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Q. What is a Depository? |
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A depository is an organisation, which holds 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. |
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Q. How is a depository similar to a bank? |
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It can be compared with a bank, which holds the funds for depositors. A Bank – Depository
Analogy is given in the following table: BANK-DEPOSITORY – AN ANALOGY - BANK Holds
funds in an account. DEPOSITORY Hold securities in an account. - BANK Transfers
funds between accounts on the instruction of the account holder. DEPOSITORY Transfers
securities between accounts on the instruction of the account holder. - BANK Facilitates
transfer without having to handle money, DEPOSITORY Facilitates transfer of ownership
without having to handle securities. - BANK Facilitates safekeeping of money, DEPOSITORY
Facilitates safekeeping of securities.
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Q. How many Depositories are registered with SEBI? |
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At present two Depositories viz. National Securities Depository Limited (NSDL) and
Central Depository Services (I) Limited (CDSL) are registered with SEBI. |
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Q. Who is a Depository Participant? |
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A Depository Participant (DP) is an agent of the depository through which it interfaces
with the investor. A DP can offer depository services only after it gets proper
registration from SEBI. Banking services can be availed through a branch whereas
depository services can be availed through a DP. |
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Q. Is it compulsory for every investor to open a depository account to trade in
the capital market? |
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As per the available statistics at BSE and NSE, 99.9% settlement takes place in
demat mode only. Therefore, in view of the convenience in settlement through demat
mode, it is advisable to have a beneficiary owner (BO). |
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Q. Account Opening : Am I eligible to open an Account? |
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Yes, any Individual, Hindu undivided Family (HUF), proprietary firm, partnership
firm, company, trust or Non Resident Indians (NRI) can open an account with Shah
Investors Home Ltd. |
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Q. Account Opening : What should I do when I want to open an account with a DP? |
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At the time of opening an account, you have to sign an agreement with the DP in
a NSDL prescribed standard agreement, which details your and your DP’s rights and
duties. You have to submit required documents to open account opening form as per
KYC norms.
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Q. Account Opening : Can I open more than one account with the same DP? |
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Yes. You can open more than one account with the same DP. There is no restriction
on the number of accounts you can open with a DP. |
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Q. Account Opening : Am I restricted to having account with only one DP? |
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No. There are no restrictions on the number of DPs you can open accounts with. Just
as you can have savings or current accounts with more than one bank, you can open
accounts with more than one DP. |
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Q. Account Opening : Why should an investor give his bank account details at the
time of account opening? |
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It is for the protection of investor’s interest. The bank account number will be
mentioned on the interest or dividend warrant, so that such warrant cannot be encashed
by any one else. Further, cash corporate benefits such as dividend, interest will
be credited to the investors account directly through the ECS (Electronic Clearing
Service) facility, wherever available, by the company. |
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Q. Account Opening : Why should I/We as BO should show my income level? |
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It is a mandatory requirement from NSDL |
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Q. Account Opening : Can an investor change the details of his bank account? |
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Yes. Since in the depository system monetary benefits on the security balances are
paid as per the bank account details provided by the investor at the time of account
opening, the investor must ensure that any subsequent change in bank account details
is informed to the DP. |
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Q. Account Opening : What should be done if the address of the investor changes? |
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Investor should immediately inform his/her DP, who in turn will update the records.
This will obviate the need of informing different companies. |
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Q. Account Opening : Does the investor have to keep any minimum balance of securities
in his/her accounts? |
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No. |
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Q. Account Opening : Can an investor open a single account for securities owned
in different ownership patterns such as securities owned individually and securities
owned jointly with others?
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No. The demat account must be opened in the same ownership pattern in which the
securities are held in the physical form. e. g. if one share certificate is in the
individual name and another certificate is jointly with somebody, two different
accounts would have to be opened. |
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Q. Account Opening : What is required to be done if one has physical certificates
with the same combination of names, but the sequence of names is different i.e.
