Frequently asked questions

What is a Depository?

A depository can be compared to a bank. A depository holds securities (like shares, debentures, bonds, Government Securities, units etc.) of investors in electronic form. Besides holding securities, a depository also provides services related to transactions in securities.

How do I obtain the services of the Depository?

A depository interacts directly with the participants registered with the Stock Exchange. If an investor wants to avail the services offered by the depository, the investor has to open an account through a participant. This is similar to opening an account with a bank in order to utilize the bank’s services.

Advantages of De-Mat Accounts

• Having a De-Mat account is mandatory to trade in the secondary market.
• Having a De-Mat account is a vital and a mandatory requirement to apply for an IPO.
• A CDS account is the safest way to hold securities, especially compared to holding physical certificates. De-Mat accounts eliminate the risk of counterfeiting, loss and theft which could be inherent when dealing with physical certificates.
• This averts the costs involved in the process of applying for new share certificates in case of loss/theft.
• De-Mat accounts facilitates fungibility for the securities. Once the shares are deposited in the De-Mat account it can be traded or transferred as partial quantities, not the total lot held in the physical certificate.
• It is the most convenient way to hold securities since any number of listed securities (inclusive of equity, corporate debt and closed ended funds) can be dematerialized and held in one account.
• De-Mat account is a useful method of consolidation of portfolios.
• Increases the efficiency in transfer of securities, since the paperwork involved is reduced and the process is streamlined.
• Transmission of shares can be done smoothly through opening of joint CDS accounts. In the event of one of the holders is passed away, the shares will be transferred to the CDS account holders of the surviving parties with a minimal documentation requirement.
• Change of the shareholder name, address or bank details can be notified to all listed companies with one single instruction submitted through any CDS Participant with whom the shareholder is registered.
• De-Mat accounts provides transparency for the securities transactions since the investors has the ability to monitor their transactions through the CDS SMS alert service.
• Opportunity of benefiting through more value added services such as CDS eStatement facility, which facilitates updating the investors of their monthly transactions and balances in a fast, secure and convenient manner.
• Account holders have the ability to register and view their CDS account and get entitled for a range of services via the CDS eConnect facility.
• De-Mat accounts protects the investor rights by speeding up the share issuance process arising out of splits, scrip dividends or consolidation of securities be facilitating automatic credit of shares into the De-Mat accounts.
• De-Mat accounts provides the opportunity for the shareholders to participate in the corporate actions such as sub-divisions and scrip dividends and receive shares to their CDS accounts instantaneously.

Account Opening

Who is a Participant?

There are two types of participants in the CDS
Direct Participant status is given only to member firms of the CSE.

Stockbrokers who are licensed by the Securities and Exchange Commission of Sri Lanka (SEC) and are members of the CSE

Indirect Participant status is given to Licensed Commercial Banks.

These are the banks registered under the Banking Act of Sri Lanka.

You can download a complete list of participants from www.cds.lk/participants.php

How do I select a Participant?

You can select a participant to open a demat account just like you select a bank for opening a savings account. Some of the important factors for selection of a DP can be:

• Convenience – Proximity to your office/residence, business hours.
• Comfort – Reputation of the participant, past association with the organization, whether the participant is in a position to give the specific service you may need?
• Cost – The service charges levied by the participant and the service standards.

Are all the participants same?

Participants listed under Debt only section can involve only in CDS/ATS activities related to listed debentures only. Other than this, the services offered by the participants may differ according to their branch network, system capabilities and other factors.

How do I open a CDS Account through a participant?

Once you select a participant you may contact them and get further information on what are the required forms and supporting documents.

The CDS requires duly completed CDS forms (pls refer the CDS guideline for the applicable CDS forms for each investor category) together with the supporting documents.

For an individual you will have to submit a copy of your NIC/Passport or in absence of these a copy of the driving license with an affidavit.

Can I open more than one account with the same Participant?

No. You can only open one account with a particular participant.

Can I open more than one account with different participants?

Yes. You can open more than one account with multiple participants.

Is there a fee charged when opening a CDS account?

No there is no fee prescribed by the CDS when opening a CDS account.

Can I open a single account for securities owned in different ownership patterns such as securities owned individually, and securities owned along-with my wife?

No. The demat account must be opened in the same ownership pattern in which the securities are held in the physical form.

e. g. if one share certificate is in your individual name and another certificate is jointly held in your and your wife's name, two different accounts would have to be opened.

What do I do if I have physical certificates with the same combination of names, but the sequence of names is different? i.e. some certificates with husband as first holder and wife as second holder and other set of certificates with wife as first holder and husband as the second holder?

The demat account must be opened in the same ownership pattern in which the securities are held in the physical form. You will have to open two CDS accounts according to the different sequences of the certificates.

Can someone else operate my account on my behalf on the basis of a power of attorney (PoA)?

Yes. If you authorize any person to operate your account by executing a power of attorney and submit it to your participant, that person can operate the account on your behalf.

However, if you wish to deposit shares, the PoA needs to be registered with the company registrars/secretaries of the relevant security.

Why should I give my bank account details at the time of account opening?

It is for protection of your interest. Your bank account number will be mentioned on the interest or dividend warrant, you are entitled to, so that such warrant cannot be en-cashed by anyone else.

Can I change details of my bank account?

