Since its inception, CDC has facilitated efficient processing of all corporate actions through the Central Depository System (CDS). However, for some time now, the issuance and settlement of unpaid letters of rights in physical form has been an area of concern for CDC. With a resolve to solve the issue of manual handling of LoR, CDC had earlier floated the procedures for handling unpaid rights in CDS to all stake holders for their feedback. The feedback received from the relevant bodies (Stock Exchanges and various Registrars) has been incorporated in the procedures to accommodate the needs of the market participants.

As per these revised procedures, handling of Unpaid Rights in CDS will result in managing end-to-end transactions including issuance, settlement and conversion of rights into shares / certificates and credit to respective accounts in CDS. Resultantly, issuance, exercise and renunciation of rights will become virtually paperless, increasing efficiency and reliability. Further, this will encourage the trading in Unpaid Rights, as the process will become hassle free and would reduce unnecessary costs.

Salient Features of this development includes:

• Instant credit of Unpaid Rights to respective accounts /sub-accounts in book entry form
• Settlement of Unpaid Rights in book-entry form
• Facility of Partial Subscription
• Deposit of physical Unpaid Rights into CDS
• Conversion of Unpaid Rights into ordinary shares / preference shares after last payment date / subscription date.
• Currently, the process of necessary amendments in CDCPL Regulations and development in CDS software is underway.

A major step in moving towards a paperless and highly efficient capital market, this development points at a long-standing aspiration of the market participants, regulators and CDC alike. Focused towards the development of the capital market, such cooperative and joint efforts are a clear evidence of CDC’s continuous resolve to offer comprehensive solutions to its clients.