online application facility also (if investor makes application online and does payment electronically, then some price discount is also available at present). Upon allotment by RBI, your demat account will credited with the requisite number of bonds.

How does Depository ensure that its DPs adhere to the stipulated requirements?

All the DPs are subjected to Depositories inspection at least once in a year. In addition, they need to engage an independent and qualified auditor to undertake audit of their depository operations. Report of such audit should be forwarded to the depository associated with the DP, twice a year. DPs are also inspected by SEBI.

How do I open an account with a Depository and will I be periodically informed about the movement in my electronic account?

You may open an account with a depository participant (DP) of your choice. As an investor you will interact with National Securities Depository Limited (NSDL) or Central Depository Services Limited. (CDSL) through your Depository Participant.Your DP will update your account after each transaction and would periodically furnish you with a statement of holding. You may verify this with them at the time of opening your electronic account.

How do I select a DP?

You can select your DP to open a demat account just like you select a bank for opening a savings account. Some of the important factors for selection of a DP can be: Convenience - Proximity to your office/residence, business hours. Comfort - Reputation of the DP, past association with the organization, whether the DP is in a position to give the specific service you may need? Cost/ level of service - The service charges levied by DP and the service standards. The DP network City/State wise.

How long does the dematerialization process take?

As per SEBIs guidelines, DP is required to process the demat request received by it within 7 days. Further, issuer company / its RTA may take up to 15 days to process the demat request received by them. Considering the time required for transmission of documents from DP to issuer company / RTA, dematerialization will normally take about 21 days.

How to Open a demat account?

Opening a demat account is quite simple. All you have to do is to approach a NSDL/CDSL DP, which will help you to complete the formalities. You need to fill up a form, submit PAN card and proof of address. In addition, you need to provide details of your bank account.After your demat account is opened, your DP will provide you DP ID and Client ID, a copy of your Client Master Report containing your demat account related details, tariff sheet and ‘Rights & Obligations of Beneficial Owner and Depository Participant’. DP ID is 8 characters long code, (example INXXXXXX) for NSDL-DP and (XXXXXXXXX) in case of CDSL-DP (where X resembles a number 0-9) to all DPs to identify them. Client ID is 8 digit long code used to identify the clients in the system. Combination of DP ID and Client ID makes your unique account number in the Depository System.Read moreYou should verify the Client Master Report to ensure that all your details have been recorded correctly in depository system. If you want to trade in shares etc. (i.e. buy or sell), you would also need to open a Trading / Broking account with any SEBI registered stockbroker. There are many DPs which offer 3-in-1 arrangement for the benefit of investors (3-in-1 is a combination of demat account, trading account and bank account).Now a days many DPs enable their clients to open demat account online, thus making the process paperless and extremely convenient.

How will I know that my DP has updated my account after each transaction?

You will get account statement showing the transactions and balances periodically to help you to monitor the happenings in your account. The depositories have a system in place wherein a notification on sms for all the debits & credits effecting your demat account.

If my depository account is with One Depository such as NSDL, can I receive my securities from an account holder having account with some other depository etither from another NSDL DP or CDSL DP.

Yes. Inter depository transfers are possible.

If the demat request is not processed within the stipulated time, what to do?

Contact the RTA/your DP to look into the delay. A BO can also inform the Investor Grievances department of the Depository to look into the delay.

I have physical certificates with the same combination of names, but the sequence of names is different. In some certificates, I am the first holder and my wife is the second holder, whereas in some other certificates, my wife is the first holder and I am the second holder. Do I need to open two different accounts for the purpose of dematerialization of these certificates?

The joint holders are entitled to change the sequence of names by making a written request to the company. This does not constitute a transfer. Changing the sequence of joint holders is called Transposition. However, transposition facility can be availed for entire holdings in a folio and not allowed for part of the holdings. If the same set of joint holders hold securities in different sequence of names, then there is no need to open multiple demat accounts for dematerialization of such securities. Using Transposition cum Demat facility such securities held vide certificates in different combinations, can be dematerialized in one demat account. For this purpose, Dematerialization Request Form (DRF) and an additional form called Transposition cum Demat Form should be submitted to the DP.

In case of minors in whose name is demat account opened?

A Minor’s demat account is opened in minor’s name as per PAN card.

Is dematerialization of securities compulsory?

NO, You can continue to hold securities in physical form.

Is it compulsory to mention the ISIN of the security while filling up the DRF?

Yes. The ISIN of the security should be mentioned in the DRF, to ensure that the correct security is dematerialized. If, however, the investor does not know the ISIN, the same can be obtained from the Depository Participant.

Is it right not to mention execution date on DIS?

