Skip to content

NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Transmission and Nomination

Mr. Kapoor, sole holder of a demat account with a registered nominee, dies. The nominee approaches the DP for transmission. Which statement best reflects the position of a nominee?

The nominee is entitled to have the securities transmitted to him on the holder's death, but he holds them subject to the claims of legal heirs under succession law. Nomination gives a convenient route for the DP to deal with someone; it does not make the nominee the absolute owner.

  1. AThe nominee becomes the absolute beneficial owner regardless of the will or succession law
  2. BThe nominee is entitled to receive the securities on the holder's death but holds them subject to the rights of legal heirs under succession lawCorrect
  3. CThe nominee has no right at all and the DP must reject the request
  4. DThe nominee can sell the securities without opening a demat account

Explanation

The nomination lets the DP deal with a person on the holder's death and protects the DP when it transmits to the nominee. It does not override succession law, so the nominee holds the securities subject to legal heirs' rights. Securities in demat form cannot be sold without a demat account to hold them, so the other options are wrong.

Did you get it right without looking?

One question tells you little. A timed set on Functions of Depository Participant - Transmission and Nomination shows your real accuracy, how long you take and where you lose marks.

Practise Functions of Depository Participant - Transmission and NominationFree diagnostic mock

More Functions of Depository Participant - Transmission and Nomination questions