2.17.2.
TYPES OF ACCOUNTS:TYPES OF ACCOUNTS:Type of depository account depends on the operations to be performed. Type of depository account depends on the operations to be performed. There are three types of demat accounts which can be opened with a depository There are three types of demat accounts which can be opened with a depository participant viz. (a) Beneficiary Account (b) Clearing Member Account and (c) participant viz. (a) Beneficiary Account (b) Clearing Member Account and (c) Intermediary Account.
Intermediary Account. 2.17.2.1.
2.17.2.1. Beneficiary AccountsBeneficiary Accounts
This is an account opened by investors to hold their securities in This is an account opened by investors to hold their securities in dematerialized form with a depository and to carry out the transaction of sale and dematerialized form with a depository and to carry out the transaction of sale and purchase of such securities in book-entry form through the depository system. A purchase of such securities in book-entry form through the depository system. A beneficiary account holder is legally entitled for all rights and liabilities attached to beneficiary account holder is legally entitled for all rights and liabilities attached to the securities (i.e. equity shares, debentures, government securities, etc.) held in the securities (i.e. equity shares, debentures, government securities, etc.) held in
that accounts. Therefore, the account is called “beneficial
that accounts. Therefore, the account is called “beneficial owner account”.owner account”. Documents for Verification
Documents for Verification
1.
1. Non-body Corporate Investors:Non-body Corporate Investors: For the purpose of verification, all mom-bodyFor the purpose of verification, all mom-body corporate investors have to submit the following documents, as prescribed by corporate investors have to submit the following documents, as prescribed by SEBI, along with the stipulated account opening form.
SEBI, along with the stipulated account opening form.
A beneficiary account must be opened only after obtaining a proof of identity A beneficiary account must be opened only after obtaining a proof of identity and address of the applicant. An authorized official of the participant should verify and address of the applicant. An authorized official of the participant should verify the photocopies of any of following documents submitted with their corresponding the photocopies of any of following documents submitted with their corresponding
originals and put his/her signature on them with remarks “verified with original” originals and put his/her signature on them with remarks “verified with original”
proceeding to open the account. proceeding to open the account.
A)
A) Proof Proof of Idenof Identity (POI)tity (POI)
PassportPassport
Voter ID CardVoter ID Card
PAN card with photographPAN card with photograph
Central/State Central/State Government Government and and its Deits Departmentspartments
Statutory/Regulatory AuthoritiesStatutory/Regulatory Authorities
Public Sector Undertakings,Public Sector Undertakings,
Scheduled Commercial Banks,Scheduled Commercial Banks,
Public Financial Institutions,Public Financial Institutions,
College affiliated to Universities (this can be treated as valid onlyCollege affiliated to Universities (this can be treated as valid only till the time applicant is a students),
till the time applicant is a students),
Professional Bodies such as ICAI, ICWAI, Bar Council etc. toProfessional Bodies such as ICAI, ICWAI, Bar Council etc. to their Members
their Members
Credit cards/Debit cards issued by Banks.Credit cards/Debit cards issued by Banks. B) Proof of address (POA)
B) Proof of address (POA)
Ration cardRation card
PassportPassport
Voter ID cardVoter ID card
Driving LicenseDriving License
Bank PassbookBank Passbook
Verified Copies ofVerified Copies of
Electricity Bills (not more than two month old)Electricity Bills (not more than two month old)
Telephone Bills (not more than Telephone Bills (not more than two month old)two month old)
Leave and License Agreement / Agreement for sale.Leave and License Agreement / Agreement for sale.
SelfSelf – –declaration by High court & Supreme Court Judges, giving thedeclaration by High court & Supreme Court Judges, giving the new address in respect of their
new address in respect of their own accounts.own accounts. 2.
2. For Corporate Investor:For Corporate Investor: For the purpose of verification, all corporate investorsFor the purpose of verification, all corporate investors have to submit the following documents as prescribes by SEBI along with the have to submit the following documents as prescribes by SEBI along with the stipulated account opening form.
stipulated account opening form.
