A Depository provides the facility for holding and/or transacting securities in, book entry form i.e. electronic form by way of dematerialization (so that they exist only as electronic records). A depository functions somewhat similar to a commercial bank.
Dematerialisation is a process by which physical certificates are converted into electronic form.
Rematerialisation is the process of converting securities held in a demat account in electronic form back into physical certificate form.
To avail of the services offered by a depository, the investor has to open a demat account with a registered DP.
A Depository Participant (DP) is an agent of the depository who is authorized to offer depository services to investors. Financial institutions, banks, custodians and stockbrokers complying with the requirements prescribed by SEBI/ Depositories can be registered as DP. An investor will always interact with a DP for the services and cannot directly approach the depository for any services.
When securities of a company are held in physical form by an investor, Name of the investor is recorded in the books of the company as a ‘Registered Owner’ of the Securities. Each certificate is identified by Folio number, certificate number and distinctive range numbers.
When physical shares are converted in to electronic form, the depository becomes ‘Registered Owner’ in the books of the company and investors name is removed from books of the company. Depository is holding shares in its records on behalf of the investors who have opened a demat account with the depository. Hence all benefits are given to the actual investor who is called as a ‘Beneficial Owner’ (BO) of the securities.
Depository provides following services to the investors through a DP:
- Opening a demat account.
- Dematerialization, i.e. converting physical securities into electronic form.
- Rematerialisation, i.e. converting electronic securities balances held in a BO account into physical form.
- To maintain record of holdings in the electronic form.
- Settlement of trades by delivering / receiving underlying securities from / in BO accounts.
- Settlement of transactions between BOs entered outside the Stock Exchange.
- Receiving electronic credit in respect of securities allotted by issuers under IPO or otherwise on behalf of demat account holders.
- Receiving non cash corporate benefits, such as, allotment of bonus and rights shares or any other non cash corporate benefits given by the issuers in electronic form on behalf of its demat account holders.
- Pledging of dematerialized securities & facilitating loans against shares.
- Freezing of the demat account for debits, credits, or both.
- Internet facilities “easi” and “easiest”, if the DP is registered for the same with CDSL.
To open a demat account you need to submit the following forms and documents:
-
Identity Proof (photocopy of any one)
- Passport
- Driving license
- Voter ID
- Address Proof (photocopy of any one)
- Passport
- Driving license
- Voter ID
- Ration card
- Bank passbook
- Pass Port and Visa copy is compulsory for NRI clients
- Photocopy of PAN Card is compulsory
- A specimen of MICR cheque leaf
- Passport-size photos
Kindly remember to bring the original documents for verification at the time of account opening. We will carry-out in-person verification of account holder(s) at the time of opening your account.
Yes, there is no restriction on the number of accounts you can open with a DP.
No, there are no restrictions on the number of DPs you can open accounts with
Following are the acts and regulations under which a depository functions:
- The Depositories Act, 1996
- SEBI (Depositories and Participant) Regulations
- CDSL Bye-laws which are framed under the above two documents
- Prevention of Money Laundering Act (PMLA), 2002.
Any person who pursuant to a contract or arrangement with a client, advises or directs or undertakes on behalf of the client the management or administration of a portfolio of securities or the funds of the client, as the case may be is a portfolio manager.
The discretionary portfolio manager individually and independently manages the funds of each client in accordance with the needs of the client.
The non-discretionary portfolio manager manages the funds in accordance with the directions of the client.
Paterson offers Discretionary PMS.
The portfolio manager, before taking up an assignment of management of funds or portfolio of securities on behalf of the client, enters into an agreement in writing with the client clearly defining the inter se relationship and setting out their mutual rights, liabilities and obligations relating to the management of funds or portfolio of securities containing the details as specified in Schedule IV of the SEBI (Portfolio Managers) Regulations, 1993.
As per SEBI regulations, the portfolio manager is required to accept funds or securities having a minimum worth of five lac rupees from the client while opening the PMS account.
There is no maximum limit for investment in the PMS.
The ideal investment horizon is scheme specific:
- Paterson Developer – 2-3 years
- Paterson Multiplier – 3 years
- Paterson Generator – 1 year and above
No, there is no lock-in period and the client can exit/redeem their funds at any point of time.
