Explanation:

The pledgor (borrower of funds) initiates the creation of pledge/hypothecation through its DP and the pledgee instructs its DP to confirm the creation of the pledge.

Explanation:

The depository may conduct entrance examinations and/or interviews, to examine the knowledge of the DP (and its staff) related to the operational, functional and technical aspects of the depository.

Explanation:

In the depository system, the securities in dematerialised form are not identified by distinctive numbers and certificate numbers as in the physical environment. Thus all securities in the same class are identical with each other and are interchangeable.

Explanation:

On issue of secured debentures, the Issuer initially allots Letter of Allotment (LOA) till the charges are created. On creation of the charge, debenture certificates are issued in lieu of the LOA.

Explanation:

CDSL allows change in name due to typographical errors at DP end subject to maintenance of prescribed documents.

Explanation:

One of the most important and basic services provided by the depositories in India is to facilitate transfer of securities from one account to another at the instruction of the account holder. In the depository system both transferor and transferee have to give instructions to its DPs for delivering (transferring out) and receiving of securities.

Securities can be easily transferred from one depository to another by filling up the Delivery Instruction Slips (DIS).

Explanation:

Government securities means a securities created and issued by the Central Government or a State Government for the purpose of raising a public loan.

Explanation:

All corporate investors have to submit documents as prescribed by SEBI along-with the stipulated KYC Application Form (Part I) and Account Opening Form (Part II) as per the format.

An authorised official of the DP shall verify the copies of the proof of address / identity documents with the original documents and write or put a stamp with the words: “verified with original” and affix his/her signature on the documents submitted by the Client, while exercising such due diligence.

Explanation:

The Depositories Act, 1996, ushered in an era of efficient capital market infrastructure, improved investor protection, reduced risks and increased transparency of transactions in the securities market.

Explanation:

Inter-Settlement Transfers : In a clearing member account, the securities are always kept in a bucket of specific market type and settlement number. The clearing member may have to move securities from one bucket with a different market type-settlement number combination to another bucket from where pay-in is to be effected.

To effect this movement a clearing member can give an instruction to move securities from one settlement to another settlement which is called ‘inter-settlement’ transfer.

Explanation:

Eligibility criteria of Designated Depository Participant :

SEBI shall not consider an application for the grant of approval as designated depository participant unless the applicant satisfies the following conditions, namely:

(a) the applicant is a participant registered with SEBI; (b) the applicant is a custodian of securities registered with SEBI; (c) the applicant is an Authorised Dealer Category-1 bank authorised by the Reserve Bank of India; (d) the applicant has multinational presence either through its branches or through agency relationships with intermediaries regulated in their respective home jurisdictions; (e) the applicant has systems and procedures to comply with the requirements of Prevention of Money Laundering Act (f) the applicant is a fit and proper person and (g) any other criteria specified by SEBI from time to time.

Explanation:

A Basic Service Demat Account or a BSDA Account is a distinctive Demat account that SEBI (Securities Exchange Board of India) launched in 2012. Focusing on the small investor with a cap on maximal holdings, a BSDA account can only be opened if your holdings add up to a maximum of Rs. 2 lakhs.

Only a single BSDA Demat Account can be opened by one investor and the Demat accounts shall be registered for SMART facility.

Explanation:

Partnership firm cannot be a member of a company under the provisions of Companies Act. Thus a depository account cannot be opened in the name of a partnership firm. All the partners of the firm, however, can sign as joint holders, and a joint account may be opened in the name of the proprietor or partners.

Explanation:

Cash corporate actions involve distribution of monetary benefits, e.g., dividend and interest etc. In case of cash corporate actions, depository merely provides information to the Issuer about the persons entitled to receive corporate benefits as on a cut-off date.

Non-cash corporate actions involve distribution of benefits other than cash such as bonus issues, offer of shares on right basis, conversion of securities, etc.

Explanation:

Transmission of Securities held singly in the Depository with Nomination :

If the Nominee does not have an account with the Depository, the Nominee shall be required to open an account with any Depository.

Explanation:

Records to be maintained by Depository – The depository has to maintain the details of the holdings of the securities of beneficial owners at the end of each day.

