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Account Closure :
A Client wanting to close a security account held with any Depository Participant shall make an application, in the format specified to that effect. The client may close its account if no balances are standing to its credit in the account. In case any balance exist, then the account may be closed by rematerialisation of all its existing balances in its account and / or, by transferring its security balances to its other account held either with the same Participant or with a different Participant. The Depository Participant ensures that all pending transactions as well as suspended accounts have been adjusted before closing such account. After ensuring that there are no balances in the Client account, the Participant executes the request for closure of the Client’s account.

Account Freezing: The Depository Participant may freeze the account of a client maintained with him on written instructions received by the Participant in that regard from the client concerned in the form specified under the Business Rules.

Account Opening : Any person willing to avail the services offered by a Depository shall open an account with a Depository Participant.

Account Payee: Also " account payee only ". Words written on the face of a cheque between two parallel diagonal lines. The purpose is to ensure that the cheque may only be paid into an account in the name of the payee, that is the person to whom the cheque is made payable. This means that the payee cannot sign it in favour of another person.
( General Finance ). The charges for using our Depository services may be paid by an Account Payee cheque.

Amend : Is to alter or change by adding, subtracting or substituting. The Depositories Act, NSDL Bye laws and Business Rules may be amended from time to time.

Annual Report : The Annual Report to the shareholders is the principle document used by most public companies to disclose corporate information to the shareholders. It is usually a company report including an opening letter from the CEO, financial data, market segment information, new product plans, subsidiary activities and research and development activities on future programs.

Articles of Association : The document, which lists the regulations that govern the running of a company. Articles of Association covers things like :

Main business and purposes of the company
Shareholder’s voting rights
Directors duties
General working and management practices.
They are registered with the memorandum of association when the company is formed.

Attest: To confirm (usually in writing) that a document is genuine. To bear witness that someone actually signed a document, such as a will.

Affidavit : Is any written document in which the signer swears under oath before a notary public or someone authorised to take oaths that the statements in the document are true.

Affix : To sign or seal, as affix a signature or a seal.


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Beneficiary :

A person who benefits from a trust set up on his / her behalf.
Anyone who benefits from the proceeds of a will
A person who benefits from a contractual or fiduciary relationship.
Beneficial Owner : The true owner of a security or property which may be registered in another name. Means a person whose name appears as such on the records of the Depository.

Buy–Back of shares : The purchase by a listed company of its own shares either in the open market or by tender offers.

Companies do it for the following reason :

To increase the share price
To rationalise the capital structure – the company believes it can sustain a higher debt-equity ratio
To substitute the dividend payouts with share repurchases ( because capital gains may be taxed at lower rate than dividend income )
To prevent the dilution of earnings caused, for example, by the issue of new shares to meet the exercise of stock options grants.
To deploy excess cash flow and return it to shareholders.
BSE : Bombay Stock exchange is one of the oldest stock exchanges in Asia with over 6,000 stocks listed.

Beneficiary Account : An investor or a broker who wants to hold shares in dematerialised ( demat ) form and undertake scripless trading must have a depository account called beneficiary account with Depository Participant of his choice.

Bye-Laws : The written rules for conduct of a corporation, association, partnership or any organisation. In exercise of the rights conferred by the Depository’s Act NSDL has framed its Bye – laws. These Bye – laws defines the scope of functioning of NSDL and its business partners.

Business Partner : A Depository like NSDL carries out its activities through various functionaries called Business Partners who include Depository participants, Issuing corporates and their Registrars and Transfer Agents, Clearing Corporations / Clearing Houses etc.

Business Rules : In exercise of the powers conferred by the Depositories Act, NSDL has framed its Business Rules. These Business Rules outline the operational procedures to be followed by NSDL and its Business Partners.


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Capital Structure :
The components which form a company’s capital : ordinary shares, preference shares, debentures and loan stock.

Cash : Money, in the form of notes and coins, which constitutes payment for goods at the time of purchase.