No. You should not submit delivery instruction slips (DIS) to your DP without mentioning the execution date. It should be the date on which you wish your account to be debited for the mentioned security and quantity thereof. In case of market instruction, it must be well within the date of payin. For off-market transfers, it may be a future date of your choice.

Is NSDL/CDSL regulated by any government authority?

NSDL & CDSL have been authorized to act as a securities depository by SEBI. Bothe the depositories are subject to periodical inspection by SEBI in addition to other applicable audits as per Companies Act, 2013.

Is there any charge for dematerialization of physical certificates?

CDSL does not levy any charge for dematerialization of securities. However, DPs may collect dematerialization charges together with postage / courier charges.

Is there any insurance cover taken for depository operations?

Depositories do obtain an insurance cover on behalf of all the DPs.

Is transfer deed required for dematerializing physical certificates?

No. There is no need to fill in a transfer deed. The physical certificates have to be accompanied by a DRF, which can be obtained from the DP.

What are different Types of demat accounts opened with Depository Partcipant?

Below are two types of demat accounts opened with a Depository Participant. Resident Individual Demat accounts which includes Minor’s, Non-Resident and Foreign Nationals The form for standalone Individual (Resident & Non-Resident) demat account opening is available on the DPs website or Non Individual / Corporate Demat accounts which includes:- Hindu Undivided Family (HUF), Domestic Corporate for Non Individual Entities like Sole Proprietorship, Partnership, Private Limited/ Limited Co., Association of Person, Foreign Insitutional Investors, Foreign Corporates, Escrow Demat account, Mutual Funds, Venture Capital Fund, Depository Receipts, Unclaimed Share Suspense account, Clearing Member (Pool Account), Commodities, Margin account etc The form for standalone HUF/Non Individual / Corporate demat account is available on the DPs website.

What are the benefits of opening a Demat Account?

a.No stamp duty (A tax levied on documents, stamp duty applies to documents like cheques, receipts, licenses and transaction records.) on transfer of securities held in Demat form.b.Auto credit of rights / bonus / public issues in your Demat Account through ECS ( Electronic Clearing Service. It is a mode by which funds are automatically debited to your account every month to pay or a certain bill or fee. It helps so you don’t have to remember every month to pay your regular bills. It is only done after a standing instruction is given by the account holder.)c. Easy access to your investments, statements through the Demat Tab on NetBanking (DP on Net)d. Settlement of securities are traded on exchanges and as well as off-market transactions.e. Shorter settlements enhance liquidity. Redemption of shares and Mutual funds allowed.Read moref. Allows for quicker transactions (Buy/Sale/Transfer) and higher efficiency in trading.g. Helps to hold shares and securities like Bonds, debentures, ETF, LIC, Mutual Funds etc in electronic formh. Helps in availing faster Loansi. Protects against risks like forgery, damage and loss (due to fire, theft, mutilation) pertaining to physical certificatesj. Automatic credit of shares created through during Mergers & Acquisitions of companiesk. Helps in de-materialization and re-materialization of securities

What are the benefits of participation in a depository?

The benefits of participation in a depository are:i. Immediate transfer of securities;ii. Elimination of risks associated with physical certificates such as bad delivery, fake securities, etc.;iii. Reduction in paperwork involved in transfer of securities;iv. Reduction in transaction cost;v. Nomination facility;vi. Change in address recorded with DP gets registered electronically with all companies in which investor holds securities, eliminating the need to correspond with each of them separately;vii. Transmission of securities is done by DP eliminating correspondence with companies;viii. Convenient method of consolidation of folios/accounts;ix. Holding investments in equity, debt instruments and Government securities in a single account;x. Automatic credit of shares in demat account, arising out of split / consolidation / merger etc.

What are the different types of Demat Fees and how is it charged?

Demat Transaction charges are monthly, and include NSDL and CDSL charges. You will receive these details in your monthly statement. De-materialisation charges are incurred monthly, and Annual Maintenance Charges are added at the expiry of every 12 months for the next year. All charges are debited from the authorised Savings or Current Account.

What are the options for existing demat holders to apply for Delivery Instruction Booklet (DIB)?

The customer can place a request for Delivery Instruction Booklet (DIB) through the below two mode · Netbanking (For exisitng Single Demat account Holders only) · Physical DIS request to be submitted to DP servicing branch (Optional For existing Single Demat holders not using Netbanking/ All Joint account holders)

What are the services provided by a Depository?

