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

Mr. Arvind Mehta wants to know who the legal owner of his shares is recorded as in the company's register of members when his shares are held in demat form through NSDL. What is the correct position?

For dematerialised shares, the depository appears in the company's register as the registered owner, while the investor remains the beneficial owner entitled to dividends, bonus and other rights. The DP merely acts as the depository's agent and is not shown as the owner.

  1. AThe DP is shown as the registered owner and Mr. Mehta as beneficial owner
  2. BThe depository is shown as the registered owner and Mr. Mehta as the beneficial ownerCorrect
  3. CThe clearing corporation is the registered owner and Mr. Mehta the beneficial owner
  4. DMr. Mehta is both the registered owner and the beneficial owner

Explanation

In a depository system, the depository's name appears in the issuer's register as the registered owner, while the investor is the beneficial owner with all rights and benefits. The DP is only an agent of the depository. Mr. Mehta is not the registered owner in the issuer's register.

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