Company profile of Indiabullss securites ltd.
Introduction to Indiabullss:
Indiabullss is
Indiabullss is lead by a highly regarded management team that has invested corers of rupees into a world class Infrastructure that provides its clients with real-time service & 24/7 access to all information and products. Their flagship Indiabullss Professional Network offers real-time prices, detailed date of news, intelligent analeptics and electronic trading capabilities, right at their finger-tips. This powerful technology is complemented by its knowledgeable and customer focused Relationship Managers. They argue that, they are creating a world of Smart Investor.
Indiabullss offers a full range of financial services and products ranging form Equities to Insurance to enhance and achieve investors financial goals.
Indiabullss’ Clients relationship Managers are available to investors to help with their financial planning and investment needs. To provide the highest possible quality of service, Indiabullss provides full access to all its products and services through multi-channels.
An overview of Indiabullss Services:
Indiabullss Financial services is incorporated on January 10, 2000 as M/s Orbis Infotech private Limited at
Indiabullss Financial Service Limited (“The Company”) was incorporated on January 10, 2000 as a private Limited company to invest invidious subsidiaries and also to invest, acquire, hod, purchase or procure equity share, debentures, bonds mortgages, and obligations, securities of any king issued or guaranteed by any company.
March 30, 2001 the company was registered under section 45-IA of the Reserve Bank of India Act, 1934 to carry on the business of a Non Banking Financial company but does not have permission from the RBI to accept public deposits. With effect form the current financial year, the company has commenced business of Short-term financial activities.
The company’s Accounting year is for a period of 12 months from April 1, 2004 to March 31 2005. These interim financial statements are prepared for an interim period of 3 months from April 1, 2004 to June 30, 2004 in accordance with Accounting Standard – 25 ‘interim Financial reporting’ issued by the Institute of Chartered Accountants of India. Accordingly, the figures of the current period in the financial statements are not directly comparable with the figures of previous accounting year.
The members of the company at their Extraordinary General Meeting held on February 3, 2004 have resolved inter-alia to:
Convert the company into a public Limited company pursuant to section 44 to the companies Act, 1956. The company has since received the certificate form registrar of companies dated February 27, 2004, in respect of the said change.
Split the nominal value of Equity Shares of Rs. 10 each in the capital of the company fully paid up, into five equity shares of Rs. 2 each fully paid up.
Increase the authorized capital of the company form Rs. 160,000,000 divided into 16,000,000 equity shares of Rs.10 each to Rs. 250,000,000 divided into Rs. 125,000,000 equity shares of Rs. 2 each, ranking pari-pasu with the existing equity shares of the company .
Pursuant to the approval of the members of the company at their Extraordinary General Meeting held on February 13, 2004, with two overseas investors for the issue and exercise of 3,000,000 warrants at an exercise price being higher of: (a) Rs. 25 per equity share and (b) lowest price per warrant security permissible under the exchange control regulations. Each of the said warrant has been converted into one equity share of face value of Rs. 2 each. As at the previous year end, the said warrants has been exercised and the company has received a sum of Rs. 7,916,900 (including Rs. 68,16,900 towards securities premium) and the company on February 26, 2004 had allotted 3,000,00 Equity Shares to the holders of such warrants.
February 28, 2004 Indiabullss established the Indiabullss Employees stock options Scheme (“Indiabullss ESO of Plan). Under the plan, the company is authorized of issue up to 6,000,000 equity shares of Rs.2 each to eligible employees including employees of its subsidiary companies. Employees covered by the plan are granted an option to purchase shares of the company subject to the requirements of vesting. A compensation committee constituted by the Board of Directors of the company administers the plan.
February 28, 2004, the company granted 6,000,000 options at an exercise prices of Rs. 2 Per share. As at the period / year end, no stock options granted under the Indiabullss ESO wee exercised. These options west uniformly over a period of 5 years, with effect from April 1, 2004 whereby 20% of the options vest on each vesting date as per the vesting schedule, giving rise to a deferred stock compensation expense of Rs. 42.50,000 (previous year Rs. 45,000,000) and employee stock options outstanding as at 30th June, 2004 amounting to Rs. 45,000,000 (previous year Rs. 45,000,000).