CDSL : Central Depository Securities Ltd is an organisation promoted by the stock exchange Mumbai, ( BSE ) in association with Bank of India, Bank of Baroda, State Bank of India and HDFC Bank to provide electronic depository facilities for securities traded in the equity and the debt market.CDSL is the second depository in India.

Compliance : The act of complying with rules and regulations. In financial markets, compliance with the rules of SEBI, NSDL and various Acts is an important issue for banks, brokers and fund managers. All of these should have dedicated compliance staff whose job is to make sure that the procedures used in the company’s operations follow the prescribed rules. Every depository Participant must appoint one Compliance Officer whose duty is to ensure that all rules and regulations are complied with

Client Id : Whenever any client opens an account with a Depository Participant he /she is provided with an account number which is known as the beneficiary account number or the Client Id. The combination of the Client Id and the Depository Participant Id is unique.

CM-Pool Account : Member brokers of those stock exchanges which have established electronic connectivity with NSDL need to open a clearing member account, also known as CM-Pool Account with a Depository Participant of his choice, to clear and settle trades in the demat form.This account is meant only to transfer shares to and receive shares from the clearing corporation / house and hence, the member broker does not have any ownership ( beneficiary ) rights over the shares held in such an account.

Corporate Action : Corporate actions are benefits given by a company to its investors.It deals with :

Cash disbursement like dividend and interest on securities.
Capital increases via bonus, rights, calls, conversions etc, capital reorganisations, merger etc.
The Depositories ( NSDL and CDSL ) along with their network of Participants facilitates distribution of corporate benefits. The Issuer announces a record date / book closure period for the purpose of entitlement of corporate benefits. In case of monetary or cash benefits, the depository gives the beneficiary ownership details to the Issuer / R & T Agent. The Issuer / R & T Agent then carries out the necessary processing and the distribution of such benefits which shall be outside the Depository system.

In case of non-monetary benefits, the Depositories ( NSDL and CDSL ) gives the beneficial ownership details to the Issuer / R & T Agent. The Issuer / R & T Agent then carries out the necessary processing and upload the beneficiary ownership details to the Depositories ( NSDL and CDSL ). The Depositories ( NSDL and CDSL ) then credits the beneficiary owner’s accounts by downloading the data to the respective Depository Participants.

Company Law Board : "Company Law Board" means the Board of Company Law Administration constituted under section prescribed section of the Companies Act, 1956.

Complainant: A person or entity who begins a lawsuit by filing a complaint and is usually called the plaintiff, or in some cases the petitioner.


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Debit : An outflow of funds or securities with a bank or Depository Participant.For Example : When a person issues a cheque or delivery instruction, his / her account will subsequently be debited with the amount of cash or securities mentioned on the cheque or delivery instruction slip.

Deface : The client ( registered owner ) shall submit a request to the DP in the DRF for dematerialisation along with the certificates of securities to be dematerialised. Before submission, the client has to deface or cancel the certificates by writing " SURRENDERED FOR DEMATERIALISATION.

Defreezing of an account : The client can request his depository participant to release the suspension order and defreeze the account for regular operations. The Depostiory participant shall defreeze the account only after receipt of the application for defreezing signed by all the account holders.

Delivery : The transfer of title of a security such as stock from buyer to seller.

Delivery Instructions by client : In order to transfer securities from his account to another a beneficial account owner must give an instruction to his / her Depository Participant.A beneficial account owner must give instruction to his / her DP to transfer

Dematerialisation : Is the process by which a client can get physical certificates converted into electronic balances maintained in its account with the Depository Participant. Securities held in dematerialised form are fungible i.e. they do not bear any distinguishing features.

DRF : In order to dematerialise his physical shares the client ( registered owner ) submits a request to the Depository Participant in the Dematerialisation Request Form ( DRF ) along with the certificates of securities to be dematerialised. The DRF should be submitted in triplicate. One copy of the DRF is sent by the Depository Participant to the respective company or Registrar, one copy is retained by the Depository Participant for its records and the third copy is returned back to the clients.

