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

Nivedita Securities Ltd. is a depository participant of a depository. Under the Depositories Act, 1996, in what capacity does a participant enter into an agreement with the depository?

A participant enters into the agreement with the depository as its agent. Section 4 of the Depositories Act, 1996 requires the depository to appoint one or more participants as agents, and the agreement must be in the form specified by the bye-laws.

  1. AAs the depository's agentCorrect
  2. BAs an independent principal dealing on its own account
  3. CAs an issuer's registrar
  4. DAs a guarantor of the beneficial owner

Explanation

Section 4 provides that a depository shall enter into an agreement with one or more participants as its agent. The agreement must be in the form specified by the bye-laws. A participant is therefore not an independent principal.

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