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

Ms. Kavita Nair has a demat account with a DP. She wants to know the legal position regarding ownership of securities held in the depository. Under the Depositories Act, 1996, who is treated as the beneficial owner and who as the registered owner in the issuer's records for dematerialised securities?

The depository appears as the registered owner in the issuer's books, while the investor is the beneficial owner entitled to all rights and benefits of the securities. The DP merely acts as the depository's agent and has no ownership claim.

  1. AThe investor is the beneficial owner and the depository is the registered ownerCorrect
  2. BThe DP is the beneficial owner and the investor is the registered owner
  3. CThe issuer is the beneficial owner and the depository is the registered owner
  4. DBoth the investor and the DP are beneficial owners jointly

Explanation

In the dematerialised form, the depository's name appears as registered owner in the issuer's register, while the investor holds the beneficial ownership and enjoys all rights and benefits. The DP is only an agent of the depository. Hence the DP being the beneficial owner is incorrect.

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