NISM Certifications · NISM-Series-VI: Depository Operations · Depository and its Business Partners
Ms. Kavita Rao, a client of a DP, asks who is shown as the registered owner and who as the beneficial owner when her shares are held in demat form. What is the correct position?
The depository is the registered owner in the issuer's books, while Kavita is the beneficial owner entitled to dividends, bonus and other rights. The DP merely acts as the depository's agent and holds no ownership of the shares.
- AThe depository is the registered owner and Kavita is the beneficial ownerCorrect
- BKavita is both registered owner and beneficial owner
- CThe DP is the registered owner and the depository is the beneficial owner
- DThe issuer company is the registered owner and Kavita is the registered holder
Explanation
In a depository system the depository's name appears in the issuer's register as registered owner, while the investor enjoys all rights and benefits as beneficial owner. The DP is only an agent of the depository, so it is not the registered owner.
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