The SEBI (ESO & ESPS) Guidelines, 1999 (“the guidelines”) were not applicable to the company, being an unlisted company, when the Indiabullss ESO was established. The company has also been legally advised as regards the not-applicability of the guidelines. The Company has also been further the non-applicability of the guidelines. The Company has also been further advised tat per disclosure requirement clause 15.3 an accounting treatment to be follower per 13.1 of the guidelines, the company would have to record a compensation expense being the difference between the grant price and the fair value only after vesting of stock option begin. As per the said plan, as the vesting begins after April 1. 2004, and as legally advised, no compensation expense was required to be charged tot he profit and loss as at the previous year end. For the quarter ended June 30, 2004, an amount of Rs. 2,250,000 being pro-rate charge tot he profit and loss account.
Capital Structure of the company
Capital Structure
| Share Capital as of March 3, 2004 | In the (Rs) | |
| Face Value | Total Value Including premium | |
| a) Authorized Capital | | |
| b) Issued Subscribed And paid-Up capital before the issue. 8,15,62,555 Equity Shares of Rs. 2 each fully paid-up | 16,31,25,110 | 16,31,25,110 |
| c) Present issue to the public in terms of this Red Herring Prospectus 2,187,519 Equity Shares of Rs. 2 each | 5,43,5,038 | [ 0 ] |
| d) Equity Capital after the issue | 21,5,00,148 | [ 0 ] |
| e) Share Premium Account | | 11,55,30,237 |
| Before the issue | | [ 0 ] |
| After the issue | | |
The Fair value of options is measured on the basis of an independent valuation performed in respect of stock options granted.
| Particulars | Period ended June 6, 2004 | ||
| Shares arising out of options | Exercise Price | Weighted average remaining contractual life (months) | |
| Standing at the beginning of the | 6,00,000 | 2 | 60 |
| Period | - | - | - |
| Counted during the period | - | - | - |
| Forfeited during the period | - | - | - |
| Exercised during the period | 6,00,000 | 2 | 60 |
| Outstanding at the end of the | - | - | - |
| Period | - | - | - |
| Exercisable at the end of the | | | |
| Period | | | |
The company has entered into an indemnification cum license agreement with its subsidiaries for a non-assignable, non-exclusive license to use its trademarks for a period of 15 years, renewable for a further period of 15 years n mutually agreed terms and conditions.
Contingent Liabilities not provided for in respect of:
Payment of Rs 11,80,000 to the erstwhile shareholders of Indiabullss Securities Limited (formerly Securities Limited) towards acquisition of their shares in Indiabullss Securities Limited subject to either procuring additional equity funding of Rs 200 million for company.
The company has provided counter guarantees to banks amounting Rs. 510,000,000 in respect of bank guarantees given by banks to National Securities Clearing Corporation Limited in respect of its subsidiary company.
Liability in respect in IPO issue expenses has not been provided for as the same accrues on completion of issue, the amount where of is not ascertained.
Secured loans from banks include loans for Rs. 79,20,129 and secured loans form others include Rs. 251,71,987 are secured against clients as collateral against exposure / loan given.
Secured loan taken from other Rs. Nil (Previous year Rs. 59,850,000) represents loan taken from other aa Financial institution, originally secured against stock of securities. How ever as such securities were significantly sold towards the end of the previous year the said loan is shown as unsecured. Based on secured loans are repayable within a year.
Segment information for the period ended June 30, 2004
Primary segment information (by business segments)
(All amounts in Rupees)
| | Investing and financing related activities | Others | Total |
| Segment Revenue | 63,360,666 | - | 63,360,666 |
| Segment Result | 56,42725 | (145,994) | 56,22,281 |
| Less: Interest Expense | - | - | - |
| Less: allocated expenditure net of other unallocated | - | - | 544,236 |
| Income | - | - | 21,001,185 |
| Less : Income Taxes | - | - | |
| Total profit after tax | - | - | 34,26,860 |
Products and Service:
The Indiabullss professional Network offers real time prices detailed data and news, intelligent analytic and electronic trading capabilities right at its client’s finger-tips. This powerful technology is completed by their knowledgeable and customer focussed relationship managers.
Indiabullss Relationship Managers are available to investors to help with their financial planning and investment needs. To provide the highest possible quality of service, Indiabullss provides full access to all products and services through multi channels.
