Depository Part 3

ACCOUNT OPENING PROCEDURE Allots client ID number Collect DAOF

INVESTOR

6

1 4

DEPOSITORY PARTICIPANT

Agreement signed

Fill and submit DAOF with documents

2 DOCUMENTS

3

Verification of documents Opens DEPOSITORY

5

account and generates client ID

ACCOUNT OPENING PROCEDURE 1.

Select, approach & collect DAOF (Depository Account Opening Form)

2.

Fill & submit the DAOF along with all required documents

3.

Verification of all the documents

4.

Agreement signed between investor and depository participant.

5.

Open depository account, generates client ID & transmits all the details to depository

6.

DP allots client ID number & informs the client

Categories of accounts

Depository

Pledgee’s depository participant

Pledgee (lender)

Pledgor’s depository participant

Pledgor (borrower)

Agreement terminates and shares transferred to free account

Securities kept as collateral against loan

Shares are taken over by pledgee

6

Conformation

Transfer to Pledge account

NSDL

Gives conformation 3 Pledgee’s Informs Asks for DP About pledging conformation

2 Informs about request

securities

5 Conformation

Pledgee

4 Informs

Pledgor’s DP

1

Agreement for pledge

Loan

Pledgor 8

7

Request to pledge shares

3

4

Forwards invocation request 6

Pledgee’s DP Invocation 2 order

Receives securities 7

Forwards invocation request

NSDL

5 Transfer of securities through NSDL system

Receives securities

Pledgee Transfer of securities

Notice

1

Pledgor’s DP 8 Informed

Pledgor

Closes pledge and forwards it 7

Closure 6 conformation

Pledgee

NSDL

4

Pledgee’s DP 5

Intimates DP 8 & transfers security to free account

3 Forwards request

Forwards request Intimates

Pledgor’s DP 9

Intimates 1 Repayment

Pledgor

2

Closure request

Forwards request 3

NSDL

Pledgor’s DP

Pledgee’s DP

2

Unilateral pledge closure request

Pledgee

Informs DP & transfer 4 securities to free account

5

1 Repayment

Informs

Pledgor

Transfer of securities from one account to another may be done for any of the following purposes:

2

Intimates NSDL

Seller’s DP Sell order

4

7 Receives funds

8

1

Receives funds

Seller Transfer of funds Transfer of securities

5 Receives securities Receives securities

Receipt instruction

Buyer’s DP 6

Buyer

3 Receipt instruction

Transfer of security

CC

2a

3a

CM Propose to sell

1a

4a

Transfer of funds 2b

Transfer of funds Transfer of funds

Seller Transfer of funds Transfer of securities

3b

CM

Transfer of securities Transfer of securities

4a

1b

Buyer

Propose to buy

Informed DP debited

2

DP

NSDL DP’sReceipt a/c a/c debited Informs then to pool a/c Credit of CC (3)

Credit securities Delivery 4 account of

funds

CC

CC

Order to move securities 1

Seller

CM

10

5

Credits shares

Credit sellers a/c

Credits buyers a/c

9

DP

7

8 Credit funds

CM

Proposes to buy 6

Buyer

Delivery instruction slip

The DI slip contains the market type for which securities are being transferred to CM

The DI slip contains this number of Trading periods of market segments in which securities being transferred to CM.

CM account is identified with a number called 'CM-BP-ID'. The DI slip should contain the CM-BP-ID in which the trade was done.

Depository 1 (NSDL)

INTER-DEPOSITORY

Depository 2 (CDSL)

Account 2

Account 1

Transfer from one account to another

Working of Speed-e

Features of SPEED-e

Investor can view balances and transactions in demat account

facility available on SPEED-e website

Features of IDeAS 1.

Clients (Beneficial Owners)-

Client can view the transactions for a period of past 30 days. Download digitally signed monthly transaction statements of 12 months period. 3.

Clearing Members (CMs)-

CMs can view and download the latest balances and transactions in their pool accounts in respect of settlements for the current pay-in date, previous four and next four pay-in dates.

Features of IDeAS 1.

View ISIN-wise positions for a given market type and settlement number.

2.

View Delivery-out instructions, which are in 'overdue' status, for a given market type and settlement number.

3.

Download transactions in the Pool Account and import into backoffice system to determine shortages for follow-up with Clients.

4.

Download ISIN master to keep the back-office system up-to-date.

STEADY

(Securities Trading Information Easy Access and Delivery ) Have to access STEADY website with smart card

Bearing digital signature certificate issued by licensed Certifying Authority approved by NSDL.

STEADY

Transmission & Nomination

Transmission & Nomination According to Companies Act, 1956 Voluntary act of the shareholder

Transfer

V/S Operation of law

Transmission

Transmission & Nomination Devolution of title to shares

Person has to submit appropriate documents

Has to submit to the respective companies of securities held or to the DP incase person holds demat a/c

Seek transmission

Procedure for transmission of securities incase of death-Single holder

Procedure for transmission of securities incase of death-Joint accounts Death of joint holder

Producing the death certificate

Shares transferred to new account

Surviving holder get securities transmitted in his favour

Open a new account DP in their name(s).

