For shares held in electronic / Demat form, Bank Mandate should be intimated to the DP and not to the Company.
Demat
No stamp duty for transfer of securities in the Depository System. In the case of physical shares, stamp duty of 0.25% of sale value is payable on transfer of shares.
Elimination of bad deliveries and all risks associated with physical certificates such as loss in transit, theft, mutilation, damage, etc.
Facility for freezing/locking of investor accounts to make it non-operational for specified period.
Instead of filling up transfer deed(s) a simpler form is to be given to the DP.
Facility to pledge and hypothecate securities. Pledging Dematerialized securities is easier and advantageous as compared to pledging physical shares. In respect of shares in "compulsory Demat" category, banks prefer to lend against shares held in electronic form, and offer better terms.
Odd lots are not differentiated in the electronic system. Even a single share can be traded at the market rates without any reduction in realization.
Just like a bank branch, the DP will give a periodical statement of account of holdings. In addition, investor can obtain a statement of holdings as and when required for a fee.
In case investor loses the statement of holdings, he can inform his DP and obtain a duplicate statement. Investor's statement of holdings cannot be used by anybody else for trading in his account.
When an investor opens an account with a DP, he signs an agreement with the DP in which the DP will indemnify the investor for any mis-use of his holdings. The depository will also ensure that the interests of the investor are protected. Grievances, if any, against his DP will be resolved by the Depository.
Every transaction in investor's account will have to be authorized by him, which ensures total control of the investor over his investment.
For shares held in electronic/Demat form, any change in address should be intimated to the DP and not to the Company.
In case of companies whose shares are placed on compulsory Demat list, any purchase and sale of shares will only be in Dematerialised form after the notified date.
Shares of Ashok Leyland are being traded in Dematerialised form from July 1998 onwards. SEBI has notified the shares of the Company for compulsory delivery in Dematerialised form only, effective November 29, 1999.
Normally physical shares of a company, which is already in the compulsory Demat list for all investors, cannot be sold in the market. But, Stock exchanges provide a facility for small investors of such companies to sell physical shares, subject to certain limits. This facility is available for only registered holders of shares who are individuals/HUF. But, in reality, the brokers /market may be reluctant/ unwilling to accept delivery of physical certificates in these cases. Also, the buyer of these shares will not be permitted to re-sell the shares in the physical form.
Nomination facility is available for depository account. Once Nomination is registered for an investor's Demat account with his DP, the same will automatically cover all his shareholding (in all the companies) with that DP so long as the name(s) of the holder(s) is the same. The investor need not file separate nomination for each company.
This holds good for change of address, bank, mandate, ECS etc.
Any investor holding shares in Demat/electronic form should contact his DP directly for nomination (the company does not register nomination for shares held in electronic/Demat form.)
Dematerialisation is the process by which physical share certificates of an investor are converted to electronic form through investor's Depository Participant (DP) and credited to the investor's account with his DP.
Initially Equity Shares and Units of Mutual Fund were permitted to be Dematerialised. Now Debt instruments like Bonds, Debentures, Commercial Papers, and Certificate of Deposit etc. irrespective of whether these instruments are listed/unlisted/privately placed, can also be Dematerialised and held in electronic form.
Ashok Leyland (AL) has joined hands with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) to facilitate investors to hold and trade in AL's shares in electronic form.
Frequently asked questions on Nomination
Who can nominate?
Nomination can be made only by individuals holding beneficiary accounts on their own behalf either singly or jointly. Non-individuals including society, trust, body corporate, partnership firm, karta of Hindu Undivided Family, holder of power of attorney cannot nominate.
Can joint holders nominate?
Yes. Nomination is permitted for accounts with joint holders. But, in case of death of any of the joint holder, the securities will be transmitted to the surviving holder(s). Only in the event of death of all the joint holders, the securities will be transmitted to the nominee.
Can a NRI nominate?
Yes, NRI can nominate directly. But, the power of attorney holder cannot nominate on behalf of NRI.
Who can be a nominee?
Only an individual can be a nominee. A nominee shall not be a society, trust, body corporate, partnership firm, karta of Hindu Undivided Family or a power of attorney holder.
Can there be more than one nominee?
No, at present only one nomination can be made for one depository account.
Can a minor be a nominee?