A Depository provides following services to investors through a DP:a. Demat Account Opening.b. Dematerialization, i.e. converting physical securities into electronic form.c. Rematerialization, i.e. converting electronic securities balances held in a BO account into physical form.d. To maintain record of holdings in the electronic form.e. Facilitate settlement of trades by exchanges / Clearing corporations by delivering / receiving underlying securities from / in BO accounts.f. Facilitate transfer of securities between BOs.g. Receiving electronic credit in respect of securities allotted by issuers under IPO or otherwise.h. Receiving non cash corporate benefits, such as, allotment of bonus and rights shares or any other non cash corporate benefits given by the issuers in electronic.i. Facilitate pledging of dematerialized securities.j. Freezing of the demat account for debits, credits, or both.k. Login facility to its clients, to access its demat account..l. Subscription/ Redemption of mutual fund units in demat form.

What can I do with my demat account?

There are numerous uses of your demat account. Few important things that you can do with your demat account are listed below –You may apply for IPOs and NFOs. Do not forget to mention your DP ID and Client ID correctly in the application form. Same demat account can be used to purchase and hold shares and other types of securities.You will automatically receive all corporate benefits (bonus, rights issue, etc.) in your demat account. Cash benefits like dividend declared by your company, interest or maturity amount payable on your bond investments etc. would be credited to bank account linked with your demat account. Please ensure correct bank account details are recorded in your demat account.You may use your demat account to avail loan against shares facility which is offered by many banks etc. to meet your financial requirements without requiring to sell the investments.You may convert all your investments in shares, bonds, debentures, government securities, sovereign gold bonds etc. held in paper form to demat form through your DP.Read moreYou may hold your mutual fund investments in the same demat account. Holding mutual fund units in demat account makes things a lot easier for you. You would be able to monitor your portfolio at one place through CAS. It also saves you from the need to engage with various mutual fund houses if you want to make any change in your personal information, for example, address or bank details or nominee, etc. You may subscribe to mutual fund units in demat form by simply mentioning your DP ID and Client ID in application form. Investment in mutual funds by way of SIP is also possible through your demat account. For redemption or repurchase of mutual fund units, you may give an instruction to your DP.You may participate in buyback offer by tendering your shares to company through your demat account.You may participate in securities lending and borrowing scheme by lending securities lying idle in your demat account and may earn market returns.

What do you mean by Delivery Instruction Slip (DIS) and its Processing?

Delivery Instruction slips (DIS) are just like cheque leaves, but they must be clearly signed by all demat account holders. Make sure you keep them securely and submit on time for timely execution.Market Transactions should include:CMBP ID of your brokerCM name of your brokerMarket TypeSettlement NumberISIN NumberScrip NameQuantity in NumbersQuantity in WordsExecution DateOff-Market Transactions should include:DP IDDP NameClient IDRead moreISIN NumberScrip NameQuantity in NumbersQuantity in WordsExecution DatePlease note that you will also need to provide a reason for the Off-Market Transaction, along with a Consideration amount (if any).Securities Lending and Borrowing (SLB) should be submitted on the trading dayInter-depository Transactions involve a transfer of securities between two Demat Accounts held in two different depositories

What happens to the physical certificates after they are dematerialized ?

After dematerialization, physical certificates may be retained/destroyed by the Issuer / RTA.

What is a clearing member account and how is it different from a beneficiary account?

A registered member of any of the stock exchanges that have direct connectivity with the depositories holds a clearing member account or pool account. A Pool account is used by the members to hold securities received from clients and deliver them to clearing corporations. This account is also used to receive securities from the Clearing Corporations and distribute onwards to clients.

What is a demat account?

DEMAT account is a type of account that holds shares and securities in electronic form. DEMAT account is similar to a bank account, the only difference lies in the underlying asset held (DEMAT accounts hold shares while bank account hold money). It facilitates faster transactions and makes trade of securities extremely convenient

What is a depository?

A depository can be compared to a bank. A depository holds securities (like shares, debentures, bonds, Government Securities, units etc.) of investors in electronic form. Besides holding securities, a depository also provides services related to transactions in securities.

What is a Depository and how does it work?

A Depository is like a bank where securities are held in electronic form. There are two Depositories in India – National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Under the Depositories Act, investors can use the services of these Depositories through Depository Participants (DP) such as HDFC Bank.HSBC BANK, ICICI BANK. There are a number of benefits: Settlement of securities are traded on exchanges and as well as off-market transactions Shorter settlements enhance liquidity No stamp duty (A tax levied on documents, stamp duty applies to documents like cheques, receipts, licenses and transaction records) on the transfer of securities held in Demat form Changing your address, registering a power of attorney and even signatures can be effected in Demat accounts by submitting requests along with the relevant documents to the Depository Participant

What is dematerialization?

Dematerialization is the process by which physical certificates of securities are converted into securities in electronic form by way of credit in investors demat account held with a DP. Dematerialization is change in form of holding, it does not result into change of ownership.

