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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Transmission and Nomination

A demat account is held jointly by Anil (first holder) and Bina (second holder). Anil dies. Which statement correctly describes the DP's treatment of the account on a transmission request?

The securities are transmitted to Bina, the surviving joint holder, once the DP receives the transmission request along with the death certificate and other prescribed documents. The legal heir of the deceased does not rank ahead of a surviving joint holder, and the securities are not sold automatically.

  1. AThe account is closed and the securities are sold in the market automatically
  2. BSecurities are transmitted to Bina as the surviving joint holder on submission of the transmission request with a death certificate copy and the required documentsCorrect
  3. CSecurities are transmitted to Anil's legal heir even though Bina is alive
  4. DThe account is frozen permanently until a court order is produced in every case

Explanation

For a joint account, the surviving holder is entitled to the securities on the death of a holder, so the DP processes transmission in favour of Bina after receiving the request, death certificate and other documents. The legal heir of Anil does not take priority over a surviving joint holder. Automatic sale or a permanent freeze is not the prescribed procedure.

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