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MANY investors have switched over to electronic (demat) settlement of trades. To create awareness about the depository processes and reassure investors about the benefits and safety of the depository system, the National Securities Depository Ltd (NSDL) holds investor depository meets. The following are some of the commonly asked questions:

What is `transposition-cum-demat' facility?

The Companies Act, 1956 permits joint holding of shares. When shares are issued in physical form, the names of all the joint holders are printed on the share certificates. All the joint holders are recognised as members of the company. However, the company will deal with the member whose name appears first among the joint holders for payment of dividend and delivery of documents/communication/notices. The joint holders are entitled to change the sequence of names by making a written request to the company. This does not constitute a transfer. Changing the sequence of joint holders is called `transposition'. However, transposition is to be availed for the entire holding in a folio and is not allowed for part-holding.

If the same set of joint holders held securities in different sequence of names, these joint holders were earlier required to open different depository accounts in the NSDL depository system. The NSDL has introduced `transposition-cum-demat facility' to help joint holders dematerialise securities in the same account even though share certificates are in different sequence of names.

For this, dematerialisation request form (DRF) and an additional form called transposition form should be submitted to the depository participant (DP).

Should I dematerialise securities that I do not intend to sell?

The Depositories Act, 1996 has given investors an option to hold securities in physical/demat form. Hence, investors who do not intend to sell their securities may not dematerialise them.

The investors will continue to receive corporate benefits such as bonus, dividend, rights, and so on, on the securities held in physical form from the issuer/registrar and shall have the same rights and responsibilities as those of investors holding securities in demat form.

In addition, shares up to 500 can be sold in physical form (without dematerialisation). However, check with your broker before selling since not many investors would buy physical shares.

Can I add or delete names of accountholders (second or third accountholder) after opening the account?

No. Names of the accountholders in a depository account cannot be changed. If you want to add or delete the name(s) of the accountholder(s), you need to open a new account in the desired holding pattern (names) and transfer the securities to the newly opened account. The old account may then be closed. This is to ensure complete audit trail in the system.

How can I consolidate my holdings?

Some investors may have opened more than one demat account in different name combinations to dematerialise their holdings. They can consolidate their holdings by transferring securities to the account(s) that they would like to maintain in future and close the other demat accounts.

To whom should I complain, if I do not receive my transaction statement periodically?

According to Clause 6 of the agreement between the DP and its accountholder, the DP undertakes to provide a transaction statement to the accountholder at monthly intervals. If there is no transaction in the account, then the DP shall provide such statement to the accountholder at least once a quarter.

In case the accountholder does not receive transaction statements in accordance with the provisions mentioned, then it should be brought to the notice of the DP or the NSDL for resolution.

What is the procedure for nomination? Can the nominee be changed?

The nomination form duly filled-in should be submitted to the DP. The accountholder, nominee and two witnesses must sign this form and the name, address and photograph of the nominee must be submitted.

The nomination can be changed anytime by the accountholder(s), by simply filling up the nomination form once again and submitting it to the DP.

(Edited extracts from the NSDL newsletter)

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