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

Meera, a compliance officer at a depository, prepares a list of matters that the depository's bye-laws must cover under the Depositories Act, 1996. Which item does NOT appear among the matters that Section 26(2) requires the bye-laws to provide for?

The rate of corporate tax payable by issuers on dividends is not a bye-law matter. Section 26(2) requires bye-laws on pledge or hypothecation, dispute resolution and distribution of dividends and other benefits among beneficial owners, but tax rates fall under tax law.

  1. AThe rate of corporate tax payable by issuers on dividendsCorrect
  2. BThe manner of creating pledge or hypothecation of securities held with a depository
  3. CThe procedure for resolving disputes involving depository, issuer, company or beneficial owner
  4. DThe manner of distribution of dividends, interest and monetary benefits among beneficial owners

Explanation

Section 26(2) lists items such as pledge and hypothecation, dispute resolution and distribution of dividends and monetary benefits among beneficial owners. Tax rates on issuers are a matter of tax law and are not among the bye-law subjects listed.

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