In order to lend against electronic book entry securities, the Pledgors can Pledge the desired securities only in favor of Eligible Pledgee in CDS. Once pledged, the securities are no longer available for transfer/delivery to the pledgor until such time as Eligible Pledgee releases them from pledge. In short, the control over the pledged securities moves to Eligible Pledgee until the securities are released. Any benefits however, still accrue to the Pledgor. Eligible pledgees can also call the pledged securities in another account if they so desire.
Any Company, Corporation or Institution such as Banks / Financial Institutions / Development Financial Institutions that are authorized to provide financing against securities and Stock Exchanges / Clearing Companies for risk management purpose can join CDC in the capacity of Eligible Pledgees.
Account Opening Procedure:
To open an Eligible Pledgee Account in CDS, the account opening requirement is provided to the applicant on their request. The Account Opening Documents for Eligible Pledgee are as follows:
Documents to be Submitted by Applicant
§ Eligible Pledgee Admission Form: General information about the client is obtained on this Form.
§ Board Resolution: Certified true copy of the Board Resolution (BR) nominating signatories on behalf of the company on CDC’s prescribed format is required from the applicant.
§ Signature Card: It contains the name(s) & signature(s) of the authorized signatory(ies) of the Pledgee (as per BR). The Signature Card must be in original and bears the Company Stamp.
§ Eligible Pledgee Agreement: Standard Agreement states the terms and conditions agreed upon by both parties for induction into Central Depository System (CDS).
§ Certified true copy of Memorandum and Articles of Association
§ Certified true copy of Certificate of Incorporation
§ Certified true copy of Certificate of Commencement of Business (not applicable for Private Limited Companies)
§ Certified true copy of Certificate of Change of Company Status / Name (If applicable)
§ Certified true copy of Banking License (in case of a Bank)
§ Certified true copy of NBFC License (in case of a NBFC)
§ Certified true copy of Modaraba Authorization Certificate - Form III, Minimum Subscription Certificate - Form IV, Registration Certificate & Prospectus (in case of a Modaraba)
§ Certified true copy of Power of Attorney (in case form is signed by Attorney of the Applicant)
Signature Card can be collected / requested from CDC offices.
Pledgee Agreement is provided after receiving all the required documents from client.
§ Security Deposit & Documentation Fee (as per CDC Schedule of Fees and Deposits, approved by SECP). Only Crossed Cheque, Pay Order or Demand Draft is accepted.
Upon receipt of above documents (complete & correct in every aspect) from the applicant, CDS software is installed at applicant's premises on a stand alone computer terminal. Please ensure Hardware/Software configuration as recommended by CDC.
After the installation of CDS software, CDC conducts a comprehensive training session for the users nominated by the applicant (if required). The session explains in detail the concept & workings of the CDS.
Once the installation and training is done, CDC opens the account in CDS and provides the Post Account Opening Package to the Pledgee.
Note: It is important to note that it takes three working days to open an account in CDS after submission of documents (provided the documents are complete in every aspect).