What is DRN?

DRN mean demat request number

What is eDIS?

eDIS (Electronic Delivery Instruction Slip) is a facility that allows you to sell your shares even if you have not submitted your POA (Power of Attorney).

What is in-person verification?

It is mandatory to establish the identity of the applicant at the time of opening account as per SEBI guidelines. This is done by the DP’s staff by verifying the affixed photograph on account opening form and the photo seen on document on PAN card with the person seeking to open the account. For Joint account holders, the ’in-person verification’ is required for all the holders.

What is meant by Freezing the account? How can I do this?

Any transaction in the demat account is possible only upon a valid instruction from the account holder. In addition, the entries in the depository software at DP’s end are possible through a maker checker system. Still in order to prevent any undesired transaction happening in the account, demat account holder may opt to freeze his / her demat account by submitting a written request to DP. The following types of freeze are available- a. Freeze for debits only - A demat account holder may freeze the account only for debits by submitting a freeze instruction to its DP. However, during the period of freeze, the account holder will continue to receive credits like bonus or credits arising out of any other corporate action. b. Freeze for debits as well as credits - An account holder may freeze the account for debits as well as credits. No debits and credits can be made in the account, unless the account holder issues unfreeze instruction. This facility is beneficial to clients who do not use their account for long period. By freezing their account for debits and credits, they can avoid undue credits to their accounts in addition to preventing debits. c. Freeze particular ISIN(s) in the account - An account holder may freeze a particular ISIN(s) (security of a specific company) either for ‘debit’ or ‘debit & credit’, without freezing the whole account. If this type of freeze facility is used, all other securities in the account can be debited or credited but the securities under the specific ISIN(s) will be frozen for ‘debit’ or ‘debit & credit’ respectively. The client will be able to use other securities lying in its demat account and also receive credits in the ISIN which has been frozen only for debit. d. Freeze a specific number of securities held under an ISIN in an account- An account holder may freeze a specific quantity of a specific security in an account.

What is RRN?

RRN means Remat Request Number

What is Standing Instruction given in the account opening form?

In demat account, debit or credit transactions are permitted only if it is duly authorized by the respective holder(s). As a Delivery Instruction Slip (DIS) is required for every debit transfer in the demat account, a Receipt Instruction Slip is required for every credit transfer in the demat account. By giving a onetime standing instruction to your DP, you may avoid giving receipt instruction to your DP whenever a credit is expected in the account.

What is the procedure for dematerialization?

Following steps are involved in dematerialization of physical securities:• A Beneficiary Owner (BO) who wishes to dematerialize securities held by him in physical form has to submit duly filled and signed demat request form (DRF) to his Depository Participant (DP).• A separate DRF should be filled up for free securities and lock-in securities.• DP will verify the details and setup demat request in the system. The DP will then deface and mutilate the certificate and send the same along with the DRF to Issuer/ RTA.• On confirmation by the Issuer/ RTA, the BO’s account will be credited with the number of securities dematerialized.

What is the process for Closure of Demat Account ?

Closing an account requires the submission of a form signed by all members. If there is any holding in the account this should be transferred before closure, which requires a valid Demat Account number. If there is a pending de-materialisation, the Account cannot be closed. However Demat Account holders can request the DP to Cancel their Pending Demat Request with the Depository Participant. Please also ensure there are no pending corporate actions, as this could mean the Registrar or Company involved cannot credit the securities as required.

What precautions does depositories take to protect the data in the depository system?

Data security and data integrity are considered critical and given highest importance by depositories. The depositories follow highest standards in this regard. DPs are also required to follow the best practices to ensure that clients’ data and assets remain protected. Following are some of the measures adopted by depositories in this regard - a. Stringent requirement of daily back up of data at DP level as well as depository level. b. Backup is stored locally and also at a remote site by DPs and depository both on a daily basis. c. Depositories maintains a backup site as well as a Disaster Recovery Site to ensure continuing of operations in any case of disruption. d. Best industry practices are followed with respect to data handling and cyber security framework. e. Fall back mechanism for critical equipment, communication systems and utilities used for depository infrastructure. f. Data is stored in state of art data center managed by professional and qualified specialists. g. Logical and physical access barriers are adopted at various levels. h. Maker / Checker system is followed for critical data entry in depository system. i. Dcepositories have obtained the necessary ISO certification (for Information Security Management) and (for Business Continuity Management Systems), indicating compliance with best industry practices.

What precautions should I take before submitting my certificates to DP for dematerialization?