Yes. Since in the depository system monetary benefits on your security balances are paid as per the bank account details provided by you at the time of account opening, you must ensure that any subsequent change in bank account details is informed to CDS through your participant by using a CDS 28 form.

Can I add or delete names of accountholders (second or third accountholder) after opening the account?

No. Names of the accountholders for a depository account cannot be changed. If you want to change name or add / delete an accountholder, you need to open a new account in the desired holding pattern (names) and transfer the securities to the newly opened account. The old account may be closed.

What should I do if my address is changed? Do I need to write to each company separately?

In case your address is changed, you only need to inform the new address to one of your registered participants. When the participant submits the address change request to the CDS new address in the depository computer system will be changed accordingly, it will be automatically conveyed to all companies in which you hold shares.

Can I close my demat account with one Participant and transfer all securities to my account with another Participant?

Yes. You can submit account closure request to you’re the CDS through your Participant together with the transfer forms. The CDS will transfer all your securities, as per your instruction, and close your demat account.

Dematerialization

What do you mean by Dematerialization?

Dematerialization is the process by which physical certificates of a CDS account holder are converted to an equivalent number of securities in electronic form and credited in the CDS account registered through a Stockbroker. In order to dematerialize certificates; an individual/a body corporate will have to first open an account in CDS through a Participant and then request for the dematerialization of certificates by submitting duly completed CDS3/CDS4 form(s) together with the physical share certificates. The CDS 3 & 4 forms can be obtained from the participant or downloaded from the CDS web site.

Can I dematerialize any share certificate?

You can dematerialize only those certificates that are issued in your name and are in the list of securities admitted for dematerialization at CDS.

How long does the dematerialization process take?

Once the documents are submitted to the CDS the shares will be credited to the relevant CDS account on the same day or latest by next market day morning.

What if it takes more than 2 days?

Please contact your stockbroker/participant and check with them about the status of the documents submitted by you. If the CDS has returned the share certificate, a clear reason will be indicated for not accepting the documents.

Rematerialization

Can my dematerialized securities be converted back into physical certificates?

Yes. If you wish to get back your securities in physical form, you have to request your broker for rematerialisation of the same.

But this will be allowed only in the event of pledging the said securities.

‘Rematerialisation’ is the term used for converting electronic holdings back into certificates.

Your participant will forward your request to the CDS together with the duly completed forms, after verifying that you have the necessary balance.

The CDS will sent the processed documents to the relevant registrar/company secretary who will print the certificates and dispatch the same to you through the stock broker.

eStatements

How do I subscribe for the e-statement service?

If you already have a CDS account you can submit a duly completed CDS 28 form to the CDS through your participant to update the CDS with your e-mail address. You can obtain the CDS 28 form from the stock broker or download it from https://www.cds.lk/pdf/forms/cds_document_28.pdf.

Is there a fee charged for this service?

No. The e-statement facility is provided free of charge.

How can I benefit from subscribing to e-statement service?

The e-statement will be sent whether you have done any transactions or not.

You will receive the e-statement during the first 2-3 market days after the month end.

Hence, if there are any irregularities in the transactions happened during the month you will be able to identify those quickly.

There is no risk of the statement going into the hands of a third party, so your confidential information will be safely & securely sent to you.

Likelihood of your CDS account being suspended due to monthly statement returns will be nil.

to refer and no hassle with filing your statements for future reference.

SMS Alerts

How do I subscribe for the SMS Alert service?

If you already have a CDS account you can submit a duly completed CDS 28 form to the CDS through your participant to update the CDS with your e-mail address. You can obtain the CDS 28 form from the stock broker or download it from https://www.cds.lk/pdf/forms/cds_document_28.pdf.

Is there a fee charged for this service?

No

How can I benefit from subscribing to SMS Alert service?

You will receive daily updates if there is a change to your account balance.

Transactions can be easily monitored.

You can easily track down your deposits and inter/intra account transfers through the alerts.

Possibility of unauthorized transactions happening will be minimized.

eConnect

How do I subscribe for the CDS e-Connect facility?

If you already have a CDS account under the individual category you can submit a duly completed CDS 29A form or a CDS 29B form if you are registered under the body corporates category. The
duly completed form can be submitted directly to the CDS or through your participant. You can obtain the CDS 29A/29B forms from the stock broker or download it from https://www.cds.lk/cds_forms.php.

More details on the registration process can be obtained through How_to_register_for_the_CDS_eConnect_Facility

Is there a fee charged for this service?

Yes. The applicable fees differ according to the client category you fall into. You may refer all applicable fees through CDS_eConnect_Fees.

What are the benefits of the CDS e-Connect service?

The e-Connect service will keep you updated on the go with a fast, secure and convenient manner. The e-Connect facilitates the account holders to view all their registered CDS accounts through a single user ID.

The convenience of checking your account balance on any date at any given time allows you to make informed decisions about your investments.

Keeps the investors updated and well-versed by enabling access to view transaction history for the past six months of all registered accounts.

Real time updates of transactions, master file record changes and balance updates can be viewed on the go.

Alerts displayed about the corporate actions due for the next market day will prepare you and keep you aware on the happenings.

Notifications sent whenever there is a transaction or a change to your portfolio will make sure that you won’t miss anything.

e-Connect users will get their monthly statements through the facility and they will have the monthly statements of the past six months uploaded to their facility as well.

Facility of requesting for additional monthly statements without any written requests and making online payments for the requested information.