Dematerialisation and Rematerialisation of Securities in India with reference to the Depositories Act 1996
Introduction Before the enactment of Depositories Act, 1996, in Indian security market transaction of securities i.e. allotment of securities and transfer of securities was based on paper based ownership. Movement of securities was possible only in physical form which resulted in delay in settlement and transfer of securities. Some time it led to bad delivery, theft, forgery etc. As a result investor was deprived liquidity in security. It was a major drawback of the Indian Securities market. To pave the way for smooth and free transfer of securities a law was needed for depositories. This Act was enacted to ensure the transferability of securities with speed, accuracy and security. It gives the option to an investor to choose holding of securities in physical form or hold the securities in a dematerialised from a depository. Parties to Dematerialisation of Securities Dematerialisation of Securities means conversion of physical securities certificates into di...