Explanation:

Procedure of Market Settlement of Demat Shares :

1. Seller gives Delivery Instructions to his DP to move securities from his account to the brokers account

2. Securities are transferred from broker’s account to Clearing Corporation on the basis of a delivery out instruction.

3. On pay-out, securities are moved from Clearing Corporation to buying broker’s account.

4. Buying broker gives instructions and securities move to the buyer’s account

Explanation:

The instructions are executed on the execution date. If there is adequate balance in the account, such quantity will be debited on the execution date. If adequate balances do not exist in the account, then instruction will wait for adequate balances till the end of the execution day.

In cases where adequate balances are not received till the end of the day of the execution date, the instruction will fail.

Explanation:

Steps for Pledge closure procedure :

1.Pledgor repays the loan to Pledgee

2. Pledgor gives a Pledge Closure request to his DP

3. Pledgor’s DP forwards the request to Depository

4. The Depository forwards this request to Pledgee’s DP

5. The Pledgee’s DP confirms with the Pledgee with a Pledgee Closure Confirmation Form

6. This is intimated to Depository and the Pledgor’s DP

7. Pledgor’s DP intimates about this to the Pledgor.

Explanation:

Functions of a Depository – Facilitating Account Transfer: The depository gives effects to all transfers resulting from the settlement of trades and other transactions between various beneficial owners by recording entries in the accounts of such beneficial owners.

Explanation:

In case HUF goes into partition, the securities shall be divided amongst all the members in the manner specified by the applicant. The surviving members shall furnish to the Depository Participant the details of the beneficial owner accounts of the individual members in order to have the securities distributed to their respective accounts.

Explanation:

While processing a pledge/hypothecation request, the DP should take care that Pledgor DP and Pledgee DP each shall create at least two users to implement the Makerchecker feature and ensure that all compulsory fields in the instruction form are entered.

It should also ensure that the instruction form is submitted in duplicate.

Explanation:

The Companies Act deals with issue, allotment and transfer of securities and various aspects relating to company management. It also regulates underwriting, the use of premium and discounts on issues, rights and bonus issues, payment of interest and dividends, supply of annual report and other information.

Explanation:

To encourage issue of securities in demat form, the SEBI has issued the following guidelines for public issues in electronic mode:

· Issuer shall be required to enter into an agreement with all the depositories.

· In case of Public issues for Equity allotment is mandatory in demat form. In case of debt securities, Issuer shall give an option to subscriber/investor to receive the physical certificates or hold the securities in electronic mode with the depository.

· In order to eliminate the risks to investors on account of fake/forged certificates, bad deliveries, delays in transfer, etc., trading in securities of company making an IPO shall be in demat form only.

Explanation:

In the case of rejection by the pledgee, the DP enters reason for the rejection in DP system as specified in the form.

Confirmation of the acceptance/ rejection of pledge/hypothecation are electronically communicated to DP system of the pledgor’s DP.

Explanation:

A Depository Participant (DP) is described as an agent of the depository and is a registered entity with SEBI.

As per the provisions of SEBI [Depositories and Participants] Regulations, 1996, a DP can offer depository related services only after obtaining a certificate of registration from SEBI.

Explanation:

The depository itself acts as a Registrar or Transfer agents and discharges RTA functions for G-Secs (Government Securities).

Explanation:

The depositories G-Sec cell, on receipt of the RRF-GS, matches the Rematerialisation Request Number given on the RRF-GS with the electronic message received by the depository’s system linked to its shareholders system.

In case of a mismatch, the depositories G-Sec’s cell will send a letter to the DP intimating them of the mismatch. The DP has to resolve the mismatch.

Explanation:

Transfer of securities from an account in one depository to an account in another depository is termed as an Inter-Depository Transfer.

Explanation:

In order to provide clarity with respect to a trading member maintaining a running account for client securities and pledging the client securities with Banks/NBFCs, SEBI issued the following guidelines which says –

The securities received in pay-out against which payment has been made by clients, shall be transferred to the demat account of the respective clients within one working day of the pay-out. Such securities shall be transferred directly from the pool account of the TM/CM to the demat account of the respective client.

Explanation:

In order to facilitate ease of doing business and to bring in uniformity and affordability of the stamp duty on securities across States and thereby build a pan India securities market, the Central Government has made the amendments to the Indian Stamp Act, 1899.

