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CMA Final · Corporate and Economic Laws · SEBI Laws and Regulations

A depository has been directed by SEBI, by an order in writing under Section 26(3) of the Depositories Act, 1996, to amend a bye-law within a specified period. The depository neglects to comply. What may SEBI do under Section 26(4)?

Under Section 26(4), when a depository fails or neglects to comply with SEBI's written order within the specified period, SEBI itself may make, amend or revoke the bye-laws, either in the form specified in the order or with modifications it considers fit.

  1. AMake, amend or revoke the bye-law in the form specified in the order or with such modifications as it thinks fitCorrect
  2. BOnly impose a monetary penalty and wait for compliance
  3. CRefer the matter to the Central Government, which alone may amend the bye-law
  4. DCancel the depository's registration automatically without any further step

Explanation

If the depository fails or neglects to comply with the order within the specified period, Section 26(4) lets SEBI make the bye-laws or amend or revoke them, either as specified in the order or with modifications it thinks fit. Penalty-only, referral and automatic cancellation are not provided there.

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