A depository is an organization which holds (shares, debentures, bonds, government securities, mutual fund units etc.) securities of investors in electronic form at the request of the investors through a registered depository participant. It also provides services related to transactions in securities.
Currently there are only two Depositories - National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) registered with SEBI.
A Depository Participant (DP) is an agent of the depository (NSDL/CDSL) through which it interfaces with the investor and provides depository services.
Any Public financial institutions, scheduled commercial banks, foreign banks operating in India with the approval of the Reserve Bank of India, state financial corporations, stock-brokers, clearing corporations / clearing houses, NBFCs and registrar to an issue or share transfer agent complying with the requirements prescribed by SEBI can be registered as Depository Participant (DP).
An ISIN (International Securities Identification Number) is a unique 12 digit alphanumeric identification number allotted for a security (e.g. - INE283C01018). Equity fully paid up, equity-partly paid up, equity with differential voting /dividend rights issued by the same issuer will have different ISINs.
Dematerialisation is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form.
Rematerialization is the process of converting securities held in electronic form in a Demat account back in physical certificate form.
An RTA 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 offers (IPO) and corporate actions.
When securities of a company are held in physical form by an investor, his/ her name is recorded in the books of the company as a ‘Registered Owner’ of the securities. When physical shares are converted into electronic form, the depository becomes ‘Registered owner” in the books of the company and investor’s name is removed from books of the company.
All the benefits of the dematerialized shares are given to the actual investor since the depository holds the securities in a fiduciary capacity on behalf of the investors who have opened a Demat account with the depository. Hence, the actual investor is the “Beneficial Owner” (BO) of the securities.
No, A demat account cannot be opened directly with depository. It has to be opened only though a Depository Participant (DP) of depository.
Yes, demat account can be a opened in a single name or in joint holders’ name. There can be maximum three account holders i.e. one main holder and two joint holders.
Yes. Demat account can be opened in the name of a minor. The account will be operated by a guardian till the minor becomes major. Guardian has to be the father or in his absence mother. In absence of both, father or mother, the guardian can be appointed by court.
Yes. A demat account can be opened in the name of a trust if the trust is registered under the Public Trust Act 1860 / Societies Registration Act / Bombay Public Trust Act / Public Trust Act in force in the state. If the trust is a private or unregistered trust then a demat account shall be opened in the name of trustees as an individual account.
SEBI has mandated that nomination should be recorded for a demat account held by individuals. If nomination is not to be given then the account holder(s) should give a written and signed declaration to the effect.
Yes. An investor can open more than one account in the same name with the same DP and also with different DPs. For all the accounts, investor has to strictly comply with know your client (KYC) norms including proof of identity, proof of address requirements as stipulated by SEBI and also provide PAN number. The investor has to show the original PAN card at the time of opening of demat account.