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

Which statement about the relationship between a depository and the issuer's records is correct when securities are held in dematerialised form and a beneficial owner transfers them?

When dematerialised securities are transferred, only the beneficial ownership changes through book entries in the depository's records. The depository continues as registered owner in the issuer's books, so no new certificate, transfer deed or issuer approval is needed for each transfer.

  1. AThe depository transfers the registered ownership in the issuer's books each time, after the issuer approves the transfer
  2. BOnly the beneficial ownership changes in the depository's records, while the depository remains the registered owner in the issuer's booksCorrect
  3. CThe issuer must issue a new certificate to the buyer within 30 days
  4. DThe transfer is valid only after the transferor's DP physically delivers a transfer deed to the issuer

Explanation

For dematerialised securities, the depository's name stays as registered owner in the issuer's register. Transfers between beneficial owners are effected by book entries in depository records, so no change of registered owner or certificate or transfer deed is required.

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