Equities & Derivatives
Indiabullss Equity Analysis
Depository services
Equities & Derivatives:
Their Retail Equity Business caters to the needs of individual Indian and Non-Resident Indian. (NRI) investors. Indiabullss offers brokers assited trade execution, automated online investing and access to all IPO’s.
Through various types of brokerage accounts, Indiabullss offers the purchase and sale of securities which includes equity, Derivatives and Commodities Instruments listed on National Stock Exchange of India Ltd. (NSEIL), The Stock Exchange, Mumbai (BSE) and NCDEX.
Service option:
Indiabullss Signature Account: Comprehensive Services including research and investing guidance of independent investors.
Power Indiabullss : Indiabullss is dedicated to empower Active Traders through personal service and advanced trading technology.
Non-Resident Indian (NRI) Investor Services: with an extensive ranges of investment products, clients will discover an unwavering commitment to helping them to invest in
Indiabullss Documents requirement for equity Trading:
Preparing for a meeting with Indiabullss Relationship Manager.
The Indiabullss Relationship Manager shall come prepared with details and registration kits of each of their products that clients desire to use. To facilitate a more fruitful meeting, they recommend their clients to be prepared with the following documents for each of the products.
Equity Broking Account:
A passport size photograph
Proof of Demat Account, if clients intend to get a Depository account opened with Indiabullss as well; please see the relevant requirement for that.
Proof Bank Account – A cancelled cheque Would be sufficient.
Photocopy of income Tax permanent Account Number (PAN) Card)
Identity Proof – photocopy of any of the following
Passport
PAN Card
Voter ID
Driving License
Ration Card
Address Proof – Photocopy of any one Driving License / Pass port/ ration card/ voter Card/ Telephone Bill / Electricity Bill/ Bank statement.
Indiabullss Signature Account:
A multitude of ways to allow investors account either through profitability accesses to Relationship Manager phone or online access to clients Account and Research tools.
Benefits:
Control - say on top of investments with convenient access to investors account online or by phone.
Confidence – Support investing decisions with premium in dept research- Indiabullss Analysis TM.
Value – Enjoy competitive commissions and get the service and support client need at a fair price
Priority Service - Enjoy priority telephone access that gives direct access
Premium Research – Benefit from full access to Indiabullss Equity Analysis TM, their objective, and fact based approach to rating stocks.
Online Accounting- Stay on the top of investments with a snapshot of client’s Account statements. Get access to Protfolio statement and access to digital contract notes.
Power Indiabullss:
Regardless of how the market is performing of which way the economic winds are blowing investors as a trader, are researching, charting crafting a strategy, buying and selling out and moving on to the next trade.
Investors can choose from a compressive offering of accounts, platforms and products. Customize their technology and services to support the way one work.
Feature of power Indiabullss:
Live streaming Quotes
Fast Order Entry
Tic by Tic Live Charts
Technical Analysis
Live News and Alerts
Extensive Report for Real-time Accounting
Indiabullss equity analysis:
Benefits:
Comprehensive Financial Services – As an Active trader, investors will have the tools, resources and support investor need to execute their trading strategy, plus their choice of a wide range of investment products and services.
Dedicated Support and Services – Enjoy property access to Relationship Managers who are dedicated to supporting investor’s trading and investing needs.
Non-Resident Indian (NRI) Investors Service:
Investors can now enjoy the convenience of hassle free and fast way of trading in the Indian Equity Markets through Indiabullss, NRI investor services.
Indiabullss unique integrated service creates one window for all investors trading depository and buying needs. Investors can buy and sell on their own computer using Indiabullss NRI Trading Account services which have been seamlessly integrated with their Indiabullss Depository Account and with the HDFC, NRE / NRO BANK.
The company provided full access to the following services to help your trade seamlessly:
Indiabullss NRI Trading Account – provides access to comprehensive trading tools for Indiabullss NRI Investors.
Indiabullss depository services – Integrated Services for seamless delivery.
HDBFC Bank Account – NRE/RIRD Account – Provides access to comprehensive trading tools for Indiabullss NRI Investors.
Indiabullss Equity Analysis – Premium Research or 5047 companies updated daily.