some certificates with ‘A’ as first holder and ‘B’ as second holder and other set
of certificates with ‘B’ as first holder and ‘A’ as the second holder? |
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In this case the investor may open only one account with ‘A’ & ‘B’ as the account
holders and lodge the security certificates with different order of names for dematerialisation
in the same account. An additional form called "Transposition cum Demat" form will
have to be filled in. This would help you to effect change in the order of names
as well as dematerialise the securities. |
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Q. Account Opening : Can an investor operate a joint account on "either or survivor"
basis just like a bank account? |
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No. The demat account cannot be operated on "either or survivor" basis like the
bank account. |
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Q. Account Opening : Can someone else operate the account on behalf of the BO on
the basis of a power of attorney? |
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Yes. If the BO authorises any person to operate the account by executing a power
of attorney and submit it to the DP, that person can operate the account on behalf
of the BO. |
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Q. Account Opening : Can addition or deletion of names of accountholders is permitted
after opening the account? |
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No. The names of the account holders of a BO account cannot be changed. If any change
has to be effected by addition or deletion, a new account has to be opened in the
desired holding pattern (names) and then transfer the securities to the newly opened
account. The old account may be closed. |
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Q. Account Opening : Can an investor close his demat account with one DP and transfer
all securities to another account with another DP? |
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Yes. The investor can submit account closure request to his DP in the prescribed
form. The DP will transfer all the securities lying in the account, as per the instruction,
and close the demat account. |
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Q. Account Opening : Whether investors can freeze or lock their accounts? |
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Investors can freeze or lock their accounts for any given period of time, if so
desired. Accounts can be frozen for debits (preventing transfer of securities out
of accounts) or for credits (preventing any movements of hindrances into accounts)
or for both. |
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Q. Account Opening : What is dematerialisation? |
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Dematerialisation is the process by which physical certificates of an investor are
converted to an equivalent number of securities in electronic form and credited
into the investor's account with his/her DP. |
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Q. Account Opening : How can one convert physical holding into electronic holding
i.e how can one dematerialise securities? |
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In order to dematerialise physical securities one has to fill in a DRF (Demat Request
Form) which is available with the DP and submit the same along with physical certificates
one wishes to dematerialise. Separate DRF has to be filled for each ISIN Number.
The complete process of dematerialisation is outlined below: • Surrender certificates
for dematerialisation to your depository participant. • Depository participant intimates
Depository of the request through the system. • Depository participant submits the
certificates to the registrar of the Issuer Company. Registrar confirms the dematerialisation
request from depository. • After dematerialising the certificates, Registrar updates
accounts and informs depository of the completion of dematerialisation. • Depository
updates its accounts and informs the depository participant. • Depository participant
updates the demat account of the investor. |
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Q. Account Opening : What is an ISIN? |
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ISIN (International Securities Identification Number) is a unique identification
number for a security. |
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Q. Account Opening : Can odd lot shares be dematerialised? |
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Yes, odd lot share certificates can also be dematerialised. |
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Q. Account Opening : Do dematerialised shares have distinctive numbers? |
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Dematerialised shares do not have any distinctive numbers. These shares are fungible,
which means that all the holdings of a particular security will be identical and
interchangeable. |
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Q. Account Opening : Can electronic holdings be converted back into Physical Certificates? |
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Yes. The process is called rematerialisation. If one wishes to get back his securities
in the physical form one has to fill in the RRF (Remat Request Form) and request
his DP for rematerialisation of the balances in his securities account. The process
of rematerialisation is outlined below: • One makes a request for rematerialisation.
• Depository participant intimates depository of the request through the system.
• Depository confirms rematerialisation request to the registrar. • Registrar updates
accounts and prints certificates. • Depository updates accounts and downloads details
to depository participant. • Registrar dispatches certificates to investor. |
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Q. Trading/Settlement : What is the procedure for selling dematerialised securities? |
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The procedure for buying and selling dematerialised securities is similar to the
procedure for buying and selling physical securities. The difference lies in the
process of delivery (in case of sale) and receipt (in case of purchase) of securities.
In case of purchase:- • The broker will receive the securities in his account on
the payout day • The broker will give instruction to its DP to debit his account
and credit investor's account • Investor will give ‘Receipt Instruction to DP for
receiving credit by filling appropriate form. However one can give standing instruction
for credit in to ones account that will obviate the need of giving Receipt Instruction
every time. In case of sale:- The investor will give delivery instruction to DP
to debit his account and credit the broker’s account. Such instruction should reach
the DP’s office at least 24 hours before the pay-in as other wise DP will accept
the instruction only at the investor’s risk.
