Skip to content

NISM Certifications · NISM-Series-VI: Depository Operations · Depository and its Business Partners

Under the Depositories Act, 1996, what is the legal position of a depository with regard to securities held in dematerialised form in its records?

The depository is the registered owner in the issuer's records, while the investor remains the beneficial owner. The depository holds the securities only in a custodial, record-keeping capacity and has no right to the benefits attached to them, which belong to the investor.

  1. AIt is the registered owner and holds the securities as beneficial owner
  2. BIt is the registered owner in the issuer's records but not the beneficial ownerCorrect
  3. CIt is neither registered owner nor beneficial owner and only keeps a copy of the register
  4. DIt is the beneficial owner while the investor is the registered owner

Explanation

When securities are dematerialised, the depository's name appears as registered owner in the issuer's register, but the investor remains the beneficial owner with all rights and benefits. The depository therefore has no voting or economic rights over the securities. The reverse arrangement in the distractors is incorrect.

Did you get it right without looking?

One question tells you little. A timed set on Depository and its Business Partners shows your real accuracy, how long you take and where you lose marks.

Practise Depository and its Business PartnersFree diagnostic mock

More Depository and its Business Partners questions