NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to Depository
A company's shares are admitted to a depository. Mr. Dinesh Rao asks which of the following is a facility that the depository system provides to investors holding securities in dematerialised form that was NOT available for physical certificates in the same way.
Demat holding eliminates risks tied to physical certificates, such as forgery, loss, theft and bad delivery. It does not guarantee returns, give tax exemption or increase voting rights, which remain tied to the number of shares held.
- AElimination of risks of bad delivery, forgery and loss of certificatesCorrect
- BGuaranteed capital appreciation on every security held
- CExemption from all taxes on securities transactions
- DAutomatic voting rights beyond the shareholding
Explanation
Holding in demat form removes risks of forged, lost, stolen or mutilated certificates and bad delivery. Depositories cannot guarantee appreciation, tax exemption or extra voting rights, which depend on shareholding and law.
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