Q.Explain the meaning of a Beneficial Owner (BO) in the context of the depository system.
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Start your 14-day free trial to unlock the full solution →In the depository system, a distinction is drawn between who is registered as holding a security in a company's records and who actually owns it economically.
Meaning of Beneficial Owner (BO). The Beneficial Owner is the investor — the person who bought and holds the securities — who is the real, economic owner of securities held in electronic form through a demat account, even though the depository (NSDL or CDSL) is technically shown as the registered holder in the issuer company's records for administrative convenience.
Rights of the Beneficial Owner. All the substantive rights that come with owning a security belong to the BO, not to the depository:
- the right to receive dividends, interest (on debentures/deposits) and other income;
- the right to bonus shares and rights entitlements;
- the right to vote at company meetings; and
- the right to sell, transfer or pledge the securities, subject to the usual procedures. …
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