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NISM Certifications · NISM-Series-VI: Depository Operations · Investor Services (NISM VI)

A BO has submitted a request to close his demat account, which still holds 50 shares of a listed company. Which is the correct position?

The BO must first clear the account of securities by transferring them to another demat account or rematerialising them. Only after the balance is nil and dues are cleared can the DP close the account; shares are never forfeited or handed to the company.

  1. AThe DP may close it and forfeit the shares
  2. BThe BO must first transfer the balance to another account or rematerialise it, and the DP then closes the account after clearing duesCorrect
  3. CThe account is closed and shares go to the company
  4. DThe depository closes the account without any request from the BO

Explanation

An account with balances cannot simply be closed; the BO must move the holdings to another account (or rematerialise them), after which the DP closes the account. Forfeiture or transfer to the issuer is not permitted, and closure follows the BO's request through the DP.

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