You should take care of following -Verify that you are the registered owner of the securities.Pattern of ownership (name sequences) of securities is same as that in demat account from which you wish to initiate the demat request.Verify that securities you wish to dematerialize are indeed available for demat.Verify that the RTA has not stopped services to the company of which you are holding the shares. This can be searched at the depository portal.After above steps, you may mark the share certificates that you wish to dematerialize with words Surrendered for Dematerialisation. Your DP will provide you the rubber stamp to be used for this purpose.After ensuring that the certificates have been duly marked as above, you may submit the DRF completed in all respects to your DP along-with the share certificates for further processing.

What should I do if I want to open a demat account?

Once you have identified and decided to open an account with a particular DP, you may approach that DP and fill up an account opening form. You would be required to provide your photograph and self-attested copy of following documents - Please remember to take original documents to the DP for verification. In case you are unable to produce original document for verification, then photocopy should be attested by any authorized entity, like a public notary. Your DP may ask additional proof of identity / address to meet its requirements in addition to above-mentioned.

What should I do if there is any discrepancy in my account statement?

In case of any discrepancy in the account statement, you must immediately contact your DP. If the discrepancy cannot be resolved at the DP level, you should approach the concerned depository who is associated with the depository.

Whats the Process of Transfer cum Closure cum Waiver (TCW):

A. Customers who wish to submit closure request [(Annexure Q)] need to come ‘In person’ – Any one of Demat Account holder(s) to be present at the time of submitting the transfer cum closure request. his requirement would also be applicable in case of NRI customers. In case of corporate Accounts, any one of the Authorised signatories will have to visit the DP personally. B. Signatures of Demat holder(s) to be affixed in presence of the DP official (space provided in Closure request) C Demat Account holder (any holder) signed in presence of DP staff. D. Copy of Client master Report (NSDL - CML) or Crystal Report (CDSL) of the target Account with another participant where the securities are to be transferred. This has to be stamped and signed by the target DP E. Customer needs to surrender unused DIS duly cancelled – In case the customer informs that he has exhausted the DIB booklet / misplaced / not traceable and he still wants to close the Account , then ‘In person verification’ to be carried out for ALL the joint holders.& customer needs to affix signatures against the relevant option in the closure request F. DP to cancel and destroy the unused physical slips in case submitted by the customer. DP to record the same in “DIS destruction register” G. Self attested copy of valid Proof of identity viz PAN card, passport, Voter ID card, Driving license etc. to be submitted. This document needs to be stamped as “Original seen and verified” by DP official. H. Original Client master List (CML for NSDL) or Original Crystal Report (CR for CDSL) of the target Demat Account duly signed and stamped by the target DP official. I. Pattern of Holder(s) need to be match with Source Demat Account.

What to do if I lose my account statement?

There is no need to worry. You may simply request the depository to provide your statement for the desired period once again. Using online facilities on the web or mobile apps you may view / download account statement as and when you want.

What type of instruments are available for demat ?

All types of equity/debt instruments viz. Equity shares, Preference Shares, Partly paid shares, Bonds, Debentures, Commercial Papers, Certificates of Deposit, Government Securities (G-SEC), etc. irrespective of whether these instruments are listed / unlisted / privately placed can be dematerialized with any of the depositories (i.e NSDL/CDSL), if they have been admitted with the concerned depository..

What will be the charges for account opening and other depository related transactions?

Depositories charges the DPs and not the investors. Depositories charges to its DPs are fixed and are based on the usage of depositories system. Complete details of depositories charges payable by the DPs are available at the respective websites of depositories. The DP charges its client for the services offered. The charges that the DP will be charging you for various services are mentioned in the Schedule of Charges which forms a part of the ‘Rights and Obligations of Beneficial Owner and Depository Participant’. You may keep a copy of this for your future reference. You can also get a comparative list of DP charges from the respective websites of the depositories. Your DP may revise charges by giving you 30 days notice in advance.

What will happen if my DP goes bankrupt or stops operation?

In a rare event of your DP going bankrupt or closing its operations, the interests of the demat account holders are fully protected. In such a situation, you would be given option to transfer your balances to any other DP of your choice or rematerialize the same.

Whether all the DPs are same?

Depositories have specified certain basic eligibility criteria for becoming a DP. The criteria are similar or even higher in certain respects than the corresponding provisions of SEBI regulations. All the DPs are same in the sense they are appointed by Depositories (NSDL/CDSL) only after grant of Certificate of Registration by SEBI to them. However, the type of services offered, service standards and charges for the services rendered may differ among DPs.

Whether different securities issued by the same Issuer will have same ISIN?

No. Different securities issued by the same issuer will have different ISIN code.

Who is a Beneficial Owner (BO) of the securities?