DRN : When the securities are found in order with the details of the request as mentioned in the form, the depository participant enters the details in the DPM ( Depository participant Module, provided by NSDL to the DP ) a Dematerialisation Request Number ( DRN ) is generated by the system.The DRN so generated is entered in the space provided for the purpose in the Dematerialisation Request Form. The request is then released to DM ( Depository Module – Depository’s software system ).The DM forwards the requests to the Issuer / R & T agent electronically. Once the DRN is confirmed or accepted by the Issuer / R & T agent the DM electronically authorise the creation of appropriate credit balances in the client’s account. The DPM shall credit the client’s account automatically.

Demerger : A corporate restructuring in which one part of a company is spun off as a new company. Like their opposite – mergers – demergers tend to go in and out of fashion. When share prices are rising, companies like to use their shares to acquire other companies, so their advisers encourage merger activity. In a market of falling prices, mergers and IPOs are less popular, and demerger possibilities are looked at.

Depository : A Depository is an organisation where the securities of an investor are held in electronic form, at the request of the investor through the medium of a Depository Participant.It is a company formed and registered under the Companies Act, 1956 and which has been granted a certificate of registration under the relevant sections of the Securities and exchange Board of India Act, 1992.
A depository can be compared to a bank. If an investor wants to utilise the services offered by a Depository, he has to open an account with the depository through its Depository Participant. This is similar to opening an account with any of the branches of a bank in order to utilise the services of that bank.

Depository Participant : A Depository Participant ( DP ) is an agent of the Depository and is authorised to offer depository services to investors. According to SEBI guidelines, financial institutions, banks, custodians, stockbrokers etc can become Depository Participants in a Depository.

Depository System : The depository system is similar to the Banking system with the exception that banks handle funds whereas a depository handles securities of the investors. A depository can therefore be conceived of as a " Bank " for securities. An investor wishing to utilise the services offered by a depository, has to open an account with the depository through the Depository Participant. This is very similar to opening an account with any of the branches of a bank in order to utilise the services of that bank.

Depreciation : The charge in a company’s accounts which reflects the reduction in value of an asset over time as its useable life is exhausted.
Depreciation is charged before calculation of profit, on the grounds that the use of capital assets is one of the costs of being in business and one of the contributors to profit.
Depreciation has no effect on cash flow. It is just an accounting procedure.

Dividend : Is a portion of the profit, usually based on the number of shares of stock in a corporation and the rate of distribution approved by the board of directors or management, that is paid to shareholders for each share they own. Dividends may also be paid in shares of stock, known as a stock dividend.

Electronic Public Offering ( EPO ) : An initial public offering, or new issue of shares, in which the process of applying for shares is handled electronically ( via websites ).

Eligible Securities : Means securities which are admitted on the Depository.

Equity : The amount which shareholders own in a publicly quoted company. Equity is the risk-bearing part of the company’s capital and contrasts with debt capital which is usually secured in some way and which has priority over shareholders if the company becomes insolvent and its assets are distributed.

Face Value : The value of a bond, note or other security as printed on the document. Throughout the life of a security, its market price will fluctuate but at maturity the face value amount is payable.

Fee : A charge for services.

Financial Institution : An institution which accepts funds from the public and reinvests in bank deposits, bonds and stocks etc. These include banks and insurance companies.

Freezing of an account : Any client can give instructions, in the prescribed form, to his Depository Participant to freeze his account either for debit or for all operations. Only after receipt of the application for freezing the account signed by all the account holders the Depository Participant shall freeze the account till further notice received from the client in this regard.

Fungible : Dematerialised shares do not have any distinctive numbers or certificate numbers. These shares are fungible – which means that 100 shares of a security are the same as any other 100 shares of that security.


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Guardian: A person who has been appointed by a judge to take care of a minor child or incompetent adult (both called ward) personally and / or manage that person’s affairs. To become a guardian of a child either the party intending to be the guardian or another family member, a close friend or a local official responsible for a minor’s welfare will petition the court to appoint the guardian. In the case of a minor, the guardianship remains under court supervision until the child reaches majority at 18.


Heir :
One who acquires property upon the death of another, based on the rules of descent and distribution, namely, being the child, descendent or other closest relative of the dear departed.