To be launched soon.
The E Contracts can be sent by e-mail or the physical copies (by mail/courier).
No, the same form can be used for any scheme.
The fund manager will decide on the allocation by investment type based on market conditions.
The discretion to invest primarily lies with the Fund Manager with the objective to maximize your returns. At the same time we understand that each client is unique and might not wish to invest in certain sectors/stocks, etc. We can take these into consideration at the time of portfolio structuring.
As per the SEBI Norms all the investments are made in the Investor’s names only. For this purpose, separate bank and demat account are opened, wherein all the stocks are credited and all the non cash benefits like bonus are credited directly to the demat account. Similarly all the cash benefits like dividends are credited to the investor’s account directly.
The following forms will be required:
- PMS Application Form
- Bank account opening form – this is a PMS specific bank account
- DP account – Paterson Securities Pvt Ltd
- Cash and Derivative account form
The following documents will be required:
- Address proof
- ID proof
- PAN card copy
- Bank statements
- Passport size photos
For more details kindly refer to Documentation: PMS
Yes.
IndusInd Bank is our designated bank for all PMS activities.
The fee structure from PMS is scheme specific and it may be either a fixed amount or a performance based fee or a combination of both.
| Scheme | Management Fees |
Performance Based Fees
Hurdle Rate Performance Fees |
| Paterson Developer | 2% p.a. | N.A. |
| Paterson Multiplier | 2% p.a. | 12.5% 20% on returns over hurdle rate |
| Paterson Generator | 2.5% p.a. | N.A. |
Brokerage:0.5% per transaction
The management fees are charged as a percentage of the funds under management and are levied on a quarterly basis.
Entry load of 2% is the only upfront payment.
In case of premature account closure in less than 12 months charges as agreed will be applicable. After the specified period has elapsed, no exit load will be applicable.
Yes, you can with draw your profit at any time, provided that you maintain your minimum account size.
Paterson Securities Pvt Ltd is a Depository Participant with Central Depository Services Limited (CDSL) and has a background of exemplary compliance and ethical standards. All stock ownership rests with the client.
All the short term profits booked out of the Portfolio transactions will attract a Short Term Capital Gain of 15%.
We send across the Capital gain statement at the end of the year which can be produced to the auditors. Any other information required can be provided on request.
The PMS is open for all Indian nationals, resident or otherwise. NRIs will have to open a PIS Account in order to invest in the PMS scheme.
In order to invest in the Secondary Markets in India, NRIs need to obtain RBI permission. In order to do so, a Bank account with a designated bank has to be opened under Portfolio Investment Scheme (PIS) and all the transactions related to the investment in secondary markets need to be routed through this account.
A portfolio manager is permitted to invest in derivatives, including transactions for the purpose of hedging and portfolio rebalancing, through a recognized stock exchange. However, leveraging of portfolio is not permitted in respect of investment in derivatives.
The total exposure of the portfolio client in derivatives should not exceed his portfolio funds placed with the portfolio manager and the portfolio manager should invest and not borrow on behalf of his clients.
The portfolio manager provides to the client the Disclosure Document at least two days prior to entering into an agreement with the client. The Disclosure Document, inter alia, contains
- the quantum and manner of payment of fees payable by the client for each activity,
- portfolio risks,
- complete disclosures in respect of transactions with related parties as per the accounting standards specified by the Institute of Chartered Accountants of India in this regard,
- the performance of the portfolio manager and
- the audited financial statements of the portfolio manager for the immediately preceding three years.
The performance of a discretionary portfolio manager is calculated using a combination of absolute returns and weighted average method, where applicable, taking each individual category of investments for the immediately preceding three years and in such cases performance indicators is also disclosed.
There are several advantages to investing in a PMS scheme compared to a Mutual Fund scheme:
- Greater control over the asset allocation, whereas it is automatic in MF
- Portfolio can be customized to suit your risk- return profile, which is not possible in MF
- Greater flexibility to move in and out of cash as and when required depending on the market view, whereas a MF has to say invested throughout
- Typically, charges are lower and more transparent in PMS vis-à-vis a Mutual Fund
- Since the PMS account is client-specific, holdings not impacted by entry/exit of big investors