Concept of Demat Share

Article:Concept of Demat Share Dematerialized securities (Demat in short) are securities that are not on paper and a surety to that effect do not exist. They exist in the form of entries in the keep of depositories. Essentially, unlike the traditional method of possessing a share certificate to the effect of ownership of shares, in the demat system, the shares are held in a dematerialized form. This system works through a depository who is registered with the Securities and permutation Board of India (SEBI) to perform the functions of a depository as regulate by SEBI. Under Section 68 B of the Companies Act, inserted by the Companies (Amendment) Act, 2000, it is mandated that every Initial Public Offer (IPO) made by a listed company in the excess of Rs. 10 Crores has to be issued in dematerialized form by complying with the requisite provisions of the Depositories Act, 1996. Background Indian cracking foodstuff has seen unprecedented boom in its application in the last 15 years in wrong of number of stock exchanges, listed companies, trade volumes, market intermediaries, investor population, and so forth

However, this surge in activity has brought with it numerous problems that threaten the very survival of the capital markets in the long run, most of which are due to the larger-than-life volume of paper work involved and paper ground trading, clearing and settlement. Until the late eighties, the common man kept outside(a) from capital market and thus the quantum of funds mobilized through the market was meager. A major problem, however, continued to plague the market. The Indian markets were drowned in shares in the form of paper and hence it was problematic to wrap up them. Fake and stolen shares, fake signatures and signature mismatch, duplication and mutilation of shares, transfer problems, etc. The investors were scared and were under compensated for the risk borne by them. The one C old system of trading and settlement requires handling of Brobdingnagian volumes of paper work. This... If you want to get a full essay, clubhouse it on our website: Orderessay

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