NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Dematerialisation
A client's dematerialisation request is rejected by the issuer because the signature on the DRF does not match the specimen with the company. Which of the following is the correct handling of the rejected request?
When an issuer rejects a demat request, the reasons reach the DP through the depository. The certificates are returned to the client, or after the defect is cured a fresh request is lodged. The depository cannot override the rejection, and nothing is lost or closed.
- AThe depository directly overrides the rejection and credits the shares
- BThe DP receives the rejection with reasons, and after the client corrects the defect the DP can resubmit a fresh request, or the certificates are returned to the clientCorrect
- CThe DP must destroy the certificates and the shares are lost
- DThe client's demat account is closed automatically
Explanation
On rejection, the issuer/RTA communicates reasons via the depository to the DP. Securities remain in physical form; the DP returns the certificates or, once the defect is cured, lodges a fresh request. The depository cannot override an issuer rejection.
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