The amendment proposes to create the legal and institutional mechanism to enable states to collect stamp duty on securities market instruments at one place by one agency (through the Stock Exchanges or Clearing Corporations authorised by the stock exchange or by the Depositories) on one Instrument and subsequent disbursement of the duty collected to the respective states.

Explanation:

Steps for Pledge closure procedure :

1.Pledgor repays the loan to Pledgee

2. Pledgee gives a Unilateral Pledge Closure (Unpledged) request to his DP

3. Pledgee’s DP forwards the request to Depository. The pledge is then closed

4. The Depository informs the pledgor’s DP. The securities are moved from the ‘pledged’ balances to free balances in the pledgor’s account

5. Pledgor’s DP intimates the pledgor

Explanation:

A demat request can be rejected for various reasons like :

– Physical quantity of shares/certificates received by R&T Agent from DP is less or more than what is mentioned in Demat Request Form

– All/some certificates received by R&T Agent from DP is/are found to be fake.

– Demat request initiated under wrong ISIN.

etc.

Explanation:

In the depository system, the securities in dematerialised form are not identified by distinctive numbers and certificate numbers as in the physical environment. Thus all securities in the same class are identical with each other and are interchangeable. For example, all equity shares in the class of fully paid up shares are interchangeable.

This feature is known as Fungibility.

Explanation:

The powers in respect of the contracts for sale and purchase of securities, gold related securities, money market securities and securities derived from these securities and ready forward contracts in debt securities are exercised concurrently by RBI.

Explanation:

Non-individuals including society, trust, body corporate, Hindu Undivided Family (HUF), holder of power of attorney cannot nominate.

Explanation:

The Depositories Act, 1996 gives option to investors to hold their securities either in physical form or in book entry form with the depository. Issuer of the security i.e. company may offer a facility to hold the securities issued by it in demat form by entering into an agreement with the depository.

The issuers who intend to offer demat facility will have to first establish connectivity with the depository either directly or through a Registrar & Transfer Agent which in turn have connectivity with the depositories.

Explanation:

In an initial public offer (IPO), the investors apply for shares and in case of over subscription, the shares are allotted proportionally (lot wise). Similar in Rights issue, existing investors apply for shares and in case of over subscription, shares are allotted proportionally.

When a business purchases up to 15% of the outstanding shares of another listed company, it is said to have initiated an open offer. Investors cannot transfer the rights that come with their purchases in an open offer, which is how it differs from a rights issue.

A Dutch auction is a price discovery process in which the auctioneer starts with the highest asking price and lowers it until it reaches a price level where the bids received will cover the entire offer quantity. A Dutch auction can be used in an IPO to figure out the optimum price for a stock offering.

Explanation:

One of the most important and basic services provided by the depositories in India is to facilitate transfer of securities from one account to another at the instruction of the account holder. In the depository system both transferor and transferee have to give instructions to its DPs for delivering (transferring out) and receiving of securities.

Explanation:

Investor intending to subscribe to a public issue can submit a completed Bid-cum-Application form to a depository participant whose name is mentioned on the website of the stock exchange as eligible for this activity.

The DP will at the time of receipt of application give an acknowledgement to investor, by giving the counterfoil or specifying the application number to the investor, as a proof of having accepted the application form, in physical or electronic mode respectively. After accepting the application form, respective DP shall capture and upload the relevant bid details, in the electronic bidding system of stock exchanges.

Explanation:

No foreign entity, individually or collectively either as a sponsor or as a DP, or as a sponsor and DP together, can hold more than 20% of the equity capital of the depository.

Explanation:

Procedure for Transferring Government Securities in SGL Form to Depository account :

The DP scrutinizes the document / letter of authority (as may be specified by the depositories) and the DRF-GS which involves the following:

Verification of Clients signature or of the authorised signatory in case of corporates on the DRF-GS with the specimen signature recorded with the DP. If the signature differs, the DP should satisfy himself of the identity of the client.

Explanation:

Certificate of Deposits are issued only in dematerialized form with depositories. The procedure followed is identical to that followed for direct credit of equity shares during IPO/ Bonus/ Rights.

Explanation:

De-statementization (Destat) is the process, which enables BOs to convert their mutual fund units represented by Statement of Account (SoA) in physical form to electronic form and hold the same in their demat account.

