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

Ashoka Depository Ltd wants to frame its bye-laws governing admission of participants and dematerialisation procedure. Under the Depositories Act, 1996, what is the requirement for making such bye-laws?

A depository must make its bye-laws with the previous approval of SEBI, and they must be consistent with the Depositories Act, 1996 and the regulations. Subsequent intimation alone is not enough, and neither Central Government nor participant approval is the statutory requirement.

  1. AThey must be made with the previous approval of SEBI and be consistent with the Act and regulationsCorrect
  2. BThey may be made freely and merely intimated to SEBI within thirty days
  3. CThey must be approved by the Central Government before SEBI is informed
  4. DThey must be approved by a majority of participants and issuers

Explanation

Section 26(1) says a depository makes bye-laws with the previous approval of the Board (SEBI), consistent with the Act and regulations. Mere intimation after making them, or approval by the Central Government or participants, is not the statutory requirement.

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