Central Depository Service
In the mentioned answer, there is a term Depository Participant (DP) what does it mean?
DP is the agent of Central Depository Company; in case of Nepal, members of CDS and Clearing Limited. To be a DP one need to have a registration certificate from the Security Board of Nepal and the membership license from CDSC. Mainly financial institution like that of Bank, Stock Broker, Registrar and Transfer Agent, custodian or such other entity that are prescribed by the SEBON are legible for DP.
What does the (DP) Depository Participant do?
A depository takes the ownership guarantee of the shareholders by holding those securities and other market instruments which are listed in the secondary market, distributed or allotted and can be deposited into the electronic form. Additionally, the depository maintains the record in the account of the investors. To obtain all this services one need to open a de-mat account.
Qualification of Depository Member: The Eligibility Criteria for a Depository Participant shall be as follows:-
(a) Shall be a Bank or Financial Institution, Stock Broker, Registrar and Transfer Agent, custodian or such other entity as may be prescribed by the Board from time to time.
(b) Shall have a minimum net worth of rupees ten million
(c) Have not been blacklisted by Credit Information Bureau,
Power, functions and duties of Depository Participant:
The power, functions and duties of the Depository Member shall be as follows:
(a) To open an account for securities only upon signing of agreement with the Beneficial Owner,
(b) To carry out the Beneficial Owner identification process as may be specified by the Board / Central Depository Company before opening the account of the Beneficial Owner,
(c) To maintain separate accounts in the name of each Beneficial Owner and the securities of each Beneficial Owner shall be segregated and shall not be mixed up with the securities of other Beneficial Owners,
(d) To de-mat the securities deposited by the Beneficial Owner into electronic form and to convert de-mated securities in physical certificate as per the instructions of the Beneficial Owner by sending them to the issuers / Registrar and Transfer Agents within seven days of receipt of instruction from the Beneficial Owner,
(e) To keep record of securities kept in electronic form,
(f) To effect a transfer of securities from the Beneficial Owner’s account only on receipt of written/ electronic instructions of the Beneficial Owner or his assigns.
(g) To maintain high standards of integrity in all its dealings with its clients and other intermediaries, in the conduct of its business.
(h) To provide adequate freedom and powers of its compliance officer for the effective discharge of its duties
(i) To issue a statement of de-mat account to the Beneficial Owner at a such periodicity as may be prescribed by the Central Depository Company.
(j) To comply with the instructions, guidelines and advice provided by Central Depository company / Board.
Functions not to be carried out by the Depository Participant:
The Depository Participant shall not perform or cause to perform the functions as follows:
(a) To make any exaggerated statement to the Beneficial Owners/ clients either about its qualification or capability to render certain services,
(b) To make any untrue statement or suppress any material fact in any documents, reports or information furnished to the Board or Central Depository Company,
(c) To assign or delegate to any other person its functions as a depository participant, without the prior approval of the Central Depository Company.
(d) To indulge in any unfair competition, which is likely to harm the interests of other Participants or Beneficial Owners
(e) Not to keep the information relating to account of Depository Participants confidential except otherwise prescribed by the law.
(f) To render investment advice about any securities to its clients