The rules regarding reconciliation of Destat requests and maintenance records will be same as applicable for dematerialisation of securities.

Explanation:

The Executive Committee / Securities Committee of the depository determines the securities that are eligible for dematerialisation.

Explanation:

A demat account may be frozen in certain cases –

If a written instruction is received from the client by the DP, requesting freezing of account
If orders are received by the DP or the depository from the Central or State Government, SEBI, or any order by the court, tribunal, or any statutory authority
If a request is received by the Depository from a DP or client, in case of NSDL
If orders are passed by Disciplinary Action Committee (DAC) or if DP becomes insolvent, bankrupt or if a DP is being wound up

Explanation:

There are mainly two types of demat accounts which can be opened with a depository participant viz., (a) Beneficial Owners Account, and (b) Clearing Member Account.

Clearing Member Account: This account is opened by a broker or by a clearing member for the purpose of settlement of trades executed on a recognised stock exchange.

Beneficiary Account: A beneficial owner’s account is an ownership account. The holder/(s) of securities in this type of account owns the securities.

Explanation:

The investor while opening the demat account has to sign and submit an account opening form and acknowledgement of the receipt of the copy of the Rights and Obligation document to the DP. The form and contents of the Rights and Obligation document are specified by SEBI.

Explanation:

Equity linked saving schemes are a type of Equity Mutual Fund with tax benefits.

Debentures, Commercial paper and Bonds are all debt instruments.

Explanation:

Securities (free balances / lock-in balance) held in a depository account can be pledged or hypothecated against a loan.

If the pledge is for lock-in securities, then invocation request cannot be setup till the lock-in period is over. It is important to note that locked-in securities cannot be invoked before the lock-in release date.

Explanation:

SEBI had issued circular on Mechanism for acquisition of shares through stock exchange mechanism pursuant to tender-offers for the purpose of takeovers, buy back and delisting of securities.

The Clients (eligible shareholders) who wish to participate in the tender offers viz., buyback, takeover and delisting offer of company will be required to mention the details as per the existing process (as given below) while submitting delivery instructions slip (DIS) or electronic instructions to the Participants :

· Execution Date · Tender Offer Type (i.e. Market Type) · Event Number (i.e., Settlement Number) · CM BP ID · ISIN · Quantity

Explanation:

A DP may also choose to terminate its participation in the depository by giving a notice of not less than 30 days. On receipt of such notice, the depository may cease to provide any service or act for the DP. The depository should notify the DP, other participants, clients of the surrendering DP and SEBI within seven days of this action.

Explanation:

A DP may register the transfer of securities to or from a beneficial owner’s account only on receipt of instructions from the beneficial owner. No debit or credit can be given to the account of a beneficial owner without a due authorisation from such beneficial owner.

However, for ease of operation and elimination of redundancies, a clause has been included in the standard format of Rights and Obligations document. This clause enables clients to give standing instructions to DPs, at the time of opening the account itself, for receiving securities to the credit of their accounts without any further instruction from them. These instructions are given as a part of the account opening form itself.

Explanation:

In case of death of one of the clients, the surviving client can open a new account with the same DP. It’s not mandatory to open a new account with another DP.

In case of death of one of the Clients in a joint account, the surviving Client(s) shall request the DP to transmit the balances lying in the Client account to the account of the surviving Client(s).

The surviving Client(s) shall make an application to the DP in the specified form given by the Depository, along with original or a copy of the death certificate duly notarised / attested by a gazette officer. The surviving joint holder(s) will have to open a new account with the DP in their name(s).

Explanation:

DP can close a depository account on receipt of an application in the prescribed format. The application should be made by the account holder or by all the joint holders.

An account can be closed only when there is no balance (zero balance) in the account.

Explanation:

In order to detect malpractice and ease of reconciliation, it has been decided and advised to the Depository Participants to Map the Unique Client Code (UCC) with demat account of the clients.

This will help detect: (a) Diversion of pay-out of securities to nonclient/other client accounts.; and (b) Mis-matches between gross (client-wise) securities pay-in and pay-out files of a stock brokers generated by the Clearing Corporation which shall be compared with actual transfer of securities to/from the client’s depository accounts by the Depository.