Investing from outside
To a Non-Resident Indian (NRI) who is living abroad, investing in
Investing in
Note: This service is presently being offered to Non-Resident Indians (NRI) residing in Gulf Co-operation Council (GCC) including
Forms:
To obtain the forms below, investors need to select the delivery option that fits their needs.
Telephone:
Call Indiabullss telephone
Outside
Inside
In person:
At all Indiabullss offices within the country.
Account Opening Applications:
NRI Trading Services Registration From
Schedule of charges for Depository service
HDFC Bank NRE / NRO Account opening Forms.
HDFC Bank fee schedule
Application for HDFC Bank – portfolio investor Scheme
ECS Mandate from
Electronic Clearing services (Debit Clearing) Module from
A partnerships firm desirous to open an account would required the following as well:
A certified true copy of the partnership deed.
Copy of last Income Tax Returns fields.
Corporate desirous of opening an account would require the following additional documents
Certified true copy of resolution passed by the Board of Directors naming the authorized officials to sign the Member constituent agreements.
Certified true copy of the annual reports for the last year.
List of Directors
Optional Procedures:
Overview of operation procedure of NRIs:
A NRI can deal only deal only one bank at any point in time. If a NRI has a permission taken from another bank then the same has to be transferred to HDFC Bank.
As an NRI he will be allowed to invest only up to 5% of the paid up capital of the company. The aggregate paid up value of share of any company purchased by all NRI’s and OCBs does not exceed 10 percent of the paid up capital of the company and in the case of convertible debentures purchased by all NRI’s and OCBs dose not exceed 10% of the paid up value of each series of convertible.
The NRI will have to take delivery and give delivery of shares. He can only sell the delivery for which payout is already done. He cannot sell any delivery, which is yet to come form NSE.
Every purchase and sale transaction has to be reported to the RBI. He will need to submit the original broker’s contract notes tobe designated Bank branch, within 24 hours of the transaction. In case RBI reporting will be done by HDFC Bank.
A NRI is required to make bill to payments. No adjustments of purchase against sale consideration can be done. Purchase and Sales will be dealt separately for payments / receipts.
If a purchase and sale transaction has not bee reported / not approved than RBI does not consider the transaction legitimate and the NRI will not be able to credit the sale proceeds to the NRE/NRO savings account. That transaction will have to be reversed in his account and losses if any will be charged to the client.
Objective guidance to help Investors to buy or sell:
Building and maintaining investors ideal portfolio demand objective, dependable information. Indiabullss Equity Analysis helps satisfy that need by rating stocks based on carefully selected, fact-based measures. And because they are not focused on investment banking, they don’s have the same conflicts of interest as traditional brokerage firms. This objective is only an important difference in out category A to E ratings are applied to over 540 + Indian head quartered stocks using a wide verity of investment criteria from a scales of A,B,C,D & E.
The Indiabullss Equity Analysis model attempts to gauge investor expectations, since stock prices tent to move in the same directions, as changes in investor expectations.
Stocks with low and potentially falling investor expectations tend to receive A or B ratings.
Stock with high and potentially falling investor expectations tent to receive D or E ratings.
Over the next 12 months, A-rated stocks have a return outlook of strongly outperforming the market while E-rated stocks have a return outlook of strongly under performing the market. Find out look of strongly under performing the market. Find out more about using Indiabullss Equity Analysis.
Special Considerations:
Indiabullss systematic approach is dependent on the accuracy of financial data provided by third parties. Indiabullss Equity Analysis may not capture more subjective, qualitative influences on return and risk. Such as management changes and pending lawsuits.
Indiabullss Equity Analysis also does not reflect the possible impact of late breaking news since the rating are updated daily. Thus, it is important to conducts additional research prior to making a trading decision.
Access to Indiabullss Equity Analysis is contingent to the payment of subscription amount. Indiabullss Equity analysis are generally updated daily. So, investors should review and consider any consider any recent market or company news before investing. Indiabullss Equity Analysis are generally information; they do not take into account investors individual cricumstances, financial solutions or needs, nor do they represent a personalized recommendation of stock of stocks to investors. Stocks can be volatile and entail risks. Investment in stocks is subjects to market risk. And they recommend toe read the SEBI prescribed Risk Disclosure Document before investing.
