powerpoint presentation on DEMAT compliance

1. LEGAL ASPECTS OF
BUSINESS
Dematerialisation
Of Shares & Securities
BY:
SURNEET BHATIA- 112-E01
ANNU YADAV-112-E11
SHRITI CHATTERJEE-112-E21
KAUSTUBH GUPTA-112-E31
ANISH TANEJA-112-E41
MANISH DHINGRA-112-E51

2. What is Demat
 Conversion of physical securities into
electronic form
 No distinctive number to securities
required as depositing & withdrawing
money from a bank without bothering
about distinctive no. of currency

3. Demat-need ?
 bad deliveries due to signature difference
 mistakes in completion of transfer deeds
 tearing and mutilation of securities
 fake certificates
 fraudulent interception of certificate in transit
 transfer stamp duty
 extra consumption of time by the Companies
 postal delays and charges etc

4. Dematerialisation
 Introduced in India through the enactment of
the Depositories Act, 1996
 It is not mandatory
 One may keep its holding partly in physical
form and partly in Demat form
 A select list of securities announced by SEBI
can be delivered only in demat form in the
stock exchanges connected to NSDL

5. DEMAT-participants
 Participants:
Investors
The Depository
○ NSDL [national securities depository ltd.]
○ CDSIL[central depository of securities india
ltd.]
The Depository Participants
The Issuing Company

6. Depository
 a depository is an organisation, which
holds the beneficial owner's securities in
electronic form, through a registered
Depository Participant (DP).
 A depository functions somewhat similar to
a commercial bank.
 To avail of the services offered by a
depository, the investor has to open an
account with it through a registered DP.

7. NATIONAL SECURITIES DEPOSITORY LIMITED (NSDL)
 Established in August 1996 as the first depository in India.
 This depository promoted by institutions of national stature
responsible for economic development of the country has
since established a national infrastructure of international
standards that handles most of the securities held and settled
in dematerialized form in the Indian capital market.
 NSDL has around 1,23,84,644 investors associated with it
currently and has 14,336 service centers all over India

8. CENTRAL DEPOSITORY OF SERVICES LIMITED (CDSL)
 CDSL received the certificate of commencement of business from
SEBI in February, 1999.
 All leading stock exchanges like the National Stock Exchange,
Calcutta Stock Exchange, Delhi Stock Exchange, The Stock
Exchange, Ahmedabad, etc. have established connectivity with
CDSL.
 Currently around 81 lakh investors and 12000 companies have
admitted their securities (equities, bonds, debentures, commercial
papers), units of mutual funds, certificate of deposits etc. into the
CDSL system.
 CDSL has around 568 Depository Participants (DPs) in around 13000
different locations all over India.

9. Depository Participant
A Depository Participant (DP) is an agent
of the depository who is authorised to offer
depository services to investors.
Financial institutions, banks, custodians and
stockbrokers complying with the
requirements prescribed by SEBI/
Depositories can be registered as DP.

10. Investors [Beneficial
Owner]
 Individual
 Partnership Firm
 HUF
 Company
“Beneficial Owner” is a person in whose name
a demat account is opened with Depository
for the purpose of holding securities in the
electronic form

11. DEMATERIALISATION PROCESS
 Open an account with DP
 Fill up the Dematerialization Request Form
and submit together with share certificate
which is to be demat.
 The DP upon receipt of the shares and the
DRF, will issue an acknowledgement and
will send an electronic request to the
Company/Registrars and Transfer Agents
of the Company through the Depository for
confirmation of demat.

12.  DP ,then issues an acknowledgement to the investor and
afterwards follows the following procedure :
 (a) Defaces the Share Certificates by putting a rubber stamp
"Surrendered for Dematerialization“ and by punching two
holes on the name of the company on the Share Certificate.
 (b)Generates a Demat Request Number(DRN) through his
Depository Participant Module (DPM) and fills the same in
DRF at the appropriate place.
 (c)Sends an electronic communication to Depository viz.
NSDL or CDSL, as the case maybe, to the effect that so
many shares of this company (Identified by ISIN) have been
received for dematerialization.
 (d)Sends the DRF and Share Certificates to the company by
courier. The role of DP comes to an end with this but he
must send a reminder incase credit of shares is not received
in demat account of investors within a month.
 The depository electronically downloads the particulars of
demat request, received from DP and sends to the
electronic Registrar of the company so that these shares
could be dematerialized.