Explanation:

SEBI encourages investors to lodge complaints through electronic mode in SEBI Complaints Redress System (SCORES). However, complaints received from investors in physical form are also digitized by SEBI and uploaded in SCORES.

Explanation:

In terms of Section 124 (6) of Companies Act, 2013 and the Rules notified thereunder, the shares in respect of which dividend has not been paid or claimed for a period of 7 consecutive years or more, are required to be transferred by the company to the Investor Education and Protection Fund Authority (IEPF).

Explanation:

All accounts opened by illiterate person(s) with NSDL DPs must be either introduced by an existing account holder or must be attested by applicant’s bank. CDSL however does not need an introducer for accounts to be opened by an illiterate person(s).

Explanation:

If the pledgor fails to discharge his obligations under the agreement of pledge or for any other reason, the pledgee may invoke the pledge. He can then claim the beneficial ownership of the concerned securities after taking the necessary steps.

It may be noted that in case of pledge, no confirmation is required in DP system of the pledgor’s DP for transferring securities from pledgor’s (borrower’s) account to pledgee’s (lender’s) account.

Explanation:

A certificate of registration is valid unless it is suspended or cancelled by the SEBI.

The DP, to keep the registration in force, shall pay registration fee for every five years from the sixth year.

Explanation:

According to the SEBI (Depositories and Participants) Regulations, 2018, the following securities are eligible for holding in dematerialised form.

1. Shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of similar nature of any incorporated company or other body corporate, including underlying shares of ADRs and GDRs.

2. Units of mutual funds, rights under collective investment schemes and venture capital funds, commercial paper, certificate of deposit, securitised debt, money market instruments, government securities and unlisted securities.

Explanation:

In case of death of one or more of the joint holders, the surviving joint holder(s) can get the name(s) of the deceased removed from the security certificate(s) and get them dematerialised by submitting the security certificates along with the Transmission Form and the DRF to the Participant. Original or copy of the death certificate of the deceased holder(s), duly notarised or attested by a Gazetted Officer or by a notary public.

Explanation:

A depository that has obtained registration can function only if it obtains a certificate of commencement of business from SEBI.

SEBI grants a certificate of commencement of business if it is satisfied that the depository has adequate systems and safeguards to prevent manipulation of records and transactions.

SEBI examines if the depository has a detailed operational manual explaining all aspects of its functioning, including the interface and method of transmission of information between the depository, issuers, issuers’ agents, DPs and beneficial owners.

Explanation:

As per guidelines on Anti Money Laundering (AML) measures :

Each Depository Participant should appoint a senior management executive to be designated as the Principal Officer, if it has not already done so. The Principal Officer shall be located at the head/corporate office of the Participant and shall be responsible for monitoring and reporting of all transactions and sharing of information as required under the law.

This is true for all stock brokers and non-stock brokers.

Explanation:

Transaction statements shall be sent to the clients at the end of each quarter. If there are no transactions in any quarter, no transaction statement may be sent for that quarter.

Explanation:

A market trade is one that is settled through the participation of a Clearing Corporation/ Clearing House.

Any trade that is cleared and settled without the participation of a clearing member or clearing corporation is called off-market trade, i.e., transfer from one beneficiary account to another due to a trade between them.

Explanation:

When a rematerialisation request is sent, the securities in the client account will not be available for delivery/transfer immediately. The client will have to wait for physical certificates to reach him before they can be sold. Thus the client would encounter temporary illiquidity on the securities requested for in rematerialised form.

Explanation:

All off-market transfer of securities shall be permitted by the Depositories only by execution of Physical Delivery Instruction Slip (DIS) duly signed by the client himself or by way of electronic DIS and client’s consent is required to be obtained through OTP for such off market transfer of securities from client’s demat account.

Explanation:

As per the rules of Rematerialisation Process – Issuer / R & T Agent should send the certificate to Beneficial Owner within 30 days from the date of confirming the request in the depository system.

Explanation:

The following are important descriptions of a transaction done on a stock exchange. All these descriptions have to be written on the ‘DIS’ – Delivery instructions slips

1. Market Type – Stock exchanges offer different market segments in which trades can be done. The segmentation is done by the type of settlement or type of trade

2. Settlement Number – Trading periods of each of the market segments is identified by a settlement number. Every settlement number has a trade beginning day, trade-ending day, settlement pay-in day and settlement pay-out day etc.

