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NISM Certifications · NISM-Series-VI: Depository Operations · Foreign Portfolio Investors (FPI)

An FPI client with a demat account wants to know how corporate benefits such as bonus shares on its holdings are credited. Which is correct?

Bonus shares due to an FPI are credited electronically to its demat account through the depository system, since FPIs hold in dematerialised form. They are not sent as physical certificates, credited to the DDP's account, or withheld from FPIs.

  1. ABonus shares are credited electronically to the FPI's demat account held through its custodianCorrect
  2. BBonus shares are issued as physical certificates to the FPI abroad
  3. CBonus shares are credited only to the DDP's own demat account
  4. DBonus shares are not available to FPIs

Explanation

FPIs hold securities in demat form, so bonus shares are credited electronically by the issuer through the depository to the beneficiary owner account on the record date entitlement. Physical certificates, credit to the DDP's account or denial of benefits are not applicable.

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