Four broad categories :
About Indiabullss Equity Analysis Component Grades: Indiabullss Equity Analysis four underlying components (fundamentals, valuation, Momentum and Risk) are provided to give investors further insight into why a stock has a particular Indiabullss Equity Rating. The component grades should not be used alone in making investment decisions. Always consider investor’s investment goals, portfolio diversification and tax situation and check recent news before in making an investment decision on an individual stock.
Fundamentals: The fundamentals grade underlying the Indiabullss Equity Analysis is based upon several earnings –quality measures derived form recent financial statement data. Stocks with strong fundamental attributes such as a track record of high net profit margin and return on equity tend to have better fundamentals grades.
Momentum: The momentum grade underlying the Indiabullss Equity Analysis measures the potential of the stock to keep performing at a stronger than market level in the near future. Indiabullss uses the opinions collected from a panel of analysts to get to a momentum rating for a company.
Risk: The Risk grade underlying the Indiabullss Equity Analysis is based upon several drivers measures of investment risk. Larger stocks with good risk related attributes (such as low stock price volatility, low debt-equity ratio, high stock liquidity etc) tend to have better risk grades.
Indiabullss Equity Analysis Experience the difference:
Their ratings are based on a disciplined, objective approach that is unique to Indiabullss. The ratings are different because they:
Are based on facts, not hype, and are not focused on investment banking or equity underwriting conflicts.
Rely on measures found by Indiabullss researchers to be correlated with stock performance.
Evaluate a large number of stocks and kept current with daily updates.
Indiabullss Equity Analysis Meaning and Distribution:
Indiabullss Equity Rating are assigned to over 540 + of the most widely held stocks using a scale of ‘A’, ‘B’, ‘C’, ‘D’ and ‘E’. The most widely held stocks using a included to assist investors in using Indiabullss Equity Ratings as one component of their own research to evaluate stocks and investment opportunities. Indiabullss Rate Stock ‘A’ rated stock are expected to outperform and ‘E’ rated stock are expected to under perform the market over the next few months. The Indiabullss Equity Rating is based upon a model that evaluates each stock on the basis of a wide variety of investment criteria from three board categories : Fundamentals, Valuation and Risk. The model attempts to gauge investor expectations. Stocks with low and potentially improving investor expectations tend to receive the best Indiabullss Ratings (‘A’ or ‘B’ ratings) while stocks with high and potentially fallings investor expectations tend to receive the worst Indiabullss Equity Ratings (‘D’ or ‘E’ ratings).
General
Indiabullss Equity Distributing of Rating Return outlook
Buy / Hold / Sell
| Rating | | | Guidance* |
| A | Top 10% of stocks rated | Strongly | Buy |
| | | Out perform | |
| B | Next 20% | Out perform | Hold |
| C | Next 40% | Market Perform | Hold |
| D | Next 20% | Under Perform | Sell |
| E | Bottom 10% of Stocks | Strongly | |
| | Rated | Under Perform | Sell |
The general buy/hold/sell guidance is relative to other rated equities only. Before considering whether to take any action, an investor should consider whether equities generally are performing well in comparison to other asset classes and whether other equities in the same sector or category with the same of better.
(Strongly outperform): If an investor is looking to add a stock to his her portfolio, ‘A’ rated stocks may be the best candidates for consideration.
(Out perform): An investor looking to add a stock to his or her portfolio might also consider a ‘B’ rated stock, though preference should be given to ‘A’ rated stocks.
(Market perfroms): An investor holding ‘D’ rated stock should consider whether it is appropriate to continue to hold that stock in his of her portfolio. An investor would not usually consider a ‘D’ rated for purchase.
(Strongly underperforms): An investor holding an ‘E’ rated stock should consider whether it is appropriate to continue to hold that stock in his or her portfolio. An investor would not usually consider a ‘D’ rated for purchase.
(Strong underperforms): An investor holding an ‘E’ rated stock should consider whether it is appropriate to eliminate that stock form his or her portfolio.
An investor would not usually consider an ‘E’ rated stock for purchasse.
Depository Services:
Indiabullss depository participant with the National Securities Depository limited and Central Depository Services (
Schedule of Cheques:
NSDL
CDSL
Depository Services:
Photograph (s) of Holders
Copy of any of the following identity proof
Passport
Driving License
Voters ID
Proof of Bank Account in the form of copy of cheque duely signed by the account holder.