3. Clearing Member Every broker in a stock exchange participating in settlement process through depository is required to open clearing member account

Explanation:

SEBI’s regulatory jurisdiction extends over corporates in the issuance of capital and transfer of securities and all intermediaries and persons associated with securities market.

It can conduct enquiries, audits and inspection of all concerned and adjudicate offences under the SEBI Act.

Explanation:

A Pledgor is a person who needs a loan against the securities in his Demat account.

The pledgor submits the request form containing all details like the details of securities to be pledged, The DP verifies the form for completeness and validity and ensures that the securities to be pledged exist in the pledgor’s account.

Explanation:

Depository is an organisation where securities of an investor are held and transferred in electronic form.

The principal function of a depository is to provide a facility for investors to hold and transfer securities in dematerialised form and in book-entry form. The securities are transferred by debiting the transferor’s depository account and crediting the transferee’s depository account.

Explanation:

Rights and Obligations of Depositories :

The depository should indemnify beneficial owners of securities for any loss caused to them due to the negligence of the Depository Participant (DP). Where the loss however, is caused due to the negligence of a DP, the depository shall have the right to recover it from such DPs.

Explanation

A Basic Service Demat Account (BSDA) is a demat account intended for small investors who do not or cannot regularly invest in stocks, bonds, ETFs, mutual funds, etc. The BSDA can be maintained at a reduced cost.

Individuals shall be eligible to opt for BSDA subject some conditions and one of them is : No annual maintenance charges (AMC) shall be levied in case the value of holdings of debt securities is up to Rs. 1 lakh. A maximum AMC of Rs. 100 shall be levied if the value of holdings of debt securities is between Rs. 1,00,001 and Rs.2,00,000.

The photograph of the Nominee is annexed to the nomination form in case of NSDL.

Explanation:

Role of Issuer/R&T Agent in Corporate Benefits

In the case where the client has consented to receive the benefits through the depository, the Issuer/R&T Agent provides allotment details of all clients to the depository. On receipt of these details, the depository makes the necessary credit entries in the account of the client concerned.

In certain cases, such as split of shares, consolidation of shares, mergers, demergers, bonus shares, etc. corporate action is executed automatically as per the fixed ratio defined by Issuer/R & T Agent, through the depository system. This feature is called “Auto Corporate Action”.

Explanation:

The Indian money market is divided into organized and unorganized sectors. The market that directly comes under the purview of RBI is called the organized sector while the one that is independent is called the unorganized sector.

Indigenous money lenders form a part of the unorganised money market.

Explanation:

To encourage issue of securities in demat form, SEBI has stated that the issuer shall be required to enter into an agreement with all the depositories.

Explanation:

Each security is identified in the depository system by an International Securities Identification Number (ISIN).

Explanation:

For creation of pledge /hypothecation both the parties to the agreement, i.e., the pledgor and the pledgee must have a beneficial account with the same depository as inter-depository pledge is presently not permitted.

Explanation:

No person shall buy, sell or otherwise deal in securities as a foreign portfolio investor unless it has obtained a certificate granted by the designated depository participant on behalf of the Board.

The Applicant is a custodian of securities registered with SEBI is a necessary condition.

Explanation:

The Depositories Act, 1996 provides that the depositories provide their services to the security holder(s) through their agents called Depository Participants (DPs).

Explanation:

Allotment in electronic form is given only when the client name and the beneficiary account are matched with details filled in the application form.

Explanation:

SEBI (Depositories & Participants) Regulations, 2018 prescribe a minimum net worth criteria for different kind of applicants

Depositories however, can fix a higher net worth criterion for their DPs. As per the Bye-laws of the Depositories, an applicant has to submit a net worth certificate certified by a chartered accountant (which includes the computation of networth). It may happen that different Depositories have different methodology for calculation of the net worth. In that case the DP may have different net worth figures for different Depositories.

Explanation:

Clearing Members and brokers have to open a beneficiary account if they have to deal with their own holdings.

Explanation:

The DP scrutinizes the form of transfer, the DRF-GS and the certificates.

Explanation:

As per the Reserve Bank of India directions, for redemption of commercial paper, investors will no longer be required to transfer commercial paper held in their beneficial owner accounts to Issuing and Paying Agents (IPAs) Redemption account.

