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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Dematerialisation

While accepting certificates for dematerialisation, the DP should ensure that the investor marks the certificates in a particular way before sending them to the issuer. What is this requirement?

The DP defaces the certificates by stamping or marking them 'Surrendered for Dematerialisation' before forwarding them with the DRF. This prevents the physical certificates being used again. No transfer deed or endorsement to the depository is needed, because demat does not change beneficial ownership.

  1. ACertificates are stamped 'Surrendered for Dematerialisation' by the DPCorrect
  2. BCertificates are signed on the reverse by all holders as transfer deeds
  3. CCertificates are cancelled by punching holes by the investor himself
  4. DCertificates are endorsed in favour of the depository

Explanation

The DP defaces the certificates by marking 'Surrendered for Dematerialisation' before sending them to the issuer/RTA. This prevents their reuse as physical securities. They are not endorsed to the depository nor signed as transfer deeds, since demat is not a transfer of ownership.

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