13. Separate folios should be created in computer in the names of NSDL
and CDSL to which dematerialized shares will be transferred.
The particulars mentioned in DRF should be checked from Share
Certificates. This is very much similar to scrutiny of Share Certificates
and Transfer Deed in case of Transfer of shares. However, special
attention should be given that the pattern of holding written on DRF is
the same as the endorsement on Share Certificates.
Signatures or shareholders on DRF should be verified from the
specimen signatures as per records of the company. All the joint
holders should sign the DRF.
The ISIN should be mentioned in the DRF. This, to a certain extent,
ensures that the security mentioned in the DRF is the one, which the
investor intends to dematerialize.
The data of all demat requests received viz. DRN, DP-Id, Client-Id,
Distinctive Nos. of Shares are entered in computer.
After completion of data entry, a checklist containing all the demat
requests is generated which should be checked thoroughly to ensure
that only those shares for which Share Certificates have been
received are dematerialized.

14. Procedure of Demat-
for an investor
 Fill DRF(Demat  Submit the DRF
Request Form) and Share
available with DP Certificates to DP
 DP would forward
 Deface the share
them to the
certificate(s) one issuer/their
wants to Registrar &
dematerialise by Transfer Agent
writing across  Investor’s
“Surrendered for depository a/c
Dematerialisation ” would be credited
with the
dematerialised
securities

15. The time involved in the
process
 Dematerialisation is normally
completed within 15 days after the share
certificates have reached the issuer/their
R&T agent. Thus it will take only a
month from the date one hands over
shares, to receive Demat Credit.

16. Trading & Settlement in
Dematerialised Securities
 If you are a buyer:
Purchase securities in any of the S.E.s(connected
to NSDL) through a broker of your choice and
make payment to your broker
Broker arranges payment to clearing
corpo./clearing house of the stock exchange
Broker receives cr. in his clearing a/c
Broker can directly transfer these securities to your
a/c
Broker gives instructions to your DP to debit his
clearimg a/c and credit your depository a/c.
You give instructions to your DP for receiving Cr.
If instructions match your a/c with your DP is
credited

17. Trading & Settlement in
Dematerialised Securities
 If you are a seller
Sell your demat securities in any of the Stock
Exchanges linked to NSDL through a broker
You give instructions to your DP for Debit of
your Depository a/c and Credit of your broker’s
clearing member a/c at least 24 hrs i.e.one
working day prior to the pay-in date or before
the deadline prescribed by your DP
On pay in day your broker gives instruction to
his DP for delivery to clearing corpo.
Broker receives payment from the clearing
corpo.
You receive the payment accordingly.

18. Charges
 Charges are paid through DPs
Custody charges: 0.01% p.a.(Rs.10 for every
Rs.100,000) of the average market value of
securities held in a/c
Settlement charges: 0.02% (Rs.20 for every Rs.
100,000)of the market value of the securities
being transferred from selling broker to the
clearing corpo.of the stock exchange and same
charges from clearing corpo.to buying agent
Rematerialisation charges of 0.10%(Rs.100 for
every Rs.100,000) of the market value of
securities or Rs.10,whichever is higher

19. Other Benefits
 Allotment directly in Demat form possible,
 Pledge of Demat holdings possible,
 Lending/Borrowing of Demat Securities
to/from an Authorised intermediary,
 Freezing of a/c possible
 Transmission of holdings,
 Nomination facility

20. REMATERIALISATION
 The process of getting the securities in
an electronic form, converted back into
the physical form is known as
Rematerialisation. An investor can
rematerialize his shares by filling in a
Remat Request Form (RRF).

21. REMATERIALIZATION PROCESS
 The client will submit a request to the DP for rematerialisation of holdings
in its account.
 On receipt of the request form, the DP will verify that the form is duly
filled in and issue to the client, an acknowledgement slip, signed and
stamped.
 The DP will verify the signature of the client as on the form with the
specimen available in its records.
 If the signatures are different the DP will ensure the identity of the
client.• If the form is in order the DP will enter the request details in its
DPM (software provided by NSDL to the DP). While entering the details,
if it is found that the clients account does not have enough balance, the
DP will not entertain the request.
 The DP will intimate the client that the request cannot be entertained
since the client does not have sufficient balance.
 If there is sufficient balance in the clients account, the DP will enter the
request in the DPM and the DPM will generate a Rematerialisation
Request Number (RRN).

22.  The RRN so generated is entered in the space provided for the
purpose in the rematerialisation request form.
 Details recorded for the RRN should be verified by a person other
than the person who entered the data. The request is then released to
the DM by the DP.
 The DM forwards the request to the Issuer/ R&T agent electronically.•
The DP will fill the authorization portion of the request form.
 While processing the request, the Issuer/ R&T agent may report
some objections. Depending on the nature of objection, the Issuer/
R&T agent may reject the request or process it partially, seeking
rectification for the remaining, and send an objection memo to the DP.
 The Issuer/ R&T agent accepts the request for rematerialisation prints
and dispatches the certificates to the client and sends electronic
confirmation to the DM.
 The DM downloads this information to the DPM and the status of the
rematerialisation request is updated in the DPM.
 The DP must inform the client about the changes in the client account
following the acceptance of the request.