Holder : A general term for anyone in possession of property, but usually referring to anyone holding a promissory note, check, bond, share, either handed to the holder ( delivery ) or signed over by endorsement, for which he / she / it is entitled to receive payment as stated in the document.

Holding : Any real property to which one has a title.

Holding Company : A company, usually a corporation, which holds the stock of other corporations, thereby often controlling the management and policies of all of them.

Hypothecation : The pledging of securities as collateral.A client having a beneficiary account with a DP can hypothecate securities in electronic form against loan / credit facilities extended by a pledge, who has a beneficiary account with a DP. The creation of pledge / hypothecation will be initiated by the pledgor through its DP and the pledgee will instruct its DP to confirm the creation of the pledge. The pledge / hypothecation so created can either be closed on repayment of loan or invoked on default. After the pledgor repays the loan to the pledgee the pledgor will initiate the closure of pledge / hypothecation. In case of default by the pledgor in repaying the loan to the pledgee, the pledgee may initiate invocation of pledge / hypothecation, after taking such steps as may be necessary as per the terms of the underlying agreement with the pledgor and the Bye Laws and Business Rules of NSDL and SEBI Regulations. In case of hypothecation, the pledgor will instruct its DP to confirm the invocation of the hypothecation.


Indemnity :
An agreement in which one person is answerable for compensating the losses of another. Indemnities are common features of many commercial contracts.

Initial Public Offering ( IPO ) : The first offering of a company’s shares to the public. The shares offered may be existing ones held privately, or the company may issue new shares to the public.

Inter Depository Instructions : Inter-Depository Transfer means transfer of securities which are admitted for dematerialisation on both the depositories from an account held in one depository to an account held in the other depository.

Interim Dividend : A dividend which is declared and paid before annual earnings have been determined.

Intermediary Account : Any person desiring to act as an approved intermediary needs to open an intermediary account with any Depository Participant of his choice. An intermediary account may be opened with the Depository Participant only after the intermediary has obtained registration from Securities and Exchange Board of India and with the prior approval of NSDL. This account is meant only to deposit the securities received from the lender and lend them to the borrower. The intermediary does not have any ownership ( beneficiary ) rights over the shares held in such an account.

ISIN : International Securities Identification Number ( ISIN ) is a code that uniquely identifies a specific securities issue.

Issue : The number of shares of a company on sale to the public at a given time.

Issue Price : The price at which a company’s shares are offered to the market for the first time. When they begin to be traded, the market price may be above or below the issue price.

Issuer : Means any person making an issue of securities;

Issued Share Capital : The amount of authorised share capital that shareholders have actually subscribed to a company for share ownership.


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Joint Account :
A bank or a security account in the names of two ( or more ) people.All the account holders must give their signature to operate a security account held jointly.

Joint and several Liability : An undertaking by a group of two or more people to be responsible, either individually or jointly, for any liability which may exist after any member or members have failed to meet their obligations.

Joint Liability : The legal liability of two or more people for claims against or debts incurred by them joint liability and are indebted to another party, they may only be sued as a group and not individually.

Joint Ownership : Equal ownership of property by two or more people.


Know Your Client :
The ethical principle relating to broker dealers, Depository and other financial advisers that all reasonable steps have been taken to gather sufficient relevant financial and personal information regarding the customer and that subsequent investment recommendations will take full account of that information.


Liability :
The legal obligation to pay a debt. Recorded on the balance sheet, current liabilities are debts payable within one year while long-term liabilities are debts payable over a longer period.

Lien : When a creditor or bank has the right to sell mortgaged or collateral property of those who fail to meet the obligations of their loan contract.

Limited Company : A company whose shareholder’s maximum liability is limited to their share capital in the event of winding up.

Listed Company : A company that has satisfied the requirements for its shares to be listed on a recognised stock exchange like NSE, BSE, CSE etc

Listed Security : Securities such as shares, stocks, bonds which are quoted on a recognised stock exchange such as National Stock Exchange, Calcutta Stock exchange etc.

