4.6 Transfer of shares under central depository system

4.6 TRANSFER OF SHARES UNDER CENTRAL DEPOSITORY SYSTEM

Transfer of shares under a Central Depository System (CDS) refers to the process of electronically transferring ownership of shares between buyers and sellers through a centralized depository. The CDS is a system that facilitates the electronic holding, transfer, and settlement of securities, including shares.

How the transfer of shares works under a CDS:

1. Opening a CDS account:

To participate in share transfers through the CDS, investors need to open a CDS account with a registered depository participant (DP).

The DP is an intermediary authorized to provide CDS services and maintain investor accounts.

2. Initiation of transfer:

The transfer of shares is initiated by the seller (transferor) who instructs their DP to transfer the shares to the buyer (transferee).

The transfer instruction includes details such as the buyer’s CDS account number, the number of shares being transferred, and any relevant transaction information.

3. Verification and settlement:

The transfer instruction is verified by the transferor’s DP to ensure that it complies with the rules and regulations of the CDS.

4. Updating share ownership:

After the transfer is settled, the CDS updates its records to reflect the change in ownership.

5. Reporting and Confirmation:

The CDS provides confirmation of the share transfer to both the transferor and transferee, typically in the form of electronic statements or transaction reports.

The confirmation includes details such as the transferred share quantity, transaction date, and the respective CDS account numbers.