Copy of Address Proof
Schedule of charges (CDSL) DP Id:
[W.e.f.01 February, 2005]
| Charge Head | Charges Account with POA | Account without POA |
| Stamp Paper Charges | Rs. 200/- | Rs. 100/- |
| AMC | Nill | Rs. 250/- |
| Custody charges | Nill | Nill |
| Transaction charges Buy Market of market Transfers | Nill | Nill |
| Transaction charges Sell Market of market Transfers | Rs. 17/- Per Transaction | Rs. 17/- Per Transaction |
| Failed Inst. | Nil | Rs. 20/- Per instruction |
| Pledge Creation / Confirmation / closure / Invocation | Rs. 25/- Per Transaction | Rs. 25/- Per Transaction |
| DMAT | Rs. 1 per certificate (max Rs. 250) + Rs. 25 Courier | Rs. 2 per Certificate (max Rs.250) + Rs.25 courier |
| DMAT Rejections | Rs. 20 per rejection + Rs. 25 Courier charges | Rs. 2 per Certificate (max Rs.250) + Rs.25 courier |
| Re’ mat charges | Rs.15 request of 0.02% whichever is higher | Rs. 2 request or 0.02% whichever is higher |
| Delivery instruction Book | Nil | Rs. 10/- |
| Fax Indemnity (Optional) | N.A | Actual |
Note:
In case of delays in the payment of charges, the Demat account will be frozen for all operations till such time all dues are cleared subject 30 days notice from the payment due date.
All instructions for transfer must be received in physical form the clients up to 4: PM of “T+1 for pay in the securities. Late instructions would be accepted at the account holder’s sole risk and responsibility.
Charges are subject to revision at the company’s sole discretion and as per revisions in CSDL chares and are subject to 30 days notice from the date of application.
All payments to be made in the name of “Indiabullss Securities Ltd.” Via a cheque / DD payable at the local branch where the account it opened. Out-station cheques will not be accepted.
Out of pocket expenses incurred on the dispatch of securities for Dematerialization and communication charges incurred on out -station calls / faxes made specifically on request on the client will be charges on actuals.
Any advance payment over and above the normal amount due can also be made. Any such higher amount paid than the minimum amount payable at the time of account paid than the minimum amount payable at the time of account opening shall be adjusted against the bills raised from time to time.
Charges on Non – payment of Dues:
| Penalty and interest charges | A penalty of 2% pre month on the value out standing on the bill after one month from the due date. |
| Non payment of bill after | The depository services for from the due date 30 days of payment the account will be temporarily withdrawn. The renewal charges for resuming the depository operations will be Rs. 100 per account. |
Depository Participants:
A depository can be compared to a bank. A depository holds Securities (like shares, debentures, bonds, Government Securities, unit’s etc.,) of investors in electronic form. Besides holding securities, a depository also provides services related to transactions in securities.
Service of a Participants:
A depository interfaces with the investors through its agents called Depository Participants (DPs) if an investor wants to avail the services offered by the depository, the investor has to open an account with a DP. This is similar to opening and account with any branch of a bank in order to utilize the Bank’s services. Suggestions on how to select a DP are given in section IV.
The benefits of participation in a depository are:
Immediate transfer of securities
No stamp duty on transfer of securities
Elimination of risks associated with physical certificates such as bad delivery, fake securities etc,.
Reduction in paperwork involved in transfer of securities.
Reduction in transaction cost
Nomination Facility
Change in address recorded with DP gets registered electronically with all companies in which investor holders securities eliminating the need to correspond with each of them separately.
DP eliminating correspondence with companies does transmission of securities.
Convenient method of consolidation of folios / accounts;
NSDL provides its services to investors through its agents called Depository Participants (DP’s). these agents are appointed by NSDL with the approval of SEBI. According to SEBI. According to SEBI regulations, amongst others, three categories of entities i.e. Banks, Financial institution and members of stock exchanges (Brokers) registered with SEBI can become DP’s.
Necessary document for opening of DP account:
All investors have to submit following proof of identity and proof of address along with the prescribed account opening form.
Proof of Identity: Investors signature and photograph must be authenticated by an existing de-mat account holder with the same DP or by their bank. Alternatively, investor can submit a copy of passport, Voters Id Card, and Driving License or PAN card with photograph.