Commercial Papers will be extinguished directly from the beneficial owner accounts of Investors through corporate action for the purpose of redemption.

Explanation:

In case of death of one of the Clients in a joint account, the surviving Client(s) shall request the DP to transmit the balances lying in the Client account to the account of the surviving Client(s).

The surviving joint holder(s) will have to open a new account with the DP in their name(s).

Explanation:

Inter Depository Transfers (between Constituent Subsidiary General Ledger Accounts of depositories) shall be eligible for Value Free Transfer (VFT) if such transfers are arising out of trades in exchanges between demat account holders of different depositories.

The Inter Depository Transfers of Government Securities is applicable for Central Government Securities, State Development Loans, Treasury Bills and Sovereign Gold Bonds issued by RBI on behalf of Central and State Governments.

Explanation:

Services offered to Basic Services Demat Account Holders:

Transaction statements:

a. Transaction statements shall be sent to the BO at the end of each quarter. If there are no transactions in any quarter, no transaction statement may be sent for that quarter.

b. If there are no transactions and no security balance in an account, then no further transaction statement needs to be provided.

Explanation:

An entity desirous of becoming a DP of a depository should make an application to SEBI through the Depository. The application complete in all respects should be submitted to the Depository in which membership is sought for.

The Depository evaluates the application and if it finds that the applicant has the potential to be admitted as a DP, then it forwards that application to SEBI within 30 days from the date of receipt of the application. Along with the application, the depository also submits its recommendations regarding the applicant.

Explanation:

Rights and Obligations of Issuers and their R&T Agents –

The issuer and its R&T Agents have to reconcile with the records of the depository, the records in respect of balances of eligible securities with clients and confirm to all the Depositories, the total security balances both in physical as well as in electronic holdings in the books.

In case where a State or the Central Government is the issuer, the depository reconciles the records of the dematerialised securities with the statement provided by the RBI on a daily basis.

Explanation:

The Depositories Act, 1996 (and not the SEBI (Depositories and Participants) Regulations) provides for the establishment of depositories in securities market with the objective of ensuring free transferability of securities with speed, accuracy and security.

The Companies Act deals with issue, allotment and transfer of securities and various aspects relating to company management. It does not deal with regulations pertaining to dematerialisation of securities.

Securities Contracts (Regulation) Act, 1956 (SCRA) provides for direct and indirect control of virtually all aspects of securities trading and the running of stock exchanges and aims at preventing undesirable transactions in securities.

Explanation:

Under the Procedure for Dematerialisation – The DP should enter the dematerialisation request in DP system after following makerchecker concept. The DP system generates a request number (DRN), which should be mentioned on Demat Request Form.

Explanation:

DPs are required to open separate accounts, for their own investments, thereby keeping the `beneficial owner’ accounts separate. This is to ensure that there is no co-mingling of their assets with that of their clients.

Explanation:

The process of transmission through a depository is simplified and investor friendly and the legal heir to the title interacts only with one entity i.e., his DP. At NSDL, processing of Transmission request should be processed through ‘Transfer of Holding’ module only where the target account is in NSDL.

Explanation:

The process of a broker/trading member submitting securities sold by him on behalf of his client, to Clearing Corporation of a stock exchange is called ‘pay-in’

The process of a Clearing Corporation transferring the securities to the broker’s CM -account for the quantity of securities purchased by them on behalf of their clients is known as ‘pay-out’.

Explanation:

The securities arising out of corporate actions like bonus, share splits or consolidation or exchange under a merger/acquisition scheme are credited to the account of the pledgor (borrower), with pledge marked in favour of the pledgee (lender).

Explanation:

SEBI had issued circular on Mechanism for acquisition of shares through stock exchange mechanism pursuant to tender-offers for the purpose of takeovers, buy back and delisting of securities.

The Clients (eligible shareholders) who wish to participate in the tender offers viz., buyback, takeover and delisting offer of company will be required to mention the details as per the existing process (as given below) while submitting delivery instructions slip (DIS) or electronic instructions to the Participants :

· Execution Date · Tender Offer Type (i.e. Market Type) · Event Number (i.e., Settlement Number) · CM BP ID · ISIN · Quantity