The investor whose securities are held in electronic form in a demat account opened with a depository through a Depository Participant is called as ‘Beneficial Owner’ (BO). All the benefits as a result of the holding the securities are given to such beneficial owner.

Who is a DP?

The term "DP" means Depository Participant i.He is an agent of the depository who is authorized to offer depository services to investors and is registered as a DP with SEBI. Financial institutions, banks, custodians, stockbrokers and other types of intermediaries specified under SEBI (Depositories and Participants) Regulations, 1996, complying with the requirements prescribed by SEBI/ Depositories can be registered as DP. An investor will always interact with a DP for the services and cannot directly approach the depository for any services except for Redressal of Grievances.

Who is an Issuer?

An “Issuer” means any entity, such as corporates, state or central government organizations, issuing securities which can be held in depository in electronic form.

Who is an RTA?

An RTA i.e. Registrar and Transfer Agent is an agent of the issuer. RTA acts as an intermediary between the issuer and depository for providing services such as Dematerialization, Rematerialization, Initial Public Offer and Corporate actions.

Who is registered owner of Securities?

When securities of a company are held in physical form by an investor, name of the investor is recorded in the books of the company as a ‘Registered Owner’ of the Securities. Each certificate is identified by Folio number, certificate number and distinctive range numbers. When physical securities are converted in to electronic form, the depository becomes ‘Registered owner” in the books of the company and investors name is removed from books of the company. Since depository is holding such shares as a custodian or a guardian it cannot claim any benefit or it is not liable for any loss as a result of the holdings.

Why should I give my bank account details at the time of account opening?

Providing bank account details at the time of demat account opening is mandatory. These bank details are communicated to issuer companies / RTAs for the purpose of crediting any amount payable to you (such as dividend, interest or maturity payment or redemption amount) directly in your bank account. It is therefore suggested that you provide details of your active bank account in the account opening form. Later, in case of change therein, please remember to inform your DP.

Can a minor be a nominee?

Yes, a minor can be a nominee. Whenever, a minor is mentioned as a nominee in a demat account, details of his / her guardian should also be mentioned.

Can a minor nominate?

No. Minor cannot nominate either directly or through his / her guardian.

Can a Nominee or Joint Holder be added in a Minor Demat Account?

No, Nomination and Joint holding both cannot be done in a Minor Demat Account.

Can a non individual / corporate demat account avail nomination facility?

No, Nomination cannot be done incase of non individual / corporate demat account.

Can a Non resident become nominee in any Resident Demat account?

Yes, any individual –Resident or Non – Resident can become nominee in any resident account.

Can a NRI be a nominee?

Yes, NRI can be a nominee in a demat account subject to the provision of foreign exchange regulations in force.

Can a NRI nominate?

Yes, NRI can nominate directly. However, the power of attorney holder cannot nominate on behalf of NRI.

Can joint holders nominate?

Yes. Nomination is permitted for accounts with joint holders. However, in case of death of any of the joint holder(s), the securities will be transmitted to the surviving holder(s). Only in the event of death of all the joint holders, the securities will be transmitted to the nominee (if nomination given, else to legal heir).

Can separate nomination be made for each security held in a demat account?

No. Nomination can be made account wise and not security wise. This means, in case of death of account holder, all the securities lying in the demat account, are liable to be transmitted to nominee(s) in the pre-registered proportion. If you wish different nominees for different securities, then you may consider keeping the securities in different demat accounts and mention nominee(s) as per your choice.

Can the nominee be changed?

Yes, the nomination can be changed anytime by the account holder(s) by simply filling up the Nomination form once again and submitting it to the DP.

Can there be more than one nominee?

Yes, at present up to three nominations can be made for one demat account. In case, two or three nominees are mentioned, then it is also required to mention the proportion (%) in which various securities are desired to be transmitted upon death of the account holder.

How many nominees can be max updated in a single individual demat account?

Maximum three individuals can be nominated in a single demat account Also the percentage of their share can be specified accordingly.

Is it necessary to have nominee in the demat account?

Nomination is not mandatory for demat account utpo 31st March 2023. However, it is very much recommended to have nominee mentioned in the demat account. In the unfortunate case of death of sole account holder, it makes the process of transmission very easy and fast. In you do not wish to mention any nominee at the time of account opening, you are required to state that I/We do not wish to make a nomination.

Is nomination mandatory in demat account opening?

No, nomination is not mandatory till 31-03-2023 as per SEBI.. Still it is advisable for all demat accounts especially single holders in order to eliminate the cumbersome legal documents and procedure for transmission of shares and the cost involved. You need one witness while submitting the nomination form for updation in account.

Is witness mandatory while updating nominee in individual demat account?

