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Simple English definitions for legal terms
dematerialized security
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A quick definition of dematerialized security:
Dematerialized security is a type of security that does not have a physical certificate. Instead, ownership is recorded electronically. This means that there is no need for paper certificates to prove ownership. Dematerialized securities can include stocks, bonds, and other types of investments. They are a modern way of keeping track of ownership and making transactions easier and faster.
A more thorough explanation:
Dematerialized security is a type of security that does not have a physical certificate. Instead, ownership is recorded electronically.
For example, if you own stocks in a company, you used to receive a paper certificate that proved your ownership. But now, most stocks are held in dematerialized form, meaning that the ownership is recorded electronically in a database.
This type of security is also known as an uncertificated security. It is becoming more common because it is more efficient and cost-effective than using physical certificates.
Dematerialized securities are a way for investors to own assets without having to physically hold them. This makes it easier to buy and sell securities, and it reduces the risk of loss or theft of physical certificates.