DEPOSITORIES LAW – Company Law – Dibrugarh University – Semester 2 (CBCS)

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The Depositories Act 1996

  • This Act may be called the Depositories Act, 1996.
  • It extends to the whole of India.  It shall be deemed to have come into force on the 20th day of September, 1995.  

Important Definitions

(1) In this Act, unless the context otherwise requires,-   

(a) Beneficial owner –means a person whose name is recorded as such with a depository;  

(b)Board-means the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);  

(c)Bye-Laws– means bye-laws made by a depository under section 26;   

(d)Company Law Board- means the Board of Company Law Administration constituted under section 10E of the Companies Act, 1956 (1 of 1956);  

(e) Depository- means a company formed and registered under the Companies Act, 1956 (1 of 1956) and which has been granted a certificate of registration under sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);  

  (f)Issuer– means any person making an issue of securities;  

(g) Participant- means a person registered as such under sub-  section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);   

(h)  Prescribed- means prescribed by rules made under this Act; 

RIGHTS AND OBLIGATIONS OF DEPOSITORIES, PARTICIPANTS, ISSUERS AND BENEFICIAL OWNERS  

Agreement between depository and participant   

(1) A depository shall enter into an agreement with one or more participants as its agent.  

(2) Every agreement under sub-section (1) shall be in such form as may be      specified by the bye-laws. 

 Services of depository

Any person, through a participant, may enter into an agreement, in such form as may be specified by the bye-laws, with any depository for availing its services.

Surrender of certificate of security

(1) Any person who has entered into an agreement under section 5 shall surrender the certificate of security, for which he seeks to avail the services of a depository, to the issuer in such manner as may be specified by the    regulations.  

(2) The issuer, on receipt of certificate of security under sub- section (1), shall   cancel the certificate of security and substitute in its records the name of the depository as a registered owner in respect of that security and inform the depository accordingly.  

(3) A depository shall, on receipt of information under sub-section (2), enter the name of the person referred to in sub-section (1) in its records, as the beneficial owner.  

Registration of transfer of securities with depository 

(1) Every depository shall, on receipt of intimation from a participant, register the transfer of security in the name of the transferee.  

(2) If a beneficial owner or a transferee of any security seeks to have custody of such security, the depository shall inform the issuer accordingly.   

Securities in depositories to be in fungible form

(1) All securities held by a depository shall be dematerialised and shall be in a fungible form.  

(2) Nothing contained in sections 153, 153A, 153B, 187B, 187C and 372 of the Companies Act, 1956 (1 of 1956) shall apply to a depository in respect of securities held by it on behalf of the beneficial owners.

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