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FINANCIAL MARKET — OCM STD 12 Commerce — Question

Gujarat BoardEnglish MediumSTD 12 CommerceOCMFINANCIAL MARKET3 Marks
Question
Give the details regarding demat account.
✓

Answer

Introduction :
  • Companies used to provide shares to share to shareholders in physical form.
  • These shares were in printed paper form.
  • They were known as share certificates in common language.
  • They were sent for transfer in physical form – transfer form was being filled up and sent to the company along with share certificates.
  • To remove this entire procedure in $1996,$ depository act $1996$ was passed.
  • Investors are given option to maintain their share, debentures, bonds, government securities, units etc. in dematerialized electronic form.
  • What is Demat?
  • Dematerialization is known as demit.
  • Dematerialization means to covert physical securities into electronic data through computer.
  • In other words to keep the data of the certificates shares, debentures, bonds issued by the company, in electronic form through computer.
  • These physical securities are maintained by depository participants in electronic form.
  • Depository participant is an agent or representative of depository.
  • Investor has to fill in request form and submit the same to the depository to open a demit account with him.
  • If the investor desire services form the depository participant he has to open demit account with depository.
  • Demit account holder has to pay fees fixed as per the number of physical shares to be dematerialized.

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