Listing : The process by which a company’s shares become tradable on a stock exchange. An unlisted company’s shares are tradable privately between the shareholders and the pricing of the shares is difficult to determine. A listed share on the other hand gets a daily price quotation, anybody can buy and sell the shares through brokers and market makes, and if the company wishes to raise new capital it has the option of issuing new shares.

Locked-in : A specified time period that an investor is locked into an investment. For example a period following a flotation when major shareholders agree not to sell their holdings. The objective is to give investors confidence that the management and key shareholders do not intend to cash in their stock the moment the market opens.


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Mandate :
An official order from an authority to implement an action.

Margin : The difference between the cost price of a product and the selling price. In trading, the amount deposited with a broker in order to obtain credit for purchase of shares or futures. The margin is the price of a security less credit advanced by the broker.

Market Capitalisation : The market value of a quoted company which is calculated by multiplying its current share price by number of shares in issue.

Market Trade : Trades which are settled through the Clearing Corporation / Clearing House of an exchange are classified as " Market Trades ".

For further details on Trade and Settlement, please click here

Market Value : In relation to a listed security, the rate as derived from the Daily Official list as on a relevant date.

Memorandum of association : Those details which a company, when formed, must submit to the Registrar of Companies together with its Articles of Association. They include company name, registered office, objectives, authorised share capital and a statement of limited liability.

Merchant Banker : A bank which offers a range of services to corporate clients including advice on :
Investment banking, international banking, mergers and acquisitions, flotations, new issues and capital restructuring.

Merger : The process by which two companies become one. If the companies are listed, the merger may be by agreement, or hostile. A hostile bid is one in which the directors of the target company reject the approach, but it is still possible for the predator company to obtain control if enough of the target’s shareholders accept its offer.


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NASDAQ :
The first electronic stock market, which uses computers and telecommunications to trade shares rather than a traditional trading floor. NASDAQ is owned and operated by the National Association of Securities Dealers ( NASD ). It is the fastest growing major stock market in the world with well over 5,000 companies listed.

Negotiable Instruments : An instrument, such as a cheque or a bill of exchange, which can be transferred by one person to another by the first signing his name on the back of the instrument.

Nominee : A person or company nominated by another to hold shares on his behalf.

Nomination : Every holder of shares in, or holder of debentures of, a company may, at any time, nominate, in the prescribed manner, a person to whom his shares in, or debentures of the company shall vest in the event of his death.Where the shares in, or debentures of a company are held by more than one person jointly, the joint holders may together nominate, in the prescribed manner, a person to whom all the rights in the shares or debentures of the company shall vest in the event of death of all the joint holders.For any shares and debentures of the company, where a nomination is made in the prescribed manner, in the event of death of the shareholder/s the nominee shall be entitled to all rights in the shares or debentures.

NSDL : The National Securities Depository Limited is an organisation promoted by the Industrial Development Bank of India, the Unit Trust of India and the National Stock Exchange of India Limited to provide electronic depository facilities for securities traded in the equity and the debt market. NSDL commenced its operations in the year 1996 and is the first depository in India.

NSE : National Stock Exchange is one of the leading stock exchanges in India. The NSE has been set up by leading institutions to provide a modern, fully automated screen – based trading system with national reach.

NRI : As per the Foreign Exchange Management Act, 1999 ( FEMA ), an Indian citizen is considered as NRI when he / she stays abroad :
For employment
For Carrying on business or vocation outside India
Under circumstances indicating an intention of an uncertain duration of stay abroad.
The definition of NRI’s includes :
Persons posted in U.N. Organisations
Officials deputed abroad by Central / State Governments and Public Sector Undertakings on temporary assignments
Non – resident foreign citizens of Indian Origin for the purpose of certain facilities

For tax purposes, Income Tax Act, 1961 defines an NRI as " A person whose stay in India during a financial year ( April 1st to March 31st ) is less than 182 days either continuously or otherwise.

NAV : Net Asset Value in mutual value is the total value of the portfolio less liabilities. In corporate valuations, the book value of assets less liabilities.

