5.4How does ownership transfer?
1What is it?
Ownership transfers electronically when the depository moves shares from the seller’s demat to the buyer’s demat at settlement.
2Why does it exist?
No paper changes hands. The depository records are the legal proof of ownership.
3Stock market example
The company keeps a register of members updated from depository data. That’s how it knows to pay you dividends and send you AGM notices.
4Quick revision
- Transfer happens at settlement, via depository.
- Depository records are legal proof.
- Company uses these records for dividends.
5Knowledge check
Q1. What is the legal proof that you own shares?Show answer
The depository record in your demat account.
Q2. How does the company know you should get a dividend?Show answer
From the depository’s beneficiary data on the record date.
Q3. Do you receive paper certificates?Show answer
No, everything is electronic.