A Depository Participant is an agent of the depository who has received the registration certificate
from the Security Board of Nepal and the membership license from CDSC. To be an authorized DP,
the DP has to comply following eligibility criteria:
- Shall be a Bank or Financial Institution, Stock Broker, Registrar and Transfer Agent, custodian or such other entity as may be prescribed by the Board from time to time,
- Shall have minimum net worth of rupees ten million,
- Have not been black listed by Credit Information Bureau.
A Beneficial Owner is the person who have opened the demat account with CDSC through a
registered DP in order to deposit their securities or instruments which are capable of being
deposited in demat form.
The purpose of opening a demat account are as mentioned below:
- To convert the physical securities into the electronic form,
- To deposit and transfer the NEPSE listed securities in a dematerialized form ,
- To credit the securities allotted through IPO and corporate actions (such as rights share
issue, bonus issue, merger, etc.) in a dematerialized form, - To receive the statement of the securities held in a demat account,
- To pledge the securities held in a demat account,
- To rematerialize the securities held in a demat account.
Dematerialization is a process of converting physical securities into electronic form.
The following parties are involved with CDSC:
- Beneficial Owner (BO) : The investor
- Depository Participant (DP) : Agent of the depository
- Issuer : Issuing Company
- Registrar and Transfer Agent (RTA) : Agent of the Issuer
- Stock Brokers
The services CDSC provides are as mentioned below:
- Deposit, withdrawal and transfer of securities,
- Electronic credit of securities directly into the investor’s demat account allotted in Initial
Public Offering (IPO), - To safeguard the investors’ securities into the electronic form and to debit/credit the
particular investor’s account as per the transactions occurred in the book entry - system,
- Quicker distribution of securities allotted by issuers under IPO and corporate actions and
benefits of the issuers, - To provide secure and convenient electronic procedures for pledge and un-pledge of
- To provide updated statement and reconciliation statement.
The major objective of CDSC is to render the service by dematerializing the securities (such as shares, preference shares, debentures, bond, government securities, etc.) and update the transactions in the record by safeguarding the deposit on behalf of the buyers.
CDS and Clearing Ltd. is the sole depository in Nepal established in 2067 B.S. under Company Act
2063 with an objective to render service of dematerialization of securities. It is wholly owned
subsidiary company of Nepal Stock Exchange Ltd. (NEPSE). The authorized capital and issued
capital of CDSC is NRs. 500 million and NRs. 300 million respectively.
A depository facilitates the holding and/or transacting securities in book entry form. In other
words, a depository takes the ownership guarantee of the shareholders by holding those
securities and other market instruments which are listed in the secondary market, distributed or
allotted and can be deposited into the electronic form. The investor has to open a demat account
to avail the services of depository. Additionally, the depository maintains the record in the
account of the investors.