NISM Certifications · NISM-Series-VI: Depository Operations · Depository and its Business Partners
In a depository system, the securities of investors held by a DP are registered in the issuer's books in the name of the depository. In this arrangement, which statement is correct?
The depository is the registered owner in the issuer's books, but the investor is the beneficial owner. The investor receives the benefits such as dividends and bonus, while the depository only holds the securities in a custodial role.
- AThe depository is the registered owner and also the beneficial owner
- BThe depository is the registered owner, while the investor is the beneficial owner entitled to the benefits of the securitiesCorrect
- CThe investor is both registered owner and beneficial owner
- DThe DP becomes the registered owner of the securities
Explanation
On dematerialisation, the issuer's register shows the depository as registered owner, but it holds only as a custodian. The investor remains beneficial owner with the rights to dividends, bonus and voting. The depository has no right to the benefits of the securities.
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