Distinctive Number database

Every equity share a company issues carries a distinctive number — share 1, share 2, all the way to the last share. For physical shares, each certificate records the range it covers. Those numbers are what prove that the shares in existence add up to the capital the company actually issued.

For decades those records sat only with each company and its registrar. SEBI's Depository System Review Committee pointed out that the issuer alone was responsible for reconciling total issued capital, listed capital and dematerialised capital, and recommended the depositories keep a complete reconciled record too.

The result is the DN database: one place, held by the depositories, where the distinctive numbers of all equity shares of listed companies can be checked.

What SEBI decided. By circular CIR/MRD/DP/10/2015 dated 5 June 2015, the depositories create and maintain a database of distinctive numbers of equity shares of listed companies, with DN details of all physical shares and the overall DN range for dematerialised shares.

What it holds, at one place: DN range; number of equity shares issued; stock exchange where listed; dates of in-principle listing, final trading approval or dealing permission; shares held in physical or demat form; date of allotment; and shares dematerialised under a temporary (frozen) ISIN or permanent (active) ISIN.

How distinctive numbers behave.

Daily reconciliation. Separately, the R&T agent and depository reconcile every day at end of day: register of members plus pending demat and remat requests must equal depository holdings plus pending requests. Any discrepancy is resolved before any other activity.

Illustrative, following the workbook's method with smaller numbers. A company has 20,000 shares:

Q transfers 1,000 shares to S. Certificate 0002 is split: Q keeps cert. 0004, DN 12,001–17,000 (5,000); S gets a new folio 04, cert. 0005, DN 17,001–18,000 (1,000). Total still 20,000.

R loses his certificate and gets a duplicate. Folio 03 and DN 18,001–20,000 are unchanged; only the certificate number changes to 0006.

P dematerialises through NSDL. Folio 01 ceases. The NSDL folio in the register of members now carries DN 1–12,000, and the DN database shows 12,000 shares in demat and 8,000 in physical form.

Physical: Q 5,000 + S 1,000 + R 2,000 = 8,000
Demat:    NSDL 12,000
Total:                                  20,000 = issued capital ✔

If the total ever came to 20,100, the extra 100 would be shares that should not exist — which is exactly what the database is there to catch.

Chapter 12.6 (Reconciliation) and 12.6.1 (Database for Distinctive Number of Shares), with the worked tables for transfer, split, duplicate, demat and remat. Chapter 12's sample question asks who creates and maintains the DN database — the depository, not the issuer, custodian or SEBI.

• The depositories maintain the DN database, under SEBI's circular of 5 June 2015 — not the issuer and not SEBI.
• A duplicate changes the certificate number only; folio and distinctive numbers stay the same.
• A physical transfer creates a new folio but keeps the certificate number and distinctive numbers.
• On demat, distinctive numbers move to the depository's folio in the register of members; the investor's folio ceases for those shares.
• Frozen versus active ISIN is one of the fields the database records.
• Daily reconciliation is between the register of members and the depository, including pending demat and remat requests — it is a separate end-of-day process from the DN database.