Objection memo
The document by which an Issuer or R&T Agent flags a defect in a dematerialisation request, giving the DP 15 days to resolve the objection or supply further information before the request can be rejected.
In plain language
Not every dematerialisation request is accepted at first sight. When the Issuer or its R&T Agent finds something wrong with the DRF or the certificates — a signature that does not match, a detail that does not tally — it does not just reject the request outright. It raises an objection memo, giving the DP a chance to fix the problem.
How it works
From Chapter 7, section 7.3.3: after the Issuer/R&T Agent verifies the DRF and certificates against the depository's intimation for the same DRN, if it finds an issue it sends an objection memo to the DP. The DP informs the client and works to remove the reasons for objection or supply further information, within 15 days of receiving the objection memo.
If the DP fails to clear the objection within those 15 days, the Issuer or R&T Agent may reject the request and return the DRF and certificates to the DP, which in turn informs the client and returns the certificates, taking an acknowledgement. The client may then ask the DP to set up a fresh dematerialisation request.
The same mechanism reappears for mutual fund de-statementization: if the AMC/RTA finds a mismatch it cannot simply credit, it may instead send an objection memo, which the DP must help resolve on a timely basis.
A worked example
Mr Vora submits a DRF for 800 shares worth Rs 4,80,000 to his DP, which forwards it to the Issuer's R&T Agent with the DRN. The R&T Agent finds that the specimen signature on the DRF does not match its own records and issues an objection memo to the DP on 3 March.
The DP contacts Mr Vora, obtains a corrected, properly attested signature confirmation, and supplies it to the R&T Agent by 14 March — within the 15-day window. The R&T Agent accepts the clarification and proceeds to credit the shares.
Had the DP not resolved the objection by 18 March (15 days from the memo), the R&T Agent could have rejected the request outright and returned the DRF and physical certificates to the DP, leaving Mr Vora to start a fresh demat request if he still wanted his shares dematerialised.
Why NISM asks about it
Chapter 7, section 7.3.3, sets the 15-day objection window directly within the standard dematerialisation flow, immediately before the 15-day confirmation/rejection deadline for the R&T Agent itself. Expect a question on the exact 15-day figure, and on what happens if the DP fails to clear the objection in time.
Common exam traps
- The DP gets 15 days from the objection memo to resolve it or supply more information — not 15 days from the original DRF submission.
- Failure to clear the objection in time lets the Issuer/RT Agent reject the request outright and return the certificates.
- An R&T Agent must separately confirm or reject any demat request within 15 days of receiving the physical shares — a related but distinct 15-day rule from the objection window.
- The same objection-memo mechanism applies to mutual fund de-statementization, not only equity dematerialisation.
Check yourself
1.A DP receives an objection memo from the R&T Agent on a demat request. What must it do, and what follows if it does not?
- a)Remove the objection within 7 days, failing which the depository cancels the DRN
- b)Remove the objection or provide additional information within 15 days, failing which the Issuer/RTA may reject the request and return the DRF and certificates to the DP
- c)Remove the objection within 30 days, failing which the certificates are treated as lost in transit
- d)Refer the objection to SEBI within 15 days
Show the answer
Answer: (b) Remove the objection or provide additional information within 15 days, failing which the Issuer/RTA may reject the request and return the DRF and certificates to the DP
The DP informs the client accordingly and requests removal of reasons for objection. The DP removes these or provides additional information to the Issuer or its R&T Agent within 15 days of receiving the objection memo.
And on failure: if the DP fails to remove the objections within 15 days, the Issuer or its R&T Agent may reject the request and return the DRF and accompanying certificates to the DP. The DP informs the client accordingly. The DP also returns the security certificates to the client and obtains an acknowledgement.
Crucially, the story does not end there — the DP, if the client so requires, may generate a new dematerialisation request and send the securities again to the Issuer or its R&T Agent.
Option C imports the lost-in-transit machinery, which applies only where the certificates are not returned undelivered and are not traceable at the Issuer/RTA's office — a factual finding, not a consequence of missing a deadline.
2.Within what time must a DP forward the DRF and the security certificates to the Issuer or its R&T Agent after accepting them from the client?
- a)Within 7 days of accepting them from the client
- b)Within 15 days of accepting them from the client
- c)Within 21 days of accepting them from the client
- d)Within 30 days of accepting them from the client
Show the answer
Answer: (a) Within 7 days of accepting them from the client
The forwarding letter should refer to the allotted DRN and should be sent within seven days of accepting it from the client. The DP checklist repeats it: the DRF is forwarded only after ascertaining that the number of certificates annexed tallies with the number mentioned on the DRF, within 7 days of its receipt.
The same 7 days governs the DP's other despatch duties: forwarding the RRF to the Issuer/RTA within seven days of accepting it, and despatching destat documents to the AMC/RTA within 7 days from the date of receiving them from the BO.
The 15-day figures belong to different actors — the DP removing objections within 15 days of the objection memo, and the R&T Agent confirming or rejecting a demat request within 15 days from the date of receipt of physical shares.
3.Within what time is an R&T Agent required to confirm or reject a demat request?
- a)Within 7 days from the date the DP accepted the DRF
- b)Within 21 days from the date the DRN was generated
- c)Within 30 days from the date of receipt of the DRF
- d)Within 15 days from the date of receipt of the physical shares
Show the answer
Answer: (d) Within 15 days from the date of receipt of the physical shares
The workbook: "An R&T Agent is required to confirm/ reject a demat request within 15 days from the date of receipt of physical shares."
The other numbers belong to other steps:
- 7 days (A) — the DP must forward the DRF and certificates to the Issuer / RTA within seven days of accepting them from the client.
- 21 days (B) — used in de-statementization, where the DP follows up if the conversion request is not processed within 21 days after it has been set up.
- 30 days (C) — the rematerialisation window for sending certificates to the client.
The number 15 also appears on the DP's side: on an objection memo, the DP removes the objections or provides additional information within 15 days, failing which the RTA may reject the request.
Where this is taught
Free preparation for NISM Series VIRelated terms
- DematerialisationConverting securities held as physical certificates into book-entry holdings: the certificates are defaced, mutilated and surrendered to the issuer, and an equivalent quantity is credited to the holder's demat account.
- Registrar and Transfer AgentThe SEBI-registered agency that keeps the investor records of a mutual fund — processing purchases and redemptions, updating folios and unit capital, and issuing account statements.
- Depository participantThe SEBI-registered agent through whom an investor reaches a depository — NSDL and CDSL cannot open investor accounts themselves, so every demat account is opened and operated through a DP.
- DRNThe unique number the DP system generates once a dematerialisation request is entered, used to track that request through the Issuer or R&T Agent until it is confirmed or rejected.
- Indemnity BondThe bond a DP executes in favour of the Issuer or R&T Agent when physical certificates confirmed as electronically dematerialised are lost in transit before reaching the Issuer/R&T Agent.
- Static databaseThe frozen snapshot of physical shareholder records — names, folio numbers, certificate numbers, distinctive numbers and PAN — that depositories use to validate every fresh dematerialisation request against.