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NISM Certifications · NISM-Series-VI: Depository Operations · Investor Services (NISM VI)

A DP receives a request from a BO to close a demat account that still holds 50 shares of a listed company. Which treatment is correct under the depository procedure?

The BO must first clear the balance by transferring the shares to another demat account or rematerialising them. Only after the account holds no securities can the DP close it, because securities cannot lapse to the issuer or be kept by the DP.

  1. AThe DP closes the account and the shares lapse to the issuer
  2. BThe DP closes the account and the shares move automatically to the DP's own account
  3. CThe DP closes the account, retaining the shares until the BO claims them after one year
  4. DThe BO must first transfer the balance to another account or rematerialise it before closureCorrect

Explanation

An account with a balance cannot be closed. The BO must first transfer securities to another demat account (with the same or another DP) or rematerialise them, and only then can the account be closed. Securities cannot lapse or be taken over by the DP.

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