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

In the depository system, who is recognised as the beneficial owner of securities held in a demat account with a depository?

The beneficial owner is the investor whose name is recorded in the depository's records as holding the securities. The depository appears as registered owner in the issuer's register, but it has no beneficial interest, so all rights and benefits of the securities belong to the investor.

  1. AThe depository participant through which the account is opened
  2. BThe investor whose name appears in the depository's records as holding the securities for his benefitCorrect
  3. CThe depository, which holds legal and beneficial title to all securities
  4. DThe clearing corporation that settles the trades

Explanation

Under the Depositories Act, the depository is the registered owner in the issuer's books, but the beneficial owner is the investor, whose name is recorded in the depository's records, and who has all rights and benefits attached to the securities. The depository has no beneficial interest, and a DP is merely an agent.

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