Proof of Address : Investors can submit a copy of passport, Voters Id bank passbook as proof or address.
Passport - size photograph
Bank account details:
It is for application of the client interest. Client bank account number will be mentioned on the interest or dividend warrants, clients are entitled to, so that such warrant cannot be enchased by any one else. Further, a DP cannot open the account if bank account number is not given.
Transmission:
Transmission is the progress by which securities of a deceased account holder are transferred to the amount of the surviving joint holder (s) / nominee / legal heirs of the deceased account holder, process of transmission in case of dematerialized holding is more convenient as the transmission formalities for all securities held in a de-mat account can be completed by submitting documents to the DP whereas in case of physical securities the surviving joint holder(s) / nominee / legal heirs has to correspond independently with each company in which shares are held.
Procedure for transmission:
In case of the death of the sole holder, for the purpose of transmission of securities, the nominee has to submit a duly filled – in transmission of securities; the nominee has to submit a duly filed – in transmission form, notarized copy of death certificate and an affidavit in the prescribed format to the DP. After verifying these documents and it found in order, the DP will transmit the securities to the account of the nominee.
In case the sole account holder dose not make nomination, the securities would be transmitted to the account of legal heir (s), as may be determined by an order of the competent court. However in case where the value of securities to be transmitted is less than Rs. 1,00,000/- the DP may process the request based on submission of necessary letter of indemnity, surety, affidavits and NOC documents.
Procedure for transmission in case of Joint Accounts:
In the event of death on one of the joint holders the securities will be transmitted to the surviving holder(s) on submission of Transmission form and notarized copy of the death certificate of the deceased joint holder to the DP. For transmission of securities, the account of the surviving holder(s) must be in the same sequence in which the names appear in the joint account to be closed.
Dematerialization:
An agency called the National Securities Depository Limited (NSDL) was set up in November 1996, to ease the process of Dematerialization. Trading in dematerialized shares was started in December 1996, on the National stock Exchange (NSE) and in December 1997, on the Bombay Stock Exchange (BSE).
Dematerialization is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited in the investor’s account with its DP. In order to dematerialize certificates; an investor will have to first open an account with the a DP and then an account with a DP and then request for the dematerialization certificates; an investors will have to first open an account with a DP and then request for the dematerialization certificates; an investors will have to first open an account with a DP and the request for the dematerialization of certificates by filing up dematerialization request from (DRF), which is available with the DP and submitting the same along with the physical certificates. The investor has to ensure that before the certificate are handed over to the DP for de-mat they are, defaced by marking “Surrender for Dematerialization” on the face to the certificate.
To trade in practically any share today investor need to open a de-mat account most banks offer this facility; these banks are called Depository participants. Mote than one Depository account can open in the same name with single.
Depository participants Multiple Depository Participants. There is no minimum balance required in Depository account. The account process is also fairly simple. The Depository participants will provide a client identification number.
Advantages of D-mat:
There is no risk of delivery with de-mat shares because the ownership status is clearly captured in the depositors computers. This saves investors from the extra time and cost of dealing with bad shares.
As the risk associated with bad delivery in reduced, quite a few brokerage firms have brought down their brokerage to as low as 0.1%
If investors buy a share in de-mat form, it is automatically registered in their name, so they have 0.5 percent in stamp duty which they otherwise have to pay to get physical shares transferred in their name
Investor avoid the cost of courier, the need for further following – up with their broker for shares returned for company objection.
Incase the certificate are lost in transit or when the share certificates become mutilated or misplaced, the de-mat system eliminates the need indemnity bond, newspapers, advertisements etc.,
Investors can receive their bonuses and away with the risk of loss in transit.
Investors can also expect a lower interest charges for loans taken against de-mat share as compared to the interest for loans against physical shares.
Time-horizon for Dematerialization :
Dematerializations will normally take about 30 days.
Account Maintenance:
To avail of the various services offered by NSDL an investor / a broker / an Approved intermediary (for lending & borrowing) has to open a NSDL Depository account.
Depository accounts are of three types:
Beneficiary account: An investor or a broker who want to hold shares in dematerialization (de-mat) from and undertake scrip less trading Must have a depository account called beneficiary account with a DP Must have choice.
