NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Account Operations
A BO's demat account has a standing instruction to receive credits automatically. The BO holds securities in a joint account with two holders, and one holder, Mr. Sen, dies. Which statement correctly describes the DP's treatment of the account until transmission is completed?
The surviving holders can continue operating the account, and the deceased holder's name is removed through the transmission procedure supported by a death certificate. Heirs do not automatically become holders, the account is not frozen forever, nothing is sold, and securities are not returned to the issuer.
- AThe account may continue to be operated by the surviving holder(s) per the operating instructions, with the deceased's name replaced after the transmission procedure, which requires a death certificateCorrect
- BThe account is frozen for all holders permanently and securities are sold
- CThe legal heirs of Mr. Sen automatically become joint holders without any documents
- DThe DP closes the account and returns the securities to the issuer
Explanation
In a joint account, on a holder's death the surviving holders carry on and the transmission procedure, supported by a notarised or verified copy of the death certificate and other requirements, updates the account. Heirs do not become holders automatically, nothing is sold, and the DP does not return securities to the issuer.
Did you get it right without looking?
One question tells you little. A timed set on Functions of Depository Participant - Account Operations shows your real accuracy, how long you take and where you lose marks.
More Functions of Depository Participant - Account Operations questions
- A BO has lost his unused delivery instruction slip (DIS) booklet. What should the BO do first so that misuse can be prevented?
- Which of the following is generally true regarding a change of address request by a BO at the DP?
- Ms. Kapoor holds 1,000 shares in her demat account. She wants to prevent any debit from the account while still allowing credits to come in,…
- A BO wants to prevent any debit from his demat account but still wants to receive credits such as bonus shares. Which freeze should be place…
- A beneficial owner wants to move securities from his demat account with one DP to his own demat account with another DP, both in the same de…
- A BO who has changed residence wants to update his address in the demat account. What is the usual requirement for the DP to effect the chan…