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

Under the Depositories Act, 1996, when securities of an investor are held in a depository in dematerialised form, who is recorded as the registered owner in the issuer's register of members, and who is the beneficial owner?

The depository is shown as the registered owner in the issuer's records, while the investor remains the beneficial owner entitled to all rights and benefits of the securities. The depository holds only legal title as a custodian and does not enjoy the economic benefits of the holdings.

  1. AThe investor is the registered owner and the depository is the beneficial owner
  2. BThe depository is the registered owner and the investor is the beneficial ownerCorrect
  3. CThe Depository Participant is the registered owner and the investor is the beneficial owner
  4. DThe clearing corporation is the registered owner and the investor is the beneficial owner

Explanation

In a depository system, the depository's name appears in the issuer's register as the registered owner, while the investor retains all rights and benefits as beneficial owner. The depository therefore does not enjoy the benefits of the securities. Options reversing these roles are wrong.

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