Yes, Details and signature of one witness is mandatory for nominees updation in demat account.

What documents of nominee are required for updation of nomination in account?

Nominee can either provide his/ her Photgraph & Signature, or Pan number, or Aahaar Number (along with consent declaration) or copy of bank savings bank account or any Demat account number of Nominee.

What is the maximum number of nominees that can be updated in a single demat account whether held singly or jointly?

Maximum three individuals can be nominated along with the percentage share of proportion for each.

What is the meaning of ‘Nomination’?

Nomination is a simple process by which a holder of securities communicates his / her preference regarding who should receive these securities in case of his / her death. Process of nomination in respect of demat account can be done at the time of opening of demat account or any time later.

What is the procedure for appointing a nominee?

The demat account holders need to mention the information related to nominee(s) in the account opening form at the time of account opening. Up to three different individuals may be mentioned as nominee in one demat account. In case, nomination was not done at the time of account opening or was done but account holder(s) wants to change it anytime later, then a Nomination form needs to be filled up and provided to DP.

What would happen if there is no nominee in the demat account held by sole holder?

In such a case, the securities would be transmitted to the account of legal heir(s), as may be determined by an order of the competent court. Following documents are required for this purpose -Duly filled in Transmission Form.Copy of the death certificate duly attested by a Notary Public or by a Gazetted Officer.A copy of the Succession certificate duly attested by a Notary Public or by a Gazetted Officer or An order of a court of competent jurisdiction where the deceased has not left a Will or A copy of the Probate of Will or Letter of Administration duly attested by a Notary Public or by a Gazetted Officer.In case the account of the claimant is not with the same Participant, copy of Client Master Report of the account of the claimant is also required (certified by the concerned DP).Read moreHowever, if the value of securities to be transmitted is below ?5,00,000/- (on the day of application for transmission), the DP may process the request based on the following documents:Duly filled in Transmission Form.Copy of the death certificate duly attested by a Notary Public or by a Gazetted Officer.Letter of Indemnity (in prescribed format).Affidavit (in prescribed format) andNo Objection Certificate(s) in prescribed format or Family Settlement Deed.In case the account of the claimant is not with the same Participant, copy of Client Master Report of the account of the claimant is also required (certified by the concerned DP).

Who can avail Nomination facility and what is the process?

Nomination can be made only by individuals holding beneficiary owner accounts on their own behalf singly or jointly. Non- individuals including society, trust, body corporate, partnership firm, Karta of Hindu Undivided Family, Holder of power of attorney cannot nominate. If the account is held jointly, all joint holders will sign the nomination form. Nomination in respect of the beneficiary owner account stands rescinded upon closure of the beneficiary owner account. Similarly, the nomination in respect of the securities shall stand terminated upon transfer of the securities. Transfer of securities in favour of a Nominee shall be valid discharge by the Depository against the legal heir. The cancellation of nomination can be made by individuals only holding beneficiary owner accounts on their own behalf singly or jointly by the same persons who made the original nomination. On cancellation of the nomination, the nomination shall stand rescinded and the Depository shall not be under any obligation to transfer the securities in favour of the Nominee. A minor can be nominated. In that event, the name and address of the Guardian of the minor nominee shall be provided by the beneficial owner. Birth certificate of minor nominee, Guardian proof of identity is required.

Who can be a nominee?

Only an individual can be a nominee. Non individuals like society, trust, body corporate, partnership firm, Hindu Undivided Family cannot be a nominee in the demat account.

Who can nominate?

Nomination can be made only by individuals holding demat account singly or jointly. Non-individual holders like society, trust, body corporate, partnership firm , Hindu Undivided Family and holder of Power of Attorney cannot nominate.

Transmission in Demat Acts

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What does transmission mean in relation to demat accounts?

Transmission is the process of law by which securities belonging to a deceased account holder are transferred to surviving joint holder(s) / legal heirs / nominee of the deceased account holder. Process of transmission in case of dematerialized holdings is relatively convenient as the transmission formalities for all securities held in a demat account can be completed by submitting the requisite documents to DP. There is no need to approach various companies for this purpose, as is required when securities are held in physical form.

What do you mean by Transmission-cum-Demat form?

In case security certificates are held jointly with a person who is deceased, the surviving holders can submit the certificates along with an original / notarized / gazette attested copy of the death certificate of the deceased and a ‘Transmission cum Demat’ form. The combination of names of the surviving holders on the certificates and on the account may be in the same or reverse order. Ensure that an application, in the required format, is submitted along with each DRF.

What is the meaning of Transmission cum Demat?

