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

In the depository system, the person who is the registered owner of securities in the issuer's records, while the beneficial owner is the investor, is which of the following when securities are held in a demat account?

The depository is shown as the registered owner in the issuer's records, while the investor is the beneficial owner entitled to all rights and benefits of the securities. The depository does not enjoy the benefits of ownership; it merely holds the securities in its name on the investor's behalf.

  1. AThe Depository, as registered owner, and the investor as beneficial ownerCorrect
  2. BThe Depository Participant as registered owner and the issuer as beneficial owner
  3. CThe clearing corporation as registered owner and the broker as beneficial owner
  4. DThe investor as both registered owner and beneficial owner

Explanation

Under the Depositories Act, when securities are dematerialised the depository's name appears in the issuer's register as the registered owner, while the investor remains the beneficial owner with all rights and benefits. The investor is therefore not the registered owner in the issuer's books, and the DP, clearing corporation or broker never becomes owner.

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