“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1." - Warren E. Buffett

Wednesday, September 26, 2007

Share and its requirements

In a nutshell share is nothing but the capital investment or the ownership of the company divided into a number of small parts and that is called share, a person who is holding a part of the share of a company is said to have that part of ownership of the company or that part of investment made by him in the company.
Share market is a place where these kinds of shares are being bought and sold and they are NSE and BSE which almost act as the back bone of the economic of our nation.Now a days the physical presence of a person in the market to trade has gone down a lot due to the massive advancement of internet any person can sit in anyplace in the world and can join trading and do trading.Normally when you want to buy or sell any share which you wish have to place your order through a broker or on their own thro on line trading.whenever a share is purchased that will be sent to the person either in physical or in demat form and now sending in physical is almost nil as it is totally taken over by demat form.
Demat is nothing but the short form of Dematrialization by which a person who bought the shares can get his shares converted into electronic form and that his account of this form will be maintained in the Depositary Participant in other words the DP.
DP's are nothing but those companies or the organisations that are involved themselves in this kind of services , they can be banks, financial institutions and brokers.when any body who ever interested in involving himself in trading or in investment should posses a Demat account and for opening the Demat account he should go to any DP and get himself an account,and it is very simple also, and once a demat account is opened all the investment made by the individual and all the shares on his hold will be shown in his account.So botheration of holding those share certificates personally and physically is being eased out by this .
"As per the extent rules of SEBI to buy and sell shares one must possess a demat account and that is COMPULSARY".
Allmost all the banks are now Dp registered , so you can very well open a Demat account from them, and to open a demat account the following documents are needed:
1.PAN card.
2.Voters ID for identification purpose
3.Ration card for address verification
4.IT returns
some time if you not able to produce 2,3,4 you can produce other documents like passport, driving license, telephone bill, electricity bill, or employee identitycard etc as these will serve the same purposed as stated above, but to open a demat account it is compulsory you should possess a "PAN card".
Once when you open a demat account you will be provided with a BOI number ie.,"Beneficial Owner Identification"number, with which all the transaction by the individual will be done here after.