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Annexure 2.7
Rights and Obligations of Beneficial Owner and Depository Participant as
prescribed by SEBI and Depositories
General Clause
1. The Beneficial Owner and the Depository participant (DP) shall be bound by the provisions of
the Depositories Act, 1996, SEBI (Depositories and Participants) Regulations, 2018, Rules and
Regulations of Securities and Exchange Board of India (SEBI), Circulars / Notifications /
Guidelines issued there under, Bye Laws and Business Rules/Operating Instructions issued by
the Depositories and relevant notifications of Government Authorities as may be in force from
time to time.
2. The DP shall open/activate demat account of a beneficial owner in the depository system only
after receipt of complete Account opening form, KYC and supporting documents as specified
by SEBI from time to time.
Beneficial Owner information
3. The DP shall maintain all the details of the beneficial owner(s) as mentioned in the account
opening form, supporting documents submitted by them and/or any other information
pertaining to the beneficial owner confidentially and shall not disclose the same to any person
except as required by any statutory, legal or regulatory authority in this regard.
4. The Beneficial Owner shall immediately notify the DP in writing, if there is any change in details
provided in the account opening form as submitted to the DP at the time of opening the demat
account or furnished to the DP from time to time.
Fees/Charges/Tariff
5. The Beneficial Owner shall pay such charges to the DP for the purpose of holding and transfer
of securities in dematerialized form and for availing depository services as may be agreed to
from time to time between the DP and the Beneficial Owner as set out in the Tariff Sheet
provided by the DP. It may be informed to the Beneficial Owner that "no charges are payable
for opening of demat accounts”
6. In case of Basic Services Demat Accounts, the DP shall adhere to the charge structure as laid
down under the relevant SEBI and/or Depository circulars/directions/notifications issued from
time to time.
7. The DP shall not increase any charges/tariff agreed upon unless it has given a notice in writing
of not less than thirty days to the Beneficial Owner regarding the same.
Dematerialization
8. The Beneficial Owner shall have the right to get the securities, which have been admitted on
the Depositories, dematerialized in the form and manner laid down under the Bye Laws,
Business Rules and Operating Instructions of the depositories.
Separate Accounts
9. The DP shall open separate accounts in the name of each of the beneficial owners and securities
of each beneficial owner shall be segregated and shall not be mixed up with the securities of
other beneficial owners and/or DP’s own securities held in dematerialized form.
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Annexure 2.7
10. The DP shall not facilitate the Beneficial Owner to create or permit any pledge and /or
hypothecation or any other interest or encumbrance over all or any of such securities submitted
for dematerialization and/or held in demat account except in the form and manner prescribed
in the Depositories Act, 1996, SEBI (Depositories and Participants) Regulations, 2018 and Bye-
Laws/Operating Instructions/Business Rules of the Depositories.
Transfer of Securities
11. The DP shall effect transfer to and from the demat accounts of the Beneficial Owner only on
the basis of an order, instruction, direction or mandate duly authorized by the Beneficial Owner
and the DP shall maintain the original documents and the audit trail of such authorizations.
12. The Beneficial Owner reserves the right to give standing instructions with regard to the crediting
of securities in his demat account and the DP shall act according to such instructions.
13. The stock broker / stock broker and depository participant shall not directly / indirectly compel
the clients to execute Power of Attorney (PoA) or Demat Debit and Pledge Instruction (DDPI)
or deny services to the client if the client refuses to execute PoA or DDPI.
Statement of account
14. The DP shall provide statements of accounts to the beneficial owner in such form and manner
and at such time as agreed with the Beneficial Owner and as specified by SEBI/depository in
this regard.
15. However, if there is no transaction in the demat account, or if the balance has become Nil
during the year, the DP shall send one physical statement of holding annually to such BOs and
shall resume sending the transaction statement as and when there is a transaction in the
account.
16. The DP may provide the services of issuing the statement of demat accounts in an electronic
mode if the Beneficial Owner so desires. The DP will furnish to the Beneficial Owner the
statement of demat accounts under its digital signature, as governed under the Information
Technology Act, 2000. However if the DP does not have the facility of providing the statement
of demat account in the electronic mode, then the Participant shall be obliged to forward the
statement of demat accounts in physical form.
17. In case of Basic Services Demat Accounts, the DP shall send the transaction statements as
mandated by SEBI and/or Depository from time to time.