1. Memorandum & Articles of Association (MOA & AOA) Board resolution for 1. Memorandum & Articles of Association (MOA & AOA) Board resolution for opening demat account and the list of authorized signatories along with their opening demat account and the list of authorized signatories along with their specimen signatures and photographs
specimen signatures and photographs 2.
3. Proof of address of the corporate, evidenced by the document registered 3. Proof of address of the corporate, evidenced by the document registered with Registrar of companies or acknowledged copy of income tax return or with Registrar of companies or acknowledged copy of income tax return or Bank Statement or Leave and
Bank Statement or Leave and License Agreement/Agreement for sale.License Agreement/Agreement for sale.
An authorized official of the participant shall verify the proof of address with An authorized official of the participant shall verify the proof of address with the original documents and affix his/her signature on the documents submitted by the original documents and affix his/her signature on the documents submitted by the Client, while exercising such due diligence.
the Client, while exercising such due diligence.
Common Information Common Information
The processes of opening an account with a depository, nature of such an The processes of opening an account with a depository, nature of such an account, and various factors to be considered for opening a depository account are account, and various factors to be considered for opening a depository account are explained below. Some details are common to all types of account. These are
explained below. Some details are common to all types of account. These are ::
Name of the holderName of the holder
Date of Birth (for individual account)Date of Birth (for individual account)
OccupationOccupation
Address & phone numberAddress & phone number
Bank details like name of bank, type of account (current/savings)Bank details like name of bank, type of account (current/savings) account number, branch address, MICR etc.
account number, branch address, MICR etc.
PAN numberPAN number
Details of nomination (for individual account )Details of nomination (for individual account )
Specimen signaturesSpecimen signatures
MAPIN UIN (s)MAPIN UIN (s)
E-mail addressE-mail address
Mobile numberMobile number
Address for communicationAddress for communication
Beneficiary Account- Procedure for
Beneficiary Account- Procedure for Opening AccountOpening Account
Investors have the choice of selecting a DP based on their convenience, Investors have the choice of selecting a DP based on their convenience, comfort, service levels, safety, reputation, charges etc. they have the flexibility to comfort, service levels, safety, reputation, charges etc. they have the flexibility to have more than one account with the same DP or any other DPs. No minimum have more than one account with the same DP or any other DPs. No minimum balance required for opening a depository account. Investors also have the freedom balance required for opening a depository account. Investors also have the freedom
The type of the account opening form to be filled by an investor and the list of The type of the account opening form to be filled by an investor and the list of documents required depend on the type of beneficiary account to be opened documents required depend on the type of beneficiary account to be opened – –
whether it is for NRIs or corporate or individual. Further, the individual account can whether it is for NRIs or corporate or individual. Further, the individual account can be in a single name or joint names. Clearing members a broker have to open a be in a single name or joint names. Clearing members a broker have to open a beneficiary account if they have to deal with their
beneficiary account if they have to deal with their own holdings.own holdings.
There are several client types in the depository system and different codes There are several client types in the depository system and different codes are allotted to them. These are below:
are allotted to them. These are below:
ResidentResident
OrdinaryOrdinary
Hindu Undivided Family (HUF)Hindu Undivided Family (HUF)
Financial Institutions (FI)Financial Institutions (FI)
Government-sponsoredGovernment-sponsored
State Financial CorporationState Financial Corporation
OthersOthers
Foreign Institutional InvestorsForeign Institutional Investors
Mauritius-basedMauritius-based
OthersOthers
Non-resident Indian (NRI)Non-resident Indian (NRI)
RepatriableRepatriable
Non-RepatriableNon-Repatriable
Depository ReceiptDepository Receipt
Body CorporateBody Corporate
Domestic CompanyDomestic Company
Overseas Corporate BodyOverseas Corporate Body
BrokerBroker
Foreign BodiesForeign Bodies
Group CompaniesGroup Companies
DepositoryDepository
Clearing MemberClearing Member
Foreign NationalForeign National – – Foreign National / Depository ReceiptForeign National / Depository Receipt
Mutual FundMutual Fund
TrustTrust
BankBank
Foreign BankForeign Bank
Co-operative BankCo-operative Bank
National BankNational Bank
Check List for Account Opening Check List for Account Opening
Proof of Identity: An authorized official of the Participant should verify theProof of Identity: An authorized official of the Participant should verify the
photocopies of the any of the prescribed documents submitted with their photocopies of the any of the prescribed documents submitted with their corresponding originals.
