Section 10 of DA, 1996 : Section 10: Rights Of Depositories And Beneficial Owner

Explanation using Example

Imagine that Sarah has bought shares of XYZ Corporation through an online trading platform. The shares are electronically held in a depository. According to Section 10(1) of The Depositories Act, 1996, although Sarah is the actual (beneficial) owner of the shares, the depository is recognized as the registered owner for the purpose of transferring the shares, if Sarah decides to sell them.

However, as per Section 10(2), even though the depository is the registered owner of Sarah's shares, it cannot exercise voting rights at XYZ Corporation's shareholder meetings, nor does it have any other rights that a typical shareholder would have, like receiving dividends.

Lastly, Section 10(3) ensures that Sarah, as the beneficial owner, retains all shareholder rights, such as voting and dividends, and is also responsible for any liabilities associated with the shares, like being subject to calls on partly paid shares.