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NISM Certifications · NISM-Series-VI: Depository Operations · Depository and its Business Partners

Mr. Iyer's company, which issued shares in dematerialised form, wants to know who maintains the register of its beneficial owners' holdings that is used for corporate benefits such as dividends. Which statement best describes the depository's role in this context?

The depository gives the issuer or its registrar the beneficial owner position (benpos) as on the record date. This enables the issuer to pay dividends and other benefits to the right holders; the depository neither declares, funds nor approves the dividend.

  1. AThe depository furnishes the issuer with the list of beneficial owners as of the record dateCorrect
  2. BThe depository decides the dividend amount payable to each holder
  3. CThe depository pays the dividend from its own funds to all holders
  4. DThe depository approves the issuer's decision to declare a dividend

Explanation

The depository provides the issuer or its RTA with benpos, the list of beneficial owners as on the record date, so that corporate benefits can be distributed. It does not decide or fund dividends or approve their declaration, which are the issuer's decisions.

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