FAQ
Prevention of any disposal of securities in any form where it shall not be permitted to transfer deposited securities that are subject to an ownership restriction, transfer the ownership of such securities or conduct any transaction thereto unless the ownership restriction is released in the SDC’s registers.
| Ownership restrictions on deposited securities include: | |
| 1. | Pledge. |
| 2. | Lien. |
| 3. | Freeze |
The investor can submit Freezing Securities Form to freeze free deposited securities. If the freezing restriction is authenticated, no disposal of the securities is permitted in any form, whether by the owner or others.
The SDC lifts freezing restriction on deposited securities by virtue of Unfreezing Securities Form submitted by the owner or his legal representative.
Free Securities deposited at the SDC are the only securities eligible for pledge.
| 1. | Securities Pledge through Electronic Pledge System. | |
| Based on the SDC's continuous concern to serve its clients speedily and accurately, the SDC developed a special electronic system for pledgee banks specifically called the "Pledge System". This System enables pledgees (banks) to: | ||
| A- | Impose pledge restrictions on securities owned by their clients through the system directly. | |
| B- | Storing pledge transactions that placed through the system, auditing and authenticating them. | |
| C- | Printing the pledge form through the system to be signed by both the pledgor or his legal representative and the pledgee. The pledgee is to authenticate the correctness of pledgor’s signature. | |
| 2. | Securities Pledge to the benefit of banks that don't use Electronic Pledge System. | |
| The deposited securities at the SDC for the benefit of banks that do not use Electronic Pledge System are pledged by the virtue of Securities Pledge Form that accredit for this purpose and submitted by the pledgor or his legal representative to the SDC. The pledgee is to authenticate the correctness of pledgor’s signature. | ||
| 3. | Securities Pledge through the SDC directly. | |
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The securities are pledged through the SDC directly by the presence of pledgor and pledge or their legal representatives as the case may be to the SDC to sign Securities Pledge Form in front of authorized SDC employee. All required documents and information should be attached to the form. In case of a stock split (division of nominal value) on pledged securities, the pledge shall be authenticated on the securities that result from the split. Also, the pledge shall be authenticated on stock dividends unless the pledge deed states otherwise. In case of decrease the number of securities as a result of decrease issuer's capital, the pledged securities shall be decreased according to the same percentage. |
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The SDC authenticates the pledge restriction after it ascertains the investor’s definite ownership of deposited securities that will be subject to the pledge and if the free balance is sufficient, then the SDC authenticates the pledge of the concerned securities.
| 1. | Through the SDC |
| The SDC will release the pledge after submitting Release of Pledged Securities Form by the pledgee that should be attached with valid identification documents enhanced with covering letter issued by the pledgee. | |
| 2. | Through the Pledgee (Banks) |
| The pledge system enables the pledgee to directly enter and approve the release of the pledge restriction from his clients' securities in cases where the pledge was placed for the pledgee's benefit without the SDC's intervention and in this case the pledgee transfers the investor's securities to the central registry or to the investor account maintained by the broker. |
The lien restriction is imposed by virtue of a decision issued by the competent authorities. The SDC undertakes the task of authenticating a lien upon deposited securities. As for non-deposited securities, the SDC sends circulars to all the issuers to take the necessary measures (issuers will remain responsible for placing lien restrictions upon non-deposited securities on their own responsibility).
The lien restriction is released upon receiving a decision to that effect from the competent authorities. The SDC undertakes the task of releasing lien upon deposited securities. As for non-deposited securities, the SDC sends circulars to all the issuers to take the necessary measures (issuers will remain responsible for releasing lien restrictions upon non-deposited securities on their own responsibility).
