When securities or shares of a company are held in physical form (sample share certificate above) by an investor i.e. in the form of share certificates, name of the investor is recorded in the books of the company as a ‘Registered Owner’ of the Securities. Each certificate is identified by a unique Folio number, certificate number, and distinctive range numbers. These distinctive range numbers indicate how many shares you actually own. Physical shares used to be traded in lots of 50 shares or 100 shares. Now there is no concept of lots as you can also buy and sell 1 share. Then what is a beneficial ownership? The distinction is quite interesting. Did you know that when you demat shares, the DP actually becomes the registered owner and you become the beneficial owner (BO)? Ok, read on.

When physical securities are converted into electronic form, the depository becomes ‘Registered owner” in the books of the company and investors name is removed from books of the company. Since depository is holding such shares as a custodian or a guardian on behalf of the actual investor, the DP cannot claim any benefit or it is not liable for any loss as a result of the holdings. The investor whose securities are held in electronic form in a demat account opened with a depository through a Depository Participant is called as ‘Beneficial Owner’ (BO). All the benefits as a result of the holding the securities are given to such beneficial owner. Under the new system, if you are holding 100 shares of SBI, then you are the beneficiary owner (BO) based on your demat holdings. The depository (NSDL or CDSL) will be the registered owner of the shares and will hold them in custody on your behalf.