NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to Depository
Ms. Kavita Rao holds shares of a listed company in a demat account. Which statement best describes the legal nature of her holding in the depository system?
The investor is the beneficial owner, while the depository is the registered owner in the issuer's records. The depository holds the securities only in a fiduciary capacity and has no beneficial interest, so rights and benefits of ownership remain with the investor.
- AShe is the beneficial owner while the depository is the registered owner in the issuer's recordsCorrect
- BShe is the registered owner and the depository is the beneficial owner
- CBoth she and the depository are beneficial owners of the same shares
- DThe Depository Participant is the registered owner of the shares
Explanation
Under the Depositories Act, 1996, the depository appears in the issuer's register as the registered owner of dematerialised securities, but it holds no beneficial interest. The investor is the beneficial owner with all rights and benefits. Option B reverses these roles, which is wrong.
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