Depository:

A depository is an organisation where the securities of a shareholder are held in the electronic form at the request of the shareholder through a depository participant. A depository can be compared to a bank. If an investor wants to utilise the services offered by a depository, the investor has to open an account with the depository through the depository participant. This is very similar to the opening of an account with any of the branches of a bank in order to utilise the services of that bank.

Depository Participant:

Depository Participant (DP) is an agent of the depository, who serves as the interacting medium between the depository and the investor. A DP is responsible for maintaining your securities account and handling the securities account in accordance with your written instructions.

Dematerialisation:

Dematerialisation is a process by which the physical certificates of an investor are taken back by the Company and an equivalent number of securities are credited in the electronic holdings of that investor. This is done at the request of the investor. An investor will have to open an account with a depository participant and then request for the dematerialisation of his certificates through the depository participant so that the dematerialised holdings can be credited into that account.

Rematerialisation:

Rematerialisation is the process of conversion of securities from electronic to physical form.

• What are the advantages of Dematerialisation?

  • No paper work like transfer deeds and no lodging, despatching of transfer documents.
  • Eliminates risks associated with physical deliveries such as loss, theft, forgery, etc.
  • Bad deliveries are almost eliminated. Transfer of securities is immediate on completion of respective settlement
  • Receipt / payment of proceeds on selling / purchasing is much faster
  • No stamp duty on transfers
  • Facility to pledge and hypothecate securities, in addition to freezing, locking of accounts
  • Option available for taking shares out of Depository and holding share certificates in physical forms
  • Trading possible in any lot

• Will there be a charge for the opening of an account or for every transaction?

  There will be charges for the opening of account and also for every transaction in the account. This varies from one depository participant to another depository participant.

• Do you have to keep any minimum balance of securities in your account?

  No. The depository does not have any prescribed minimum balance. However, the depository participants may fix some minimum limits.

• Are you restricted to having only one depository participant?

  There are absolutely no restrictions to the number of DPs you can open accounts with.

• Who will give you the benefits arising out of your holdings, say a bonus or a dividend?

  When any corporate event such as rights or bonus or dividend is announced for a particular security, the depository will give all the details of the clients having electronic holdings of that security as of record date / book closure to the Company. The Company will then calculate the corporate benefits due to all the shareholders. The disbursement of cash benefits such as dividend / interest will be done by the Company whereas the depository will do the distribution of securities entitlements based on the information provided by the Company.

• How to convert your physical shares into electronic shares (Dematerialisation)?
  • Approach a Depository Participant (DP) of your choice and open an investor account. You will be able to use the same account for dematerialisation of shares of different companies
  • DP will enter into an agreement with you and charge you at the agreed rate for dematerialization / rematerialisation of share certificates based normally on the number of certificates and for custody on monthly / annual basis, on value of shares held
  • Fill up Dematerialisation Request Form (DRF) to be provided by the DP and hand over the share certificate duly cancelled by writing ‘Surrendered for Dematerialisation’ to DP
  • Take a receipt from the DP for the share certificates lodged
  • DP will send the documents to the Registrar & Transfer (R&T) Agent of the Company
  • The R&T Agent will effect dematerialisation of securities subject to the documents being in order and will confirm the same to NSDL / CDSL who in turn will inform your DP
  • DP will intimate you about the dematerialisation of shares, normally within 15 days
  • DP will give a statement of holdings and update your account after each transaction

• How do you trade in your electronic shares?

  Buying and selling electronic shares can be compared to buying and selling physical shares, the only difference is that trading in electronic shares is simpler and safer. If you wish to sell your electronic shares –
  • Place your order with your broker and instruct your DP by way of Delivery Instruction to debit your account with the number of shares sold by you.
  • When you buy electronic shares you must inform your broker about your depository account number so that the electronic shares bought by you can be credited to your account.

  • Payment for electronic shares either bought or sold is made in the same way as in case of physical securities.

    Note: The electronic transfer of shares is much faster than the physical transfer of shares. Moreover, electronic shares do not turn out to be bad deliveries or fakes. There are no formalities of filling transfer deeds, affixing share transfer stamps and applying to the Company for registering the shares in your name.

• How to convert your electronic shares into physical shares (Rematerialisation)?

  Submit a Rematerialisation Request Form (RRF) to DP. The Company prints the share certificates and sends it to you within 30 days.

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