I. Benefits to the Investors:
The following are the benefits for the investors:
1. Bad deliveries are almost eliminated.
ADVERTISEMENTS:
2. The risks associated with physical certificates such as loss, theft, mutilation of certificate etc. are eliminated.
3. It eliminates handling of huge volumes of paper work involved in filing the transfer deeds and lodging the transfer documents and share certificates with the company.
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4. There is immediate transfer and registration of the securities (at the end of every settlement cycle, which is 4 working days i.e. T+3) and there is no delay on account of processing time.
5. It leads to faster settlement cycle and faster realisation of sale proceeds so the fund of the investor is not tied up unnecessarily.
ADVERTISEMENTS:
6. The system facilitates a faster disbursement of security holding benefits like rights shares, bonus shares etc.
7. The stamp duty on transfer of securities, which is 0.25% of the consideration on transfer of shares in physical form, is not applicable.
8. There is a reduction in rates of interest on loans granted against pledge of dematerialised securities by various banks.
9. There is reduction in brokerage for trading in dematerialised securities.
ADVERTISEMENTS:
10. There is reduction in transaction costs in dematerialised securities as compared to physical securities.
11. Availability of periodical status report to investors on their holding and transactions is disseminated by the depository.
II. Benefits to the Company:
1. The depository system provides up-to-date knowledge of shareholder’s names and addresses to the company.
2. There is savings in costs of new issues from reduction in printing and distribution costs.
3. It may also lead to increased efficiency of registrar and transfer agent functions and better facilities for communication with shareholders, conveying benefits of corporate actions and information notices.
4. The system enables a company to attract international investors without having to incur the expenditure of issuance in overseas markets.