Comment on the following statements: (b) 'Depositary system provides numerous direct and indirect benefits.'

The statement is true. The depository system rids the capital market of the dangers related to handling of paper. The system provides numerous direct and indirect benefits, like: Elimination of bad deliveries: In the depository environment, once holdings of an investor are dematerialized, the question of bad delivery does not arise i.e. they cannot be held "under objection". Elimination of all risks associated with physical certificates: Dealing in physical securities have associated security risks of theft of stocks, mutilation of certificates, loss of certificates during movements through and from the registrars, thus exposing the investor to the cost of obtaining duplicate certificates and advertisements, etc. This problem does not arise in the depository environment. Immediate transfer and registration of securities: In the depository environment, once the securities are credited to the investors account on pay out, he becomes the legal owner of the securities. Faster disbursement of non-cash corporate benefits like rights, bonus, etc.: Depository system provides for direct credit of non-cash corporate entitlements to an investors account, thereby ensuring faster disbursement and avoiding risk of loss of certificates in transit. Reduction in brokerage by many brokers for trading in dematerialized securities: Brokers provide this benefit to investors as dealing in dematerialized securities reduces their back office cost of handling paper and also eliminates the risk of being the introducing broker. Elimination of problems related to change of address of investor, transmission, etc.: In case of change of address or transmission of demat shares, investors are saved from undergoing the entire change procedure with each company or registrar. Elimination of problems related to selling securities on behalf of a minor: A natural guardian is not required to take court approval for selling demat securities on behalf of a minor. Public image of the company is enhanced.