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CS Executive · Capital Market and Securities Laws · Laws Governing Depositories and Depository Participants

A depository has not framed bye-laws on internal control standards. SEBI, thinking it expedient, directs it in writing to make them within 60 days, but the depository does nothing. What may SEBI do under the Depositories Act, 1996?

If the depository fails 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 given in the order or with modifications it considers fit. It need not go to the government or merely wait.

  1. AOnly impose a monetary penalty and wait for the depository to act
  2. BMake the bye-laws itself, either in the form specified in the order or with such modifications as it thinks fitCorrect
  3. CAsk the central government to make the bye-laws
  4. DCancel all agreements between the depository and its participants automatically

Explanation

Under section 26(3) SEBI may direct a depository by written order to make or amend bye-laws. Under section 26(4), on failure to comply in time, SEBI may itself make, amend or revoke the bye-laws in the form specified or with modifications it thinks fit.

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