Clearing member account: Member brokers of those stock Exchanges which have established electronic connectivity with NSDL need to open a clearing member account, with a DP of his choice, to Clear and settle traders in the de-mat form. This account is meant only to transfer shares to and receive shares form the clearing corporation house and hence, the member broker does not have any ownership (beneficiary) rights over the shares held in such an account.
Intermediary account: Any person desiring to act as an approved ‘intermediary’ for stock lending and borrowing needs to open intermediary account with any DP of his choice. An intermediary account may be opened with the DP only after the intermediary has obtained registration from the securities Exchange Board of India and with the prior approval of NSDL.
Opening more than one account with the same DP:
Client opens more than one account with the same DP. There is no restriction on the number of accounts client can open with a DP.
Restrictions on number DP account:
There are no restriction on the number of DP’s investor can open Accounts with just as account holder can have savings or current Accounts with more than one DP.
Minimum balance of securities in a DP account:
The depository has not prescribed any minimum balance. Clients can have zero balance in their account.
The de-mat account must be opened in the same ownership Pattern in which the securities are held in the physical form e.g., if one share certificate is in investor’s individual name and another certificate is jointly held in his and his wife’s name, two different accounts would have to be opened. In this case investors may open only one account with Deferent order of names for dematerialization in the same account. Investors will fill-help investors to effective change in the order of names as well as dematerialize the securities.
Changing the address of the account holder:
In case client address is to be changed, client only needs to inform the new address to DP(s). When DP enters the new address in the Depository computer system, it will be automatically conveyed to all companies in which you hold shares.
Basic services:
In case client address is to be changed, client only needs to inform the new address to DP(s). when DP enters the new address in the Depository computer system, it will be automatically conveyed to all Companies in which you hold shares.
Basic Services:
Various Services offered by DPs with respect to these accounts are as follows:
Freezing of Accounts : Account freezing means suspending any further transaction form the depository account till the account is De-frozen. A depository account maintained with a DP can be frozen if the DP receives a written instruction in prescribed form he Client. A frozen on re-activated if the client written instruction in prescribed form to the DP.
Nomination: a client can make a nomination of his account in favour of any person by filing the nomination from with his DP. Such Nomination is considered is to be conclusive evidence of the account for which the nomination is made.
Change is Address : The client can change his address by submitting the changes in writing to the DP. The changes conveyed to the DP will be automatically communicated to the companies in which he is holding shares in dematerialized form.
Standing instruction Facility : DP registers the transfer of securities to or from a beneficial owner’s account only on receipts of instructions transfer securities from their account & receipt instructions to get credit into their account. However, for ease of operation, a facility of standing instruction is provided to the clients for receiving securities to the credit of their accounts without any further instruction from them.
Consolidation of Accounts: Some clients could have opened multiple accounts to dematerialize their shares held in multiple combinations & sequences of names. However, they may not need so many accounts after they have dematerialized their shares and may want to bring all their shareholdings onto one or fewer accounts. Using off-market account transfer instruction such consolidation can be done.
Closure of Account: A client can close a depository account by giving an application in the prescribed form.
Speed-E Facility (internet Facility): Client can submit delivery instruction electronically, on the SPEED-E web site https://www.speed-e.nsdl.com, after his DP has authorized him to operate his account through the SPEED-E facility. Client can monitor the status of such delivery instructions to ensure that the instructions have been executed.
The benefit offered by SPEED-E to a De-mat account holder/Clearing member is the convenience of conducting De-mat account transactions using an Internet connection from any where at anytime eliminating paper work. Time and efforts for obtaining delivery instruction forms form your DP and submitting them to the DP every time investor sell securities is saved.
Trading / Settlement
Procedure for selling dematerialized securities is very simple. After client have sold the securities, client would instruct DP to debit his account with the number of securities sold and credit his broker’s clearing account. This delivery instruction has to be given to his DP using the delivery instruction slips given to client by his DP at the time of opening the account. Procedure for selling securities is given here below.
Client sell securities in any of the stock exchanges lined to NSDL through a broker;
Client give instruction to his DP to debit account and credit the broker’s [Clearing member pool] account.
Before the pay-in day, clients broker gives instruction to its DP for delivery to clearing corporation .
Client broker received payment from the stock the sale of securities.
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