Business StudiesFinancial Markets

An investor holds share certificates in physical form. She wants to h…

An investor holds share certificates in physical form. She wants to hold them as an electronic balance in an account. Along with the physical certificates, what must she give to the depository participant?

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → A dematerialisation request form

Option (1) A client registration form — Incorrect. The client registration form is signed with the broker, before placing an order to buy or sell.

Option (2) A broker-client agreement — Incorrect. The broker-client agreement is also signed with the broker, before trading begins.

Option (3) A trade confirmation slip — Incorrect. The trade confirmation slip is issued by the broker once an order is executed. The investor does not give it.

Option (4) A dematerialisation request form — Correct. To dematerialise shares, the investor gives the physical certificates to the DP along with a dematerialisation request form. The shares are then held as an electronic balance in her account.

NCERT (Pre-rationalised Edition): “Working of the Demat System 1. A depository participant (DP), either a bank, broker, or financial services company, may be identified.
2. An account opening form and documentation (PAN card details, photograph, power of attorney) may be completed.
3. The physical certificate is to be given to the DP along with a dematerialisation request form.
4. If shares are applied in a public offer, simple details of DP and demat account are to be given and the shares on allotment would automatically be credited to the demat account.”