In case of securities held jointly The surviving holder(s) to have a separate account with any DP.

Ensure all surviving holder(s) sign the instruction form

Ensure that instruction form is accompanied with a copy of notarized death certificate

Verify signature

Procedure for Transmission of securities held singly Copy of the death certificate

LEGAL HEIR(S)

Make a request

Copy of the succession certificate

Copy of the Probate or Letter of Administration

Ensures documents validity & Transmit balance

Capturing of PAN details in the DPMAS in case of transmission in depository account-

Dematerialisation Dematerialization is converting shares into electronic form from physical form.

Dematerialization

International Securities Identification Number (ISIN)  Securities  ISIN

dematerialized bears a distinctive ISIN.

is a 12-character long identification mark. Its three

components are:-

Dematerialization process 1

Client

Approaches

DP

for DRF

3 Verifies signature and a/c number

2

Checks details in the form

Fills and submits the form

4 Accepts if information is correct Returns if form incomplete Job of DP ends and job of Process takes 20-25 registrar starts Provides acknowledgement slip with authorized sign 5 days till further Max 15 information 6 Detailsfrom are entered sharefrom certificate dispatched NSDL in system module, DP is informed about DRF status anddays with 1 copy of DRF to registrar. date of dispatch After receiving details from DP, registrar enters details once again in system module.

8

Certificates are shredded and corresponding entries made Credit information sent to NSDL

7

9

10

NSDL disseminates credit information to DP who intern disseminates to clients through monthly, quarterly statements

Rematerialization Rematerialization is converting shares from electronic form to physical form

Rematerialization process Dispatches share certificates to investors

Beneficial owner

Submit RRF form

1

Updates a/c and sends details to DP

DP

7

DP submits RRF

3

Registrar

Intimates about request

6

2

NSDL

Conforms dematerialization request

4

Updates a/c, prints share certificates and intimates NSDL

5

Pay-in of securities Seller Verifies all details and transfers to settlement a/c

Instruction to sell securities

Transfer securities to pool a/c of CM to delivery a/c of CM Gives

CM Moves securities from pool to delivery Instruction to a/c of CM

sell securities

delivery out instruction

CC

DP Transmits to cc a/c for relevant settlement

Pay out of securities Instruction to buy

1

Buyer 5

Give instruction to debit its pool a/c and credit clients a/c

Debit CC a/c and credit CM a/c with securities

DP

CM

Instruction to buy

Credits securities in receipt a/c

Gives instruction

2

4

3

CC

Corporate Actions

PAY MEN T OF INTERE ST BONU S SH ARES

DIVIDEN D ME RGE R

Some Corporate actions

RI GH T S SPLI TS

REDE MPTIO N

LI QUI DAT IO N

PAY MENT OF C AL L MO NEY

Public issue (IPO) According to the Companies Act, 1956 (section 68B) every listed public company, making an initial offer of any security of Rs. 10 crore and above has to issue it only in dematerialised form in accordance with Depositories Act, 1996.

Public issue (present procedure)

Application form

1

Intimates

Investor 2

6 Funds with filled form

Intimates

Banks 3 Issuer/R&T agent

Participant

5 Funds with filled form 4 Transfer of securities to demat form

NSDL

Public issue (through NSDL) Funds with filled form 1

Investor

2

Informs

Funds with filled form Participant 3

Informs

Application form

8

Informs about allotment 6 Issuer/R&T agent

5 Forwards data through DPM

4 7

Banks

Enters data into DPM NSDL

Debt Instruments & Government Securities

Interest-bearing securities are called debt instruments.

COMMERCIAL PAPER

BONDS

GOVERNMENT SECURITIES

Debt instruments classification

DEBENTURES

TREASURY BILLS

Debt Instruments & Government Securities

Debt Instruments & Government Securities Allotment of government securities in Demat Form Investors in Demat Debt Instruments  NSDL

has no restriction if existing accounts or separate accounts are used for dematerialisation of debt instruments.

NSC/KVP in demat form

1

2

Advantages of holding NSC/KVP in demat form 5

On redemption investor's bank account will be credited directly

6 No account opening and custody charges for limited purpose demat account.

1

Investors can hold NSC/KVP in their existing demat account.

4

Investors can deal with any post office for effecting change in personal details

2

Investors can consolidate different types of investments in one demat account

3 Risk associated with holding physical certificate is eliminated.

LINKS

landmark details

Proof of address

Details of nominati on

PAN number

Name of the holder Some Documents for opening demat account Memorandum & Articles of Association

Proof of identity Bank details

Specimen signatures

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