NEST : NSDL is electronically linked to its Business Partners via a satellite link through Very Small Aperture Terminals ( VSATs ). The entire integrated system ( including the VSAT linkups and the software at NSDL and each Business Partner’s end ) has been named the " NEST " { National Electronic Settlement & Transfer } system.


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Obligation :
A legal duty to pay or do something.

Online Banking : The performing of banking activities via the internet.

Off Market Trade : Trades which are not settled through the Clearing Corporation / Clearing House of an exchange are classified as " Off Market Trades ". Negotiated trades which are not cleared and settled through the Clearing Corporation / Clearing House are off-market trades.

Overseas Corporate Bodies : Overseas Corporate Bodies ( OCBs ) include overseas companies, partnership firms, trusts, societies and other corporate bodies which are owned directly or indirectly, to the extent of at least 60 % by individuals of Indian nationality or origin resident outside India as also overseas trusts in which at least 60 % of the beneficial interest is irrevocably held by such persons.

Oversubscribed : A term referring to an offer for sale where applications for shares exceed the number of shares available. When this happens, the allocation of shares will depend on the rules set out in the company’s prospectus mostly on a prorata basis.


Paid–Up Capital :
Capital subscribed by shareholders for a company’s shares.

Par Value : The issued price of a security ( share, bond ). Par value is the same as " nominal value " and bears no relation to the market price. An ordinary share might have a par value of Rs 100, but its market value will be determined by supply and demand in the market place, not by its par value.

Pari Pasu : Ranking equally. For example, in a new issue of shares which carry equal rights with existing shares they are said to rank pari pasu.

Partly Paid Shares : The shareholders are usually asked to pay for their shares in two or three instalments. Until the final instalment is made the shares are only partly paid.

Payee : A person to whom a payment is made.

Payer : A person who makes a payment to a payee.

Persons of Indian Origin : A person is deemed to be of Indian origin if he at any time held an Indian passport or he or either of his parents or any of his grandparents was an Indian and a permanent resident in undivided India at any time.
A wife of citizen of Indian or of a person of Indian origin is also deemed to be of Indian origin even though she may be of non-Indian parentage. For the purpose of the facility of opening and maintenance of various types of bank accounts and making investments in shares and securities in India a foreign citizen ( not being a citizen of pakistan or Bangladesh ) is deemed to be a person of Indian origin if (1) he, at anytime, held an Indian passport, or ( 2 ) he, or either of his parents or any of his grandparents was a citizen of India by virtue of the constitution of India.
A spouse ( not being of citizen of Pakistan or Bangladesh ) of an Indian citizen or of a person of Indian origin is also treated as a person of Indian origin for the above purpose provided the bank accounts are opened or investments in shares and securities in India are made by such persons jointly with their NRI spouses only.

Petitioner : A person who signs and / or files a petition.

Pledge : To deposit personal property as security for a personal loan of money. If the loan is not repaid when due, the personal property pledged shall be forfeit to the lender. A client ( pledgor ) having a beneficiary account with a Depository Participant can pledge securities in electronic form against loan / credit facilities extended by a pledgee, who too has a beneficiary account with a Depository Participant.

Portfolio : A group of investments held by an institution or an individual.The process of choosing which investments go into a portfolio is known as portfolio management or asset allocation, and decisions are based on :
Whether the investment objective is income, growth or a balance of the two.

How much risk the investor is prepared to accept.
Based on the above the portfolio manager decides how to allocate funds between different classes of investment ( bonds, shares ), how to diversify between sectors, how much cash to hold and when to make changes in the composition of the portfolio.

Preference shares : Means, with reference to any company limited by shares, that part of the share capital of the company which fulfils both the following requirements :
That as respects dividends it carries or will carry a preferential right to be paid a fixed amount or an amount calculated at a fixed rate That as respect capital, it carries or will carry, on a winding up or repayment of capital, a preferential right to be repaid the amount of the capital paid-up or deemed to have been paid up whether or not there is a right to the payment.

Prospectus : The document which companies have to publish before issuing new shares to the public. The prospectus sets out the company’s business, its financial history, performance, capital structure and future prospects, and the content has to comply with certain specified rules.