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Q. Trading/Settlement : What is 'Standing Instruction' given in the account opening
form? |
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In a bank account, credit to the account is given only when a 'pay in' slip is submitted
together with cash/cheque. Similarly, in a depository account 'Receipt in' form
has to be submitted to receive securities in the account. However, for the convenience
of investors, facility of 'standing instruction' is given. If you say 'Yes' for
standing instruction, you need not submit 'Receipt in' slip everytime you buy securities.
If you are particular that securities can be credited to your account only with
your consent, then do not say 'yes' [or tick ] to standing instruction in the application
form. |
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Q. Trading/Settlement : What is delivery instruction slip (DIS)? What precautions
do one need to observe with respect to Delivery Instruction Slips? |
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To give the delivery one has to fill a form called Delivery Instruction Slip (DIS).
DIS may be compared to cheque book of a bank account. The following precautions
are to be taken in respect of DIS:- • Ensure and insist with DP to issue DIS book.
• Ensure that DIS numbers are pre-printed and DP takes acknowledgment for the DIS
booklet issued to investor. • Ensure that your account number [client id] is pre-stamped.
• If the account is a joint account, all the joint holders have to sign the instruction
slips. Instruction cannot be executed if all joint holders have not signed. • Avoid
using loose slips • Do not leave signed blank DIS with anyone viz., broker/sub-broker.
• Keep the DIS book under lock and key when not in use. • If only one entry is made
in the DIS book, strike out remaining space to prevent misuse by any one. • Investor
should personally fill in target account -id and all details in the DIS.
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Q. Trading/Settlement : Is it possible to give delivery instructions to the DP over
Internet and if yes, how? |
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Yes. Both NSDL and CDSL have launched this facility for delivering instructions
to your DP over Internet, called SPEED-e and EASI respectively. The facility can
be used by all registered users after paying the
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Q. Trading/Settlement : Why should BO mention “Reason” & “Consideration” while carrying
out “Off- Market” Trade? |
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It is a requirement from NSDL and Mandatory to mention in DIS. It is categorically
mentioned by them that while one carry out “Off Market” transaction (I.e. a transaction
not carried out through official market process.) the BO should mention reason why
he has transferred this shares to other account. Reason can be in mode of Gift,
Donation, transfer from one account to another account with a same client or transfer
to family member a/c, closing of Account and Transferring to Other Dp’s Account
Etc.
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Q. Corporate Benefits : Is it possible to get securities allotted in public offering
directly in the electronic form? |
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Yes, it is possible to get securities allotted to in Public Offerings directly in
the electronic form. In the public issue application form there is a provision to
indicate the manner in which an investor wants the securities allotted. He has to
mention the BO ID and the name and ID of the DP on the application form. Any allotment
made will be credited into the BO account. |
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Q. Corporate Benefits : How are cash corporate benefit such as dividend / interest
received?
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The concerned company obtains the details of beneficiary holders and their holdings
as on the date of the book closure / record date from Depositories. The payment
to the investors will be made by the company through the ECS (Electronic Clearing
Service) facility, wherever available. Thus the dividend / interest will be credited
to your bank account directly. Where ECS facility is not available dividend / interest
will be given by issuing warrants on which your bank account details are printed.
The bank account details will be those which you would have mentioned in your account
opening form or changed thereafter. |
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Q. Corporate Benefits : How would one receive non-cash corporate benefit such as
bonus etc.? |
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The concerned company obtains the details of beneficiary holders and their holdings
as on the date of the book closure / record date from depositories. The entitlement
will be credited by the company directly into the BO account. |
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Q. Corporate Benefits : Who should be contacted in case of discrepancies in corporate
benefits? |
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In case of discrepancies in corporate benefits, one can approach the company / its
R&T Agent. |
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Q. Pledging : Can one pledge dematerialised securities? |
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Yes. In fact, pledging dematerialised securities is easier and more advantageous
as compared to pledging physical securities. |
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Q. Pledging : What should one do to pledge electronic securities? |
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The procedure to pledge electronic securities is as follows: • Both investor (pledgor)
as well as the lender (pledgee) must have depository accounts with the same depository;
• Investor has to initiate the pledge by submitting to DP the details of the securities
to be pledged in a standard format ; • The pledgee has to confirm the request through
his/her DP; • Once this is done, securities are pledged. • All financial transactions
between the pledgor and the pledgee are handled as per usual practice outside the
depository system.
