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

SEBI considers it expedient that a depository amend a bye-law and directs it in writing to do so within 60 days. The depository takes no action within that period. What may the Board do under Section 26 of the Depositories Act, 1996?

The Board may itself make, amend or revoke the bye-law, either in the form specified in its order or with such modifications as it thinks fit. This power arises when the depository fails or neglects to comply with the written direction within the specified period.

  1. AMake or amend the bye-law itself, in the form ordered or with modifications it thinks fitCorrect
  2. BOnly impose a monetary penalty and wait for compliance
  3. CRefer the matter