Protection of Data : The Depository takes necessary steps to protect the transmission and storage of data under the Depository system. The data is protected from the unauthorised access, manipulation and destruction. The transmission of data is in encrypted form and has to be decrypted at the user’s end so as to eliminate the possibility of unauthorised interception of data. The backup of data stored under the Depository system by the Depository and the participants is kept by the Depository and the participants respectively. The Depository ensures sufficient security measures, to prevent the access of unauthorised persons to the data of the Depository operations.

Proxy : A person who acts on behalf of a member of a company for the purpose of voting at a company meeting.

Public Limited Company : A company registered as a public company which has an unlimited number of shareholders, and can offer its shares to the public.

Public Offering : An offering of new securities to the public.


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Quoted Company :
A company that has satisfied the requirements for its shares to be listed on a Recognised Stock Exchange.


Receipt Instruction :
The instruction given by the buying client to his depository participant in order to receive securities from the selling client’s depository account is known as a receipt instruction. In order to avoid giving receipt instruction for each receipt the client may give a standing receipt instruction to his Depository Participant.

Redeemable : A security which can be bought back by the original issuer from the purchaser.

Redeemable Preference Shares : Preference shares which the issuing company reserves the right to redeem.The shares may, or may not have a specific redemption date or dates.

Redemption : The re – purchase of a security, such as a bond or preferred stock, by the issuing company at or before maturity.

Registered Owner : Registered owner means a depository whose name is entered as such in the register of the issuer.

Rematerialisation : It is the process by which a client can get his electronic holdings converted into physical certificates. The client has to submit the rematerialisation request to the DP with whom he has an account. The DP enters the request in its system which blocks the client’s holdings to that extent automatically. The Issuer / R& T agent then prints the certificates, despatches the same to the client and simultaneously electronically confirms the acceptance of the request to NSDL. Thereafter, the client’s blocked balances are debited.

Registrar and Transfer Agent ( RTA ) : A transfer agent and registrar for a publicly held company keeps record of every outstanding share certificate and the name of the person to whom it is registered. When the share changes hands, the transfer agent transfers the ownership of the stock from the seller’s name to the buyer’s name. The registrar reconciles all transfer records and makes sure that the number of shares debited is equal to the number of shares credited.

Rolling Settlement ( T + 5 ) Cycle : Settlement is the process by which investors pay for shares they have bought and receive payment for shares they have sold. In this case, the trading period ( T ) is one day. For the trading period comprising one day, settlement of trades on the basis of netted obligations is on the 5th working day from the trade day i.e. on T + 5 basis.
The significance of rolling settlement and of shortened settlement times is that when investors sell shares, the proceeds get paid into their account quicker, and when they buy shares they have to pay for them quicker. It requires careful money management on the part of the investor.
For list of Scrips under Rolling Settlement, please click here.


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SEBI :
Securities and Exchange Board of India is an independent body formed under the SEBI Act, 1992. The duty of SEBI is to protect the interest of investors in securities and to promote the development of and to regulate the securities market through appropriate measures.

Security : A financial asset such as a share or bond. An asset which is offered by a borrower to a lender to safeguard a loan.

Securities held in Suspense : The Depository may place any balance of relevant securities in a suspense account held with the depository if it is unable to effect or give credit of a security to the account of a participant and / or the client ad a result of incorrect electronic intimation received from the Issuer or its Registrar and Transfer Agent. Such balances are reconciled within a period of fifteen days failing which the Depository authorises the Issuer or its Registrar and Transfer Agent to issue physical securities to the concerned investors.

Sell – n – Cash : This gives the investor the cash against sale of his shares on the very same day itself. In the present scenario, the proceeds against sale actualize between 7th and the 16th day from the date of sale in the Indian Stock Exchanges. The settlement mechanism today does not allow much leverage on that count. Sell-n-cash actually flanks out traditional cycle and relieves the investor from short term liquidity crunch.

Settlement : It is the process by which investors pay for shares they have bought and receive payment for shares they have sold. It is also the process by which the investor delivers the shares he has sold to the clearing house and receives the shares which he has purchased from the clearing house of a recognised stock exchange.

