CS Executive · Capital Market and Securities Laws · Laws Governing Depositories and Depository Participants
Ananya Traders Ltd. wants to know who decides the manner and procedure for dematerialisation of securities held in a depository. Under the Depositories Act, 1996, this matter is required to be provided for in which of the following?
The manner and procedure for dematerialisation must be provided for in the depository's bye-laws, which the depository makes with the previous approval of SEBI. Neither the issuer's articles nor a broker's client agreement is the statutory source for this procedure.
- AThe bye-laws of the depository, made with the previous approval of SEBICorrect
- BThe articles of association of the issuer company alone
- CThe listing agreement of each stock exchange
- DThe agreement between a beneficial owner and a stockbroker
Explanation
Section 26 requires a depository to make bye-laws, with the Board's previous approval, and these must provide for the manner and procedure for dematerialisation of securities. The issuer's articles or a broker agreement are not the prescribed source for this procedure.
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