Page 131 - DCOM304_INDIAN_FINANCIAL_SYSTEM

Indian Financial System

Notes CDSL

The Mumbai Stock Exchange (BSE) in association with Bank of India, Bank of Baroda, State Bank
of India and HDFC Bank have promoted CDSL as the secondary depository in India for dealing
in securities in electronic form.
Objectives of CDSL:
1. To accelerate the growth of scrip less trading.
2. To make a major thrust in the individual investors participation in the depository.
3. To create a competitive environment which will be responsive to the user's interest and
demands.
4. To enhance liquidity.
Services offered by the CDSL to the beneficial owner are dematerialization of existing scripts,
dematerialization of new issues, reliable and efficient settlement, re-materialization and corporate
actions (cash and non-cash).
The depositories hold securities in demat and all securities in depository are fungible. While the
investors in securities appear as beneficial owner in the records of the depository, the depositories
appear as registered owners in the record of the company. All rights relating to securities,
however, accrue to beneficial owners.
Holding securities in the demat form helps investors get immediate transfer of securities in case
of purchases. The investor do not pay stamp duty on transfer of securities and can avoid risks
associated with physical certificates such as bad delivery, false securities etc.
A depository interfaces with the investor through its agents called Depository Participants (DP).
It is necessary to open an account with a DP to avail of the services offered by a depository. This
is similar to opening an account with any branch of a bank in order to utilize the bank services.

SEBI Guidelines - Issue Management

Book building and Issue management include the share capital in the primary market by the
way of:
Initial Public Offer

Initial Public Offer means an invitation by a company to the public to subscribe to the securities
offered through a prospectus, offer for sale refers to an offer of securities by existing share
holders of a company, to the public for subscription through an offer document.

Issue Procedure

Eligibility Norms: Companies issuing securities through offer document.

1. Prospectus in the case of public issue or offer for scale.
2. Letter of offer in case of a rights issue.
At the time of filing draft offer document with the SEBI and also at the time of filing the final
offer document with the registrar of companies (or) designated stock exchanges.

Pricing Issues:
1. A listed company can freely price equity shares/convertible securities through a public/
rights issue.

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