Yes, a minor can be a nominee. In such a case, the guardian will sign on behalf of the nominee and in addition to the name and photograph of the nominee, the name, address and the photograph of the guardian must be given.
Can separate nomination be made for each security held in a depository account?
No separate nomination cannot be made for each security. Nomination can be made account wise and not security wise.
Can a NRI be a nominee?
Yes. NRI can be a nominee subject to the exchange control regulations in force from time to time.
Any investor wishing to convert securities held in electronic form to physical form has to submit a Rematerialisation Request Form (RRF) to his DP for rematerialisation of the same.
DP will electronically transmit RRF to depository and generate Rematerialisation Request No (RRN).
RRF submitted by the investor will be sent by the DP to the Company.
Company will verify the RRF and confirm the rematerialisation to NSDL/CDSL. NSDL/CDSL will remove the securities rematerialised from the investor account.
Company will print the certificates and dispatch the same to investor on rematerialisation.
For the purpose of joining the Depository System and to convert physical shares into electronic holdings, the following steps are to be taken by the investor:
Opening a Demat account
Open an account with any one Depository Participant (DP) of investors choice, by Filling up the account opening form available with DP (one can open multiple accounts with the same DP as also with different DPs). Signing Participant - Client Agreement.
- While opening Demat account, the holder will be required to give details of his Bank Account No., Name of the Bank, Branch and Account No., as part of the information requirement. Company will print the same details in the Dividend Warrants or any remittances payable based on the details furnished by the Investor to DP.
- Investor will receive his account number, which should be quoted in all his correspondence with his DP and also the Company.
Dematerialising (Dematting) physical certificates.
- Fill a Dematerialisation Request Form (DRF) available with DP
- Submit share certificates along with the above form to DP
Other steps involved
- DP will electronically transmit DRF to depository and electronically generate Dematerialisation Request No (DRN)
- DRF along with share certificates with a seal Surrendered for Dematerialisation affixed on the share certificates will be sent by the DP to the Company.
- Company will verify the certificates and DRF, and if found in order, confirm the Dematerialisation to NSDL/CDSL. NSDL/CDSL will in turn confirm the Dematerialisation to the DP.
- On receiving the confirmation, DP will credit investor's account with the number of shares so Dematerialised and thereafter he will be holding the shares in the electronic form.
- Normally the investors account will be credited within 15 days from the date of receipt of both Electronic Request and physical certificates along with DRF.
- DP will give periodic statements of holdings and will update clients account after each transaction (like bank account).
It is possible to re-convert securities held in electronic form after Demat, back to physical holding. 'Rematerialisation' is the term used for converting electronic holdings back into physical certificates
Depository is an organisation where the securities of a shareholder are held in the form of electronic accounts. Depository holds electronic custody of securities and also arranges for transfer of ownership of securities on the settlement dates. Depository participant acts as an agent of the Depository and is the interface between the investor, depository and the company.
At present National Securities Depositories Limited & Central Depository Services (India) Limited are the depositories operating in the India and offer the following services to the investor, through their respective agents viz., Depository Participants (DP):
- Dematerialisation i.e., conversion of physical holdings to electronic form.
- Rematerialisation, i.e, conversion of securities held in electronic form into physical certificates.
- Transfer of securities.
- Maintenance of holdings in electronic form.
- Settlement of market trades done in the depository segment of stock exchanges.
- Settlement of Off market trades.
- Facilitate Pledge/hypothecation of Dematerialised securities.
- Electronic credit in public offerings of companies.
- Receipt of non-cash corporate benefits such as bonus, rights in electronic form.
Buying and selling electronic shares is just like buying and selling physical shares - the only difference is that trading in electronic shares is simpler and safer:
- If an investor wishes to sell his electronic shares, he has to place his order with his broker and instruct his DP by way of a Delivery Instruction (which is similar to a cheque) to debit his account with the number of shares sold by him.
- When he buys electronic shares, he must inform his broker about his depository account number so that the electronic shares bought by him can be credited into his account, also, he has to instruct his DP by way of Receipt Instruction to receive credit in his account.
- Payment for electronic shares either bought or sold is made in the same way as in case of physical securities.
The Company will not be involved in Transfer /Transmission etc., of Dematted shares. The Depository Participants (and Depository) will themselves handle and complete these transactions.