When opening a trading account with a Stock Broker (Participating Organization or Investment Banks) a CDS account will be opened at the same time. Normally, stock brokers can offer Direct CDS or Nominee CDS Account.
CDS stand for “Central Depository System” and it maintain by Bursa Malaysia Depository Sdn Bhd. Previously it was known as Malaysian Central Depository (“MCD”).
Each CDS account have its own advantage and disadvantage. The table below highlighted the different between the two.
|Account Name||Under shareholder name (eg Mr M)||Under broker name ( eg HLG Nominee Tempatan for Mr M)|
|IPO application||Eligible||Not eligible|
|Paperwork on corporate exercise||Handle by shareholder||Handle by stock broker (upon instruction). Broker may impose fees.|
|Dividend||Send to shareholder||Credited to trust account with stock broker|
|Attending AGM||Eligible||Not Eligible (Possible but have to get stock broker to appoint as proxy)|
|Annual Report||Mail to shareholder||Have to request from broker|
|Share transfer||To own or relative account||Only to own account|
By looking at the table above, it is clear that Direct CDS account have more advantage when compare to Nominee CDS account. The only advantage of Nominee CDS account is shareholder do not need to worry about paperwork on corporate exercise.