Section 6 of The Depositories Act, 1996 — Surrender of certificate of security
Bare section text
Official Legislative Text
- (1)Any person who has entered into an agreement under section 5 shall surrender the certificate of security, for which he seeks to avail the services of a depository, to the issuer in such manner as may be specified by the regulations.
- (2)The issuer, on receipt of certificate of security under sub-section (1), shall cancel the certificate of security and substitute in its records the name of the depository as a registered owner in respect of that security and inform the depository accordingly.
- (3)A depository shall, on receipt of information under sub-section (2), enter the name of the person referred to in sub-section (1) in its records, as the beneficial owner.
Educational Study Layer
Summary
- This part of the law explains how to convert paper share certificates into electronic ones.
- A person who wants to use depository services must first have a valid agreement in place.
- They then give their paper certificates back to the company that issued them.
- The company must then cancel those paper certificates according to set rules.
- The company updates its records to show the depository is now the registered owner for those shares.
- Finally, the depository records that person as the beneficial owner in its own electronic system.
Practical examples
FAQ
1. Who do I give my paper shares to under Section 6 of the Depositories Act, 1996?
You must surrender your physical certificates to the issuer, which is the company that originally gave them to you, as required by Section 6 of the 1996 Act.
2. Does the company keep my physical certificates under Section 6 of the Depositories Act, 1996?
No, under Section 6 of the 1996 Act, the issuer must cancel the physical certificates once they receive them.
3. Who becomes the registered owner in the company's books under Section 6 of the Depositories Act, 1996?
The company enters the name of the depository as the registered owner in its records for those securities under Section 6 of the 1996 Act.
Practice Quiz
Q1.Under Section 6 of the Depositories Act, 1996, what is the first step for a person who wants to use a depository for their existing physical shares?
Q2.According to Section 6 of the Depositories Act, 1996, what must the issuer do immediately after receiving the physical certificates?
Q3.Under Section 6 of the Depositories Act, 1996, how is the person who surrendered the certificates listed in the depository's records?
Q4.If a person has already followed Section 8 of the Depositories Act, 1996 to hold new shares electronically, do they still need to use Section 6 for those specific shares?