Q.6 (iv) Depository provides easy and quicker transfer of shares.
Best answer
Answer: The statement is true.
A depository (NSDL or CDSL) holds securities of investors in electronic (dematerialised) form through its agents, the Depository Participants. Shares are held as balances in demat accounts, just as money is held in a bank account.
When shares are sold, the transfer takes place simply by debiting the seller’s demat account and crediting the buyer’s demat account on the instructions (delivery instruction slip or online instruction) given to the DP. There is no need to fill and sign a transfer deed, affix stamps, send the certificate to the company and wait for registration of transfer.
Therefore: (1) transfer is completed within the short settlement cycle of the stock exchange; (2) there is no bad delivery because of signature mismatch or defective documents; (3) no stamp duty is payable on transfer of demat securities; and (4) there is no risk of loss or forgery of certificates in transit.
Hence the depository system provides easy and quicker transfer of shares.
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