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NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to Depository

Company X's shares are held in a depository. Under the Depositories Act, when securities of an investor are held in a depository, who is treated as the registered owner and who as the beneficial owner in the issuer's records?

The depository appears in the issuer's register as the registered owner, while the investor is the beneficial owner entitled to rights such as dividends and voting. This split arises from holding securities in dematerialised form.

  1. AThe depository is the registered owner and the investor is the beneficial ownerCorrect
  2. BThe investor is both registered and beneficial owner
  3. CThe Depository Participant is the registered owner and the depository is the beneficial owner
  4. DThe issuer is the registered owner and the investor the beneficial owner

Explanation

For dematerialised securities, the depository's name appears in the issuer's register as registered owner, while the investor holds the beneficial interest and all rights such as dividends and voting. Hence the depository is registered owner and the investor beneficial owner; the other combinations are incorrect.

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