Dematerialisation is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited in the investor’s account with its depository participant. The securities are not identified by numbers or a certificate or title. <br />
DEPOSITORY :<br />A depository is the chief player in the system and is basically organised as a company. The depository may not engage itself in the process unless it is registered with SEBI under the SEBI (Depositories and Participants Regulation), 199612. It is an organisation where the securities of an investor are held in electronic form through the medium of Participants.<br />
FLOW CHART :<br />The operation is a simple six-step process, as characterised by P. MohanaRao and <br />P.V. Nishanth’s and AnanditaMishra’s study <br />on dematerialisation. In the flow process, <br />assuming that the depository is <br />NSDL.<br />
Step .1……<br />Shareholder/Investor approaches to a depository participant of his choice and opens an account just like an account with a bank. With the opening of account, shareholder gets an identification number called ‘Client’s ID’ which serves as a reference point for all transactions and correspondence with the depository participant. The shareholder fills up a Dematerialisation Request Form (DRF) to be provided by the depository participant and hands it over along with share certificates duly cancelled by writing ‘Surrendered for dematerialisation’ to the depository participant for demat26. The DP will accept certificates registered only in the name that holds the share certificates.<br />
Step .2……<br /> Upon receipt of DRF along with the original share certificates, the DP sends an electronic request to company through NSDL for conformation of demat and simultaneously surrenders the shareholdings. DRF and share certificates are accompanied by standard letter to the company for dematconfirmation.<br />
Step .3……<br />26 Depositories Act, 1996. 9 A Company must be equipped with the requisite hardware/software facility. It must be linked to the NSDL network through a V-Sat connection.<br />
Step .4……<br /> On receipt of the DRF and share certificates of the shareholder, necessary verification is done and demat<br />is confirmed to NSDL by the registrar.<br />
Step .5……<br />NSDL further confirms the demat to the shareholder’s DP.<br />
Step .6……<br />DP credits the shareholders’ account with the <br />number of shares so dematerialised and thereafter<br />the shareholder holds the securities in electronic form. DP of the shareholder gives a statement of holdings <br />and updates account after each transaction just like <br />bank account.<br />
National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).<br />NSDL is an organisation promoted by UTI and National Stock Exchange of India Ltd with its headquarters in Mumbai. The aim is to provide facilities for holding and handling securities in electronic form.<br />CDSL is the second depository in the country, after NSDL promoted by the Bombay Stock Exchange (BSE), Bank of India, Bank of Baroda, HDFC Bank, State bank of India offering services similar to NSDL.<br />
A particular slide catching your eye?
Clipping is a handy way to collect important slides you want to go back to later.