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Unit study guide · NISM Series II-A

Processes Related to Depositories

10 questions in this unit

What this unit covers

Key ideas

From the practice bank · 1

What does rematerialisation normally mean in the securities holding process?

Rematerialisation converts eligible electronic securities holdings back into physical certificate form through the prescribed process. Remember: Rematerialisation changes the form of an eligible holding rather than its owner.

Hint This process reverses the usual change from paper holding to electronic holding. Common mistake: Confusing a reverse holding-form process with a market sale.

II-A-111

From the practice bank · 2

Which transfer is an off-market transfer in the depository context?

An off-market transfer occurs outside the exchange clearing and settlement process, such as an eligible direct transfer between demat accounts. Remember: Off-market refers to the transfer route, not necessarily to whether the security is listed.

Hint The distinction concerns whether the transfer passes through the exchange transaction-settlement route. Common mistake: Assuming a listed share can move only through an exchange trade.

II-A-112

From the practice bank · 3

When securities move between eligible accounts maintained through different depositories, what type of delivery is involved?

Inter-depository delivery moves eligible securities between accounts maintained through different depositories. Remember: Inter-depository delivery links accounts across depository systems.

Hint The two accounts belong to different depository systems. Common mistake: Treating a change of depository as a new corporate action.

II-A-113

From the practice bank · 4

An investor submits physical certificates for dematerialisation. Why should the RTA validate the certificates and holder details before confirmation?

The RTA validates the documents and holder details to ensure that a genuine holding is credited to the proper account. Remember: Dematerialisation confirmation requires checks on the security and its rightful holder.

Hint Confirmation should establish entitlement and authenticity rather than create new investment value. Common mistake: Approving electronic credit merely because a certificate was submitted.

II-A-114

From the practice bank · 5

An issuer needs to determine which demat holders qualify for a record-date corporate action. Which information should the RTA use?

The RTA should use the relevant beneficial-owner position supplied through the depositories to determine record-date entitlements. Remember: Corporate-action processing needs the correct date-specific ownership records.

Hint Eligibility must be linked to the relevant ownership snapshot, not to who contacts the office first. Common mistake: Using the most convenient list instead of the relevant ownership snapshot.

II-A-115

From the practice bank · 6

An eligible holder is due 400 bonus shares. A verified posting has credited only 250. How many additional shares are needed to complete the entitlement?

An additional 150 shares are needed. Calculation: 400 shares due − 250 already credited = 150 shares. Remember: Correct only the verified missing balance and avoid duplicate credits.

Hint Compare the verified credit with the total entitlement before making any corrective posting. Common mistake: Reposting the entire entitlement after a partial credit.

II-A-116

From the practice bank · 7

A merger gives three acquiring-company shares for every seven target-company shares. What new allotment is due on 700 eligible target shares?

The merger allotment is 300 acquiring-company shares. Calculation: 700 ÷ 7 × 3 = 300 shares. Remember: Merger allotments follow the approved exchange ratio.

Hint Apply the approved share-exchange ratio in the stated direction. Common mistake: Applying the merger ratio in reverse.

II-A-117

From the practice bank · 8

Before dematerialising a listed company’s newly issued securities, what listing-related check does the RTA code of conduct require?

The RTA must verify listing permission for the securities being dematerialised under the specific listing-related duty in its code of conduct. Remember: Confirm required permissions for the particular securities being processed.

Hint Approval for an earlier issue and approval for the securities now being processed are not necessarily identical. Common mistake: Assuming a company-level listing automatically validates every later issue.

II-A-118

From the practice bank · 9

Issued capital comprises 15 lakh shares. Reconciled records show 7 lakh with one depository, 6 lakh with another and 1.8 lakh physical. What unexplained gap remains?

The unexplained shortfall is 20,000 shares. Recorded shares = 7 lakh + 6 lakh + 1.8 lakh = 14.8 lakh. Difference = 15 lakh − 14.8 lakh = 0.2 lakh = 20,000 shares. Remember: An unexplained capital-reconciliation difference needs investigation, not a balancing credit.

Hint Add the three recorded categories before comparing them with the issued-share total. Common mistake: Confusing the total of one holding category with the reconciliation difference.

II-A-119

From the practice bank · 10

A holder has 100 shares of ₹10 face value. A one-for-four bonus is completed, then every share splits into five ₹2 shares. What is the final holding?

The final holding is 625 shares. Bonus shares = 100 ÷ 4 = 25. Post-bonus holding = 125. After the five-for-one split, quantity = 125 × 5 = 625 shares. Remember: For successive corporate actions, carry the updated holding into the next calculation.

Hint Apply the second action to the holding after the first action is completed. Common mistake: Applying every action independently to the original holding.

II-A-120