CS Professional · Drafting, Pleadings and Appearances · Adjudications and Appeals under SEBI Laws
A depository's draft bye-laws, adopted without SEBI's approval, are challenged. Later SEBI, finding a bye-law inadequate, orders the depository in writing to amend it within 30 days. The depository does nothing. Which statement matches the Depositories Act?
Depository bye-laws need SEBI's previous approval. SEBI can direct amendment by written order, and if the depository neglects to comply within the specified period, SEBI may itself make, amend or revoke the bye-laws, with or without modifications. No Central Government approval is needed.
- ABye-laws need no prior approval, and SEBI may only recommend amendments
- BSEBI cannot direct amendment of bye-laws but may penalise the depository
- CBye-laws need the Board's previous approval, and on non-compliance with a written order SEBI may itself make, amend or revoke them, in the specified form or with modifications it thinks fitCorrect
- DSEBI must first obtain Central Government approval before amending the bye-laws itself
Explanation
Section 26(1) requires the Board's previous approval for bye-laws. Section 26(3) lets the Board direct making, amendment or revocation by written order. Under Section 26(4), if the depository fails to comply within the period, the Board may itself make, amend or revoke them in the specified form or with modifications. No Central Government approval is required.
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