How to activate Dormant CDS accounts in Kenya
How to activate dormant CDS Accounts before the Central Depository and Settlement Corporation Limited declares them dormant by December 31 2018
If you hold a dormant CDS account (inactive for over two years) you have till December 31, 2018 to activate it or you will not be allowed to transact (using the dormant CDS account). Read on to know how to activate dormant CDS accounts.
Failure to active dormant or inactive CDS accounts will see the accounts declared dormant by the Central Depository and Settlement Corporation Limited (CDSC) which formulated, and the Capital Markets Authority approved, the CDS Accounts Dormancy Rules and Procedures.
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The declaration of dormancy is intended to safeguard investors’ holdings in CDS accounts. An investor will not be able to carry out any transactions in a CDS Account that has been declared dormant. CDSC has granted a grace period of seven (7) months beginning June 1st 2018 to December 31st 2018 before the declaration of dormancy is effected.
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Genesis of the rule on Dormant CDS Accounts
Pursuant to the Dormancy Rules, CDS Accounts (Individual or Corporate, Local or Foreign) with no activity for a continuous period of twenty four (24) months as at December 31st 2018 will be declared dormant on January 1st 2019.
All stakeholders and the general public are advised to familiarize themselves with the dormancy and how to activate dormant cds accounts provisions under Rule 24A to 24E of the Central Depository Rules and Procedure 4.2 of the CDS Operational Procedures, which are available on the CDSC website www.cdsckenya.com/legal-framework/ rules-and-procedures.
See excerpts from the rules below:
24A (1) CDSC shall declare an account dormant if there has been no activity in that account for a continuous period of twenty four calendar months.
(2) An account shall be flagged dormant at the end of the day on which the account is due for declaration of dormancy.
(3) Upon declaration of dormancy on an account, CDSC shall send a notification to the account holder informing them of the declaration.
24B No transactions shall be effected on an account that has been declared dormant in accordance with Rule 24A.
Allowed activity on Dormant CDS accounts
24C Notwithstanding the generality of Rule 24B:
(1) (a) Upload of initial public offers and additional shares from bonus issues, script dividends, rights issues, splits or any other form of additional issued shares shall be automatically effected by CDSC on all eligible securities accounts irrespective of their dormancy status.
(b) the upload of shares or entitlements as per rule 24C (1) (a) in an account in dormancy shall not lift, nor be deemed to lift the dormancy status of that account and the account holder whose account is in dormancy shall not trade in shares so uploaded without first activating the account.
(2) (a) Redemption of debt instruments shall be automatically effected by CDSC on all eligible debt securities holders accounts irrespective of their dormancy status .
(b) The redemption of debt securities in an account in dormancy shall not lift nor be deemed to lift the dormancy status of that account
24E (1) An account that has been declared dormant may be re-activated by the account holder submitting to their CDA a written request. Read above on how to activate dormant cds accounts
CDS account holders are advised that one may re-activate a dormant account by submitting a duly completed re-activation request and identification documents to their CDA or stockbroker. Account holders are further advised to visit their CDAs or stockbrokers to update their account details and ensure that names, ID or passport number, postal address, email address, mobile phone number(s) and other information is accurately recorded.
How to activate dormant CDS Accounts
(2) An account holder may also re-activate their dormant CDS account via the client’s online portal on the CDSC website or through the CDSC Mobile application. (3) An account holder who wishes to activate their dormant CDS account via the online portal or the mobile application shall follow the instructions provided on the preferred platform to submit their activation request.
(4) An account holder who wishes to activate their dormant CDS account using their CDA shall submit written instructions to their central depository agent accompanied by a copy of their identification document.
(5) The central depository agent will verify the accuracy of the information submitted by the account holder and immediately initiate the reactivation process on the CDS and submit the reactivation instructions to CDSC for completion of the reactivation process.
(6) The reactivation instructions in Rule 24E (5) shall be accompanied with an indemnity letter from the central depository agent indemnifying CDSC against any liability for reactivation of dormant accounts on the instructions of the CDA.
(7) CDSC will complete the reactivation process within 24hours of receipt of client instructions on the online portal or mobile application or, in the case of activation using the CDA, receipt and verification of the reactivation instructions and indemnity from the CDA