The depository account of a partnership concern is opened in the name of the partners of the concern and not in the name of the partnership. The rationale for this is that the partnership share have been acquired by the partners out of the profit made by the concern and as such the sale proceeds are due to the partners in the profit-sharing ratio and not to the partnership. This procedure is different from that followed by banks for opening a partnership account.
For example, Mr. A is required by the depository participant to open a minimum of four depository accounts if he intends to dematerialize his current commodity holding.
Mr. B and Mr. C are regular investors in the commodities market. Their current holding includes the following:
Commodity Holding pattern
Pepper Mr. B and Mr. C
Cement Mr. B and Mr. C
Sand Mr. B and Mr. C
Mr. B and Mr. C will then be required to open to depository accounts:
• One in the name of Mr. B as the first holder and Mr. C as the second holder
• Second in the name of Mr. C as the first holder and Mr. B as the second holder
For this reason, depository has given investors the option to open and maintain multiple accounts. They can also establish accounts with a number of depository participants.
The depository accounts in joint names are opened in the joint names of the investors and cannot be opened for example as ‘either or survivor’. In commodity trades the rules and regulations are flexible but they are properly regulated through cumbersome procedures. Due to the flexibility on offer with each passing year more and more people are taking to commodity trade.