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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Pledge and Hypothecation

While securities remain pledged, who is generally entitled to corporate benefits such as dividends and bonus shares on them?

The pledgor continues to be the beneficial owner during the pledge, so dividends and bonus shares accrue to the pledgor. The pledgee holds only a security interest, and neither the depository nor the DP has any ownership claim to these benefits.

  1. AThe pledgee
  2. BThe pledgor, as he remains the beneficial ownerCorrect
  3. CThe depository
  4. DThe DP

Explanation

A pledge creates only a security interest and the pledgor stays the beneficial owner, so the dividend and bonus credits go to the pledgor's account, with bonus shares typically not automatically pledged unless agreed. The pledgee, depository and DP have no ownership claim.

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