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

A depository wants to frame its bye-laws governing the manner and procedure for dematerialisation of securities. Under the Depositories Act, 1996, what must the depository obtain before making such bye-laws?

A depository must obtain the previous approval of the Board, meaning SEBI, before making bye-laws. They must also be consistent with the Act and the regulations. Consent of issuers, participants or the Central Government is not the statutory requirement.

  1. AThe previous approval of the Board (SEBI)Correct
  2. BThe prior consent of every issuer whose securities it holds
  3. CThe approval of the Central Government
  4. DThe concurrence of all its participants

Explanation

Section 26(1) requires a depository to make bye-laws, consistent with the Act and regulations, only with the previous approval of the Board. Issuer, participant or Central Government approval is not the statutory requirement.

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