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Q. Pledging : How can one close the pledge after repayment of loan? |
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After one has repaid the loan, one can request for a closure of pledge by instructing
the DP in a prescribed format. The pledgee on receiving the repayment will instruct
his DP accordingly for the closure of the pledge. |
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Q. Pledging : Can one change the securities offered in a pledge? |
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Yes, if the pledgee [lender] agrees, one may change the securities offered in a
pledge. |
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Q. Pledging : Who would receive the corporate benefits on the pledged securities? |
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The securities pledged are only blocked in the account of pledgor in favour of the
pledgee. The pledgor would continue to receive all the corporate benefits. |
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Q. Pledging : What is Lending and Borrowing of Securities? |
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If any person required to deliver a security in the market does not readily have
that security, he can borrow the same from another person who is willing to lend
as per the Securities Lending and Borrowing Scheme. |
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Q. Pledging : Can lending and borrowing be done directly between two persons? |
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No. Lending and borrowing has to be done through an 'Approved Intermediary' registered
with SEBI. The approved intermediary would borrow the securities for further lending
to borrowers. Lenders of the securities and borrowers of the securities enter into
separate agreements with the approved intermediary for lending and borrowing the
securities. Lending and borrowing is effected through the depository system. |
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Q. Pledging : Can I lend the securities lying in my account? |
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Yes. You can lend your securities through Approved Intermediaries registered with
SEBI. |
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Q. Pledging : How would I lend my demat securities? |
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You may enter into an agreement with the approved intermediary to be a lender under
this scheme. After that, you may lend securities any time by submitting lending
instruction to your DP. |
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Q. Pledging : How would I get back the securities lent by me? |
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Intermediary may return the securities at any time or at the end of the agreed period
of lending. Intermediary has to repay the securities together with any benefits
received during the period of the loan.
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Q. Pledging : How would I receive the corporate benefits which would accrue on these
securities during the period of lending? |
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The benefits will be given to the Intermediary/borrower. However, whenever the securities
are being returned / recalled. Intermediary/borrower will return the securities
together with benefits received. |
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Q. Nomination : Who can nominate? |
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Nomination can be made only by individuals holding beneficiary accounts either singly
or jointly. Non-individuals including society, trust, body corporate, karta of Hindu
Undivided Family, holder of power of attorney cannot nominate. |
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Q. Nomination : Who can be a nominee? |
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Only an individual can be a nominee. A nominee shall not be a society, trust, body
corporate, partnership firm, Karta of Hindu Undivided Family or a power of attorney
holder. |
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Q. Nomination : Why I/We should nominate? |
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It is in the interest of the BO to make nomination. This will help his/her from
legal heirs to approach court of law, Obtaining of Succession certificate, Save
Expenses In absence or deceased of a BO. |
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Q. Transmission of demat securities : What is transmission of demat securities? |
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Transmission is the process by which securities of a deceased account holder are
of dematerialised holdings is more convenient as the transmission formalities for
all securities held in a demat account can be completed by submitting documents
to the DP, whereas in case of physical securities the legal heirs/nominee/surviving
joint holder has to independently correspond with each company in which securities
are held. |
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Q. Transmission of demat securities : In the event of death of the sole holder,
how the successors should claim the securities lying in the demat account? |
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The claimant should submit to the concerned DP an application Transmission Request
Form (TRF) along with the following supporting documents 1. In case of death of
sole holder where the sole holder has appointed a nominee Notarised copy of the
death certificate 2. In case of death of the sole holder, where the sole holder
has not appointed a nominee Notarised copy of the death certificate Any one of the
below mentioned documents - Succession certificate Copy of probated will Letter
of Administration The DP, after ensuring that the application is genuine, will transfer
securities to the account of the claimant. The major advantage in case of dematerialised
holdings is that the transmission formalities for all securities held with a DP
can be completed by interaction with the DP alone, unlike in the case of physical
share certificates, where the claimant will have to interact with each Issuing company
or its Registrar separately.
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