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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Dematerialisation

A client wants to dematerialise shares of a company whose shares are not yet admitted to any depository. What should the DP advise?

The DP should advise that dematerialisation is impossible until the company has an agreement with a depository and an active ISIN. Securities can be held in demat form only if admitted to a depository, and a DP cannot create ISINs.

  1. ADematerialisation is not possible until the company has an ISIN activated through a depositoryCorrect
  2. BThe DP can allot a temporary ISIN of its own
  3. CThe client should open a second account with the RTA
  4. DDemat is possible if the client pays extra charges

Explanation

Securities can be dematerialised only if the issuer has signed an agreement with a depository and the ISIN has been activated. A DP cannot create ISINs, and fees do not substitute for this requirement.

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