Manner of Closure of Demat account
18. The DP shall have the right to close the demat account of the Beneficial Owner, for any reasons
whatsoever, provided the DP has given a notice in writing of not less than thirty days to the
Beneficial Owner as well as to the Depository. Similarly, the Beneficial Owner shall have the
right to close his/her demat account held with the DP provided no charges are payable by
him/her to the DP. In such an event, the Beneficial Owner shall specify whether the balances
in their demat account should be transferred to another demat account of the Beneficial Owner
held with another DP or to rematerialize the security balances held.
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Annexure 2.7
19. Based on the instructions of the Beneficial Owner, the DP shall initiate the procedure for
transferring such security balances or rematerialize such security balances within a period of
thirty days as per procedure specified from time to time by the depository. Provided further,
closure of demat account shall not affect the rights, liabilities and obligations of either the
Beneficial Owner or the DP and shall continue to bind the parties to their satisfactory
completion.
Default in payment of charges
20. In event of Beneficial Owner committing a default in the payment of any amount provided in
Clause 5 & 6 within a period of thirty days from the date of demand, without prejudice to the
right of the DP to close the demat account of the Beneficial Owner, the DP may charge interest
at a rate as specified by the Depository from time to time for the period of such default.
21. In case the Beneficial Owner has failed to make the payment of any of the amounts as provided
in Clause 5&6 specified above, the DP after giving two days notice to the Beneficial Owner shall
have the right to stop processing of instructions of the Beneficial Owner till such time he makes
the payment along with interest, if any.
Liability of the Depository
22. As per Section 16 of Depositories Act, 1996,
1. Without prejudice to the provisions of any other law for the time being in force, any
loss caused to the beneficial owner due to the negligence of the depository or the
participant, the depository shall indemnify such beneficial owner.
2. Where the loss due to the negligence of the participant under Clause (1) above, is
indemnified by the depository, the depository shall have the right to recover the same
from such participant.
Freezing/ Defreezing of accounts
23. The Beneficial Owner may exercise the right to freeze/defreeze his/her demat account
maintained with the DP in accordance with the procedure and subject to the restrictions laid
down under the Bye Laws and Business Rules/Operating Instructions.
24. The DP or the Depository shall have the right to freeze/defreeze the accounts of the Beneficial
Owners on receipt of instructions received from any regulator or court or any statutory
authority.
25. The Joint holders are aware that in case of any Statutory Order for freezing any one joint
holder, the demat account will be frozen and the other joint holders will have to obtain a specific
Order for unfreezing their percentage of joint ownership by submitting the relevant
documentary proof to the Order issuing authority.
Redressal of Investor grievance
26. The DP shall redress all grievances of the Beneficial Owner against the DP within a period of
thirty days from the date of receipt of the complaint.
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Annexure 2.7
Authorized representative
27. If the Beneficial Owner is a body corporate or a legal entity, it shall, along with the account
opening form, furnish to the DP, a list of officials authorized by it, who shall represent and
interact on its behalf with the Participant. Any change in such list including additions, deletions
or alterations thereto shall be forthwith communicated to the Participant.
Law and Jurisdiction
28. In addition to the specific rights set out in this document, the DP and the Beneficial owner shall
be entitled to exercise any other rights which the DP or the Beneficial Owner may have under
the Rules, Bye Laws and Regulations of the respective Depository in which the demat account
is opened and circulars/notices issued there under or Rules and Regulations of SEBI.
29. The provisions of this document shall always be subject to Government notification, any rules,
regulations, guidelines and circulars/ notices issued by SEBI and Rules, Regulations and Bye-
laws of the relevant Depository, where the Beneficial Owner maintains his/ her account, that
may be in force from time to time.
30. The Beneficial Owner and the DP shall abide by the arbitration and conciliation procedure
prescribed under the Bye-laws of the depository and that such procedure shall be applicable to
any disputes between the DP and the Beneficial Owner.
31. Words and expressions which are used in this document but which are not defined herein shall
unless the context otherwise requires, have the same meanings as assigned thereto in the
Rules, Bye-laws and Regulations and circulars/notices issued there under by the depository and
/or SEBI
32. Any changes in the rights and obligations which are specified by SEBI/Depositories shall also
be brought to the notice of the clients at once.
33. If the rights and obligations of the parties hereto are altered by virtue of change in Rules and
regulations of SEBI or Bye-laws, Rules and Regulations of the relevant Depository, where the
Beneficial Owner maintains his/her account, such changes shall be deemed to have been
incorporated herein in modification of the rights and obligations of the parties mentioned in this
document.
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