Settlement Day : The day on which purchased securities are due for delivery to the buyer and payment is due to be made to the seller.

SPEED : Securities Position Easy Electronic Dissemination service, is a new service launched by NSDL, which is an Internet based facility for the brokers ( Clearing Members ). SPEED enables the brokers to view the securities balances and transactions relating to their CM Pool Accounts directly on the Internet. SPEED is a secured access with multi-layered security. Access to SPEED is possible only by using User Id and Password.

Statement of Holding : A statement of Holding details out the current balance in a depository account. At least once every fortnight the Depository participant sends a statement of Holdings to its clients.

Statement of transaction : A statement of transaction details out the various transactions done through that depository account. At least once in every fortnight the Depository Participant sends a statement of transaction to its clients.

Suspension of an Account : Any client can give instructions, in the prescribed form, to his Depository Participant to suspend his account either for debit or for all activities. Only after receiving the application for freezing an account the Depository Participant shall suspend the client’s account. The Depository Participant may also suspend the account of any client on the basis of any court order or any notice issued by the Income Tax authority. The account is released for regular operations only after relevant orders from the court or notice from the Income Tax authority.


Transferability of Shares :
Shares in a company are freely transferable, subject to certain conditions, such that no share-holder is permanently or necessarily wedded to a company. When a member transfers his shares to another person, the transferee steps into the shoes of the transferor and acquires all rights of the transferor in respect of those shares.For dematerialised shares the depository participant debits and credits the account of the client with an authorisation from such client.

Transmission : Transmission of shares denotes a process by which ownership of share is transferred on legal heir or to some other person by operation of law. In case of transmission no transfer deed and no stamp duty is required. Transmission of shares generally takes place in case of death, insolvency or mental illness or purchase in case of shares by court or in case of amalgamation, where the amalgamating company holds shares in various companies.


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Unlisted Securities :
Shares which are not listed on a Recognised Stock Exchange.

Unpaid Dividend : A dividend which has been declared by a company but has not yet been paid.

Unpublished Price Sensitive Information : Means any information which is material and unpublished i.e. generally not known or published by the company for general information but, which if published or known, is likely to materially affect the price of the securities of the company in the stock market. This will include, but shall not be limited to, financial results, intended declaration of dividends, issue of securities, any major expansion plans or execution of new projects, amalgamation, mergers and take-overs, disposal of the whole or substantially the whole of the undertaking, such other information as may affect the earnings of the company, any changes in policies, plans or operations of the company etc.

Unsecured Loan : A loan where the lender has no entitlement to any of the borrower’s assets in the event of the borrower failing to make the loan repayments.


Valuation :
The value or worth of a portfolio of investments recorded on a statement.

Variance : The difference between budgeted and actual costs.

Venture Capital : Capital invested into small and young companies in return for equity ownership. Venture capitalists supply capital to companies that are small, may be start-ups, are high risk, and which could not get the funds by listing on the stock market or borrowing from banks.

Volume : The number of shares traded on a stock exchange for a given period, also known as market turnover.


Weak market :
A stock market where volume is low and the spread is high.

Will : A document which sets out how a person wishes his / her estate or property to be dispersed after his / her death. The document must be signed by the person making the will ( testator ) in the presence of two witnesses who must also sign. An executor or executors are usually appointed by the testator to ensure that his / her wishes are carried out.

Winding Up : Means an order granted by a court under the Companies Act to wind up the business of a company. The assets of a company are sold to settle as far as possible the debts to its creditors.


Year End Dividend :
The dividend paid at the end of the trading year and based on company’s profits.

Yield : The annual dividend income per share received from a company divided by its current share price. In simple words, it is the income you are getting out of the company for the capital you’ve locked up in it. Dividend yields are calculated on the net dividend.

Yield to Maturity : An indication of the overall return of a fixed interest security if held to redemption. It takes into account both the current yield and the capital gain or loss divided by the number of years remaining to redemption.


Zero balance :
Also known as Nil balance, a situation when a depository account has no securities in it. A beneficiary account may be opened with any Depository Participant even with zero balance.