Deposit account is a new temporary type of securities account that can be opened directly in Nasdaq CSD without the intermediation of a bank. Only issuer of the securities can apply to open a deposit account in the name of the investor, not the investor himself/herself. The issuer submits necessary applications and documents as well as takes the responsibility for data correctness in relation to the deposit account.
There has to be a separate deposit account per each ISIN, i.e investors cannot hold more than one ISIN on one deposit account. If the same investor would like to hold another issuer’s securities on the deposit account then the other issuer has to apply for a new deposit account for that investor.
Opening the deposit account is subject to the same kind of „Know-your-customer“ (KYC), Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) principles as are applied when opening a securities account in a bank.
Deposit account can be opened on two occasions:
1. Initial issuance of a joint-stock company or a private limited company.
2. Increase of capital of a joint-stock company or a private limited company that is not a bonus issue.
The time frame to open a deposit account is dependent on when KYC, AML and CFT procedures are completed. Only after these procedures are completed successfully can a deposit account for the investor be opened. Then it is possible to proceed with to registration of the company or increase of capital.
Applications to be submitted:
- Deposit account agreement and application to open a deposit account by the issuer
- Application for Sanctions Screening
- From “Information on the issuer regarding the application of due diligence measures” filled and signed by the issuer
- Form “Information on the account holder regarding the application of due diligence measures” filled and signed by the the owner of the securities recorded on the deposit account.
Nasdaq CSD SE Estonian branch has outsourced KYC, AML and CFT Screening procedures and is partnering with a third party service provider. The latter is authorised on behalf of Nasdaq CSD to require necessary additional data and documentation and make queries about the issuer and the owner of the securities.
The specific information will be sent to the contact person after the documents have been checked.
Deposit account fees can be viewed here.
Securities transfer (portfolio transfer) from deposit account
Deposit account in its nature is a temporary securities account. After shareholder has opened a regular securities account via a bank (account operator), transfer from deposit account to the shareholder’s regular securities account should be initiated.
Transferring securities from the deposit account to a regular securities account requires an application from the issuer. Transfer will be made to the securities account that is opened for the same private person or legal entity that is the owner of the deposit account.
Selling securities from deposit account
It is possible to transfer securities balance in full or partially from a deposit account to change the ownership of the shares. Transfer can be made only to a regular securities account using free-of-payment (FoP) instructions. It is not possible to make a delivery-versus-payment (DvP) instruction from deposit account. It is not possible to make a transfer to another deposit account. Transaction is initiated after correct applications are received from the issuer with all the relevant documents.
It is not possible to transfer securities from a regular securities account to a deposit account.
Pledging of securities on deposit account
All actions related to pledging of securities can be done on the application of the issuer.
Application to register pledge, can be found here.
Pledged securities can be transferred to a regular securities account.
Securities can be appropriated to a regular securities account.
Securities on a deposit account are not subject to financial collateral arrangement.
Changing owner of deposit account
Due to merger or inheritance of the deposit account owner, it is necessary to open a new securities account on behalf of the acquiring company or for the heir. That is done on applications submitted by the issuer with all relevant documents supporting the change.
This is handled case by case, if there are specific questions, please contact Sales and Service Estonia at email@example.com
Screening of deposit account owners
Deposit account owners are subject to regular KYC and AML due diligence procedures. In order for the due diligence to be performed in accordance with the applicable legal acts, the CSD is entitled to require any relevant documents from the issuer and the issuer is obliged to provide this information.
The issuer is obliged to notify the CSD whenever the beneficial owner of a deposit account changes.
Closing of deposit account
Deposit account that holds no securities will be closed automatically.