Transmission cum Demat is a very useful facility when one of the joint holders mentioned in securities certificate (held in physical form) has died and remaining holder(s) wish to have the securities transmitted in their name in demat form. Using this facility the twin objectives of deletion of name of one of the deceased joint holders and dematerialization of securities can be achieved in a single step.

What is the procedure for transmission in case of death of one or more joint holder(s)?

In such a case, the securities would be transmitted to the surviving holder(s), irrespective of the nomination. For example, if the account is in the joint names of Mr. A, Mr. B and Mrs. C, in the event of the death of Mr. B, the securities will be transmitted to surviving holders that is, Mr. A and Mrs. C. The surviving holder(s) would need to submit the following documents to the DP: Duly filled in Transmission Form. Copy of the death certificate duly attested by a Notary Public or by a Gazetted Officer. After verifying the above documents and satisfying himself, the DP will transmit the securities to the surviving holder(s) account and will close the account of the deceased

What is the procedure for transmission of securities to the nominee in case of the death of the sole account holder?

In case of the death of the sole holder, for transmission of securities, the nominee needs to submit duly filled-in transmission form along with a copy of the death certificate duly attested by a Notary Public or a Gazetted Officer. In case the account of the claimant is not with the same Participant, copy of Client Master Report of the account of the claimant (certified by the concerned DP) is also required. After verification of these documents, the DP will transmit the securities to the demat account of the nominee.

What is the process of Transmission in case of death of account holder?

In the case where an account holder has passed away, it is possible to transfer securities to surviving Surviving Holders Can have the securities transmitted into their accounts by maintaining or opening the Demat Account in the same holding pattern, excluding the deceased holder. Nominees In the case of death of the sole or all holders of a Demat Account, and if a valid nomination is registered, the nominee can make a request. This should be submitted with a notarized copy of the Death Certificate/s. Legal Heir(s) If there are no surviving joint holders, and no nomination registered, the transmission can be effected to the account of the legal heir. A Succession Certificate or Probate of Will or letter of administration duly notarized should be submitted.

Transposition

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What is meant by Transposition cum Demat form?

In case security certificates are held jointly but the order of names on the certificates do not match exactly with the order of names in which the Demat Account is held with the bank, then the holders can submit a Transposition cum Demat form along with the DRF and certificates to enable Demat of these certificates into such a Demat Account. .g. Certificates held by A & B or A & B & C can be dematted into a Demat account held by B & A or C & B & A respectively.

Pledge of Securities

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After repayment of the loan taken, how should I get back my pledge securities as free balance in my demat account?

Upon repayment of loan, pledgor should submit a duly filled in ‘Pledge Closure Initiation Slip’ to its DP. Once executed, the information is forwarded to DP of the pledgee. The pledgee then may submit ‘Pledge Closure Confirmation Instruction’ to its DP. (Alternatively, the pledgee may give instruction to its DP to close the pledge without waiting for request from the pledgor). Once pledge is closed, the block created on the underlying securities is removed and they become available once again for disposal by the erstwhile pledgor.

Can I change the securities offered in a pledge?

Yes, if the pledgee (lender) agrees, you may change the securities offered in a pledge. For this purpose, a new request for creation of pledge will have to be given by the pledgor and the existing pledge needs to be closed.

How will the distribution of bonus shares for pledged shares happen?

If the shares are in pledged status on the record date, bonus shares are credited to pledgor’s account with pledge marked in favour of the pledgee. Later when the pledge is closed, all the shares (including the bonus) will be credited to the pledgor’s account as free balances. In case of invocation of pledge, all the shares (including the bonus) will be moved to pledgee’s account.

What is process for Freezing/De- freezing in demat account?

It’s possible to freeze your Demat Account at (a)Account level,(b) ISIN (International Securities Identification Number-. It is a unique 12-character alpha-numerical code for a security so you can trade in that security. Securities for which ISINs are issued include bonds, commercial paper, equities and warrants.) level and (c) Quantity level by submitting a freeze request signed by all the account holders. For De-freezing the above level freeze a separate de freeze request in prescribed format is required.

What is the difference between Pledge and Hypothecation?

In depository system, there is no difference between pledge and hypothecation except that pledge can be invoked by the lender (pledgee). Whereas, in case of hypothecation, for invocation to take place, consent of borrower (hypothecator) is also required.

What is the effect of creation of pledge on the securities?

Once the pledge instruction is confirmed in depository system, the underlying securities are blocked in the demat account of pledgor. Until this block remains, pledgor is disabled from disposing of those securities.

What is the meaning of pledging of shares?

Pledging is basically committing the shares held by a person (pledgor) in favour of another person (pledgee) as a security or collateral for the exposure granted by pledgee. Generally, shares are pledged by the concerned shareholder for taking loan against shares.