corresponding originals.
Proof of address (POS): An authorized official of the Participant shouldProof of address (POS): An authorized official of the Participant should
verify the photocopies of the any of the prescribed documents submitted verify the photocopies of the any of the prescribed documents submitted with their corresponding originals
with their corresponding originals
Ensure that all compulsory fields in the account opening form are filledEnsure that all compulsory fields in the account opening form are filled
(except nomination which is optional.) (except nomination which is optional.)
In case of corporate, ensure a copy of Board resolution of authorizedIn case of corporate, ensure a copy of Board resolution of authorized
signatories. Ensure proper authorization in case of power of attorney signatories. Ensure proper authorization in case of power of attorney holder.
holder.
DP should give a copy of agreement to the cliDP should give a copy of agreement to the client, including the charge.ent, including the charge.
Inform clients regarding standing instruction facility.Inform clients regarding standing instruction facility.
Branches of DP to co-ordinate & follow up with Head Office for accountBranches of DP to co-ordinate & follow up with Head Office for account
opening. opening.
2.17.2.2.
2.17.2.2. Intermediary Account: -Intermediary Account: -
As per SEBI Regulations on Stock Lending and Borrowing only an approved As per SEBI Regulations on Stock Lending and Borrowing only an approved intermediary can lend borrow stocks from clients. This intermediary borrows from intermediary can lend borrow stocks from clients. This intermediary borrows from lenders and lends to borrowers. Intermediaries registered with SEBI as approved lenders and lends to borrowers. Intermediaries registered with SEBI as approved intermediary account with a DP of its choice for executing stock lending and intermediary account with a DP of its choice for executing stock lending and borrowing transaction made through them. An intermediary account may be opened borrowing transaction made through them. An intermediary account may be opened only after obtaining registration from SEBI under an approved Stock Lending only after obtaining registration from SEBI under an approved Stock Lending Scheme and getting the approval of the depository for opening the account.
Scheme and getting the approval of the depository for opening the account. Operation of demat accounts based of power of attorney
Operation of demat accounts based of power of attorney
A demat account can be operated by a power of attorney holder. In this A demat account can be operated by a power of attorney holder. In this regard, it may be noted that:-
regard, it may be noted that:- i.
i. A power of Attorney executed to the promulgA power of Attorney executed to the promulgation of the Depositories Act isation of the Depositories Act is valid and enforceable.
valid and enforceable. ii.
ii. It is the responsibility It is the responsibility of the Depository of the Depository Participant to verify whether Participant to verify whether the Powerthe Power of Attorney is adequate and sufficiently authorizing the holder of the Power of of Attorney is adequate and sufficiently authorizing the holder of the Power of Attorney the done to operate the account of the beneficial owner.
Attorney the done to operate the account of the beneficial owner. iii.
iii. A sample clause is given hereA sample clause is given hereunder which if it forms a punder which if it forms a part of the Power art of the Power ofof Attorney could suffice.
Attorney could suffice.
However it may be mentioned that a DP shall not obtain Power of Attorney However it may be mentioned that a DP shall not obtain Power of Attorney (POA) from its clients as a requirement for opening a demat account. Further the (POA) from its clients as a requirement for opening a demat account. Further the POA shall not contain the following clauses:
POA shall not contain the following clauses:
I. POA Holder Done has the sole authority to operate the account and the I. POA Holder Done has the sole authority to operate the account and the
account folder is/are restrained from operating the account. account folder is/are restrained from operating the account. II.
II. Delivery Instruction Slip (DIS) books are dDelivery Instruction Slip (DIS) books are denied to the accounenied to the account holders whot holders who have
have executed executed a a POAPOA III.
III. DPs are authorized DPs are authorized to mere the securities keto mere the securities kept under various accopt under various accounts of theunts of the clients.
clients. IV.
DPs are therefore required to review the POA document and if the POA DPs are therefore required to review the POA document and if the POA contains any clause similar to what has been stated above the POA should be contains any clause similar to what has been stated above the POA should be modified suitably. DPs must inform all those clients who have executed POA about modified suitably. DPs must inform all those clients who have executed POA about such changes and obtain a written confirmation from the clients that they have taken such changes and obtain a written confirmation from the clients that they have taken note of the changes in the POA.
note of the changes in the POA.
It may also be mentioned that where a client has executed a POA such It may also be mentioned that where a client has executed a POA such depository accounts can be operated both by the clients as well as by the POA depository accounts can be operated both by the clients as well as by the POA holder. Therefore DPs should ensure that the signatures of the accounts holders and holder. Therefore DPs should ensure that the signatures of the accounts holders and the POA holder are captured in the DPM system and DPs are required to provide the POA holder are captured in the DPM system and DPs are required to provide DIS books to the clients who have executed a POA and allow the clients to operate DIS books to the clients who have executed a POA and allow the clients to operate their accounts as well.
their accounts as well.
Further DPs are required to maintain separate accounts of the clients in Further DPs are required to maintain separate accounts of the clients in conformity with regulation 42 of Security and Exchange Board of India (Depositories conformity with regulation 42 of Security and Exchange Board of India (Depositories and Participants) Regulations 1996. Lien on the securities can be only as per and Participants) Regulations 1996. Lien on the securities can be only as per Regulation 58 of SEBI Regulation and as per the procedure laid down in the bye Regulation 58 of SEBI Regulation and as per the procedure laid down in the bye Laws and business Rules of NSDL.
Laws and business Rules of NSDL.
Closure of Account Closure of Account
Closure on Client’s Request:
Closure on Client’s Request: -- DP can close a depository account on receipt of anDP can close a depository account on receipt of an application in the prescribed format. The application should be made by the account application in the prescribed format. The application should be made by the account holder or by the entire joint holder. An account can be closed only when there is no holder or by the entire joint holder. An account can be closed only when there is no balance in the account. In case there is any balance in the account sought to be balance in the account. In case there is any balance in the account sought to be closed, the following steps are necessary.
closed, the following steps are necessary. a.
a. Dematerialization of all Dematerialization of all securities to the credit of the securities to the credit of the account account at the time ofat the time of making the application for closure
making the application for closure
b. Transferring the balance to the credit of another account opened by the same b. Transferring the balance to the credit of another account opened by the same
account holders either with the same participant
account holders either with the same participant or with a different participant.or with a different participant. However, where demat request are pending for disposal for a long tine in a However, where demat request are pending for disposal for a long tine in a demat account and the client desires to close such an account the following demat account and the client desires to close such an account the following
Write a letter in the prescribed format to the issuer, requesting for rejectionWrite a letter in the prescribed format to the issuer, requesting for rejection
of the pending dematerialization requests and send fresh physical security of the pending dematerialization requests and send fresh physical security to the client directly
to the client directly
Enclose a copy of the dematerialization request generated from DPMEnclose a copy of the dematerialization request generated from DPM
system duly signed & stamped by the participant along with the aforesaid system duly signed & stamped by the participant along with the aforesaid letter to the issuer.
letter to the issuer.
Before closing the account the DP should ensure that all pending transaction Before closing the account the DP should ensure that all pending transaction has been settled. The request for closure should be processed only after ensuring has been settled. The request for closure should be processed only after ensuring that there is no balance lying in t