NISM Certifications · NISM-Series-VI: Depository Operations · Depository and its Business Partners
Ms. Kapoor asks who an 'issuer' is in the depository context when a company wants its shares to be held in dematerialised form. Which is correct?
An issuer must sign an agreement with the depository to have its securities admitted for dematerialisation, after which an ISIN is activated for them. The issuer is neither a DP nor a clearing member, and informing the exchange alone is insufficient.
- AThe issuer enters into an agreement with the depository to make its securities eligible for dematerialisationCorrect
- BThe issuer need only inform the stock exchange and no depository agreement is needed
- CThe issuer is the DP through which the shares are held
- DThe issuer is the clearing member who settles the trades
Explanation
For its securities to be admitted for demat, an issuer signs an agreement with the depository (and with its RTA arrangements), after which an ISIN is allotted. It is not a DP or clearing member.
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