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

Mr. Arvind Shah buys shares in a listed company through his broker. Under the depository system, who is the registered owner of those shares in the books of the issuer, and who is the beneficial owner?

In the depository system the depository is the registered owner in the issuer's books, acting as nominee, while the investor is the beneficial owner who enjoys all rights, such as dividends and voting. The DP and broker hold neither status.

  1. ARegistered owner is the investor; beneficial owner is the depository
  2. BRegistered owner is the depository; beneficial owner is the investorCorrect
  3. CBoth are the depository
  4. DRegistered owner is the Depository Participant; beneficial owner is the broker

Explanation

In a depository, securities are registered in the name of the depository as registered owner (nominee), while the investor retains all rights and benefits as beneficial owner. The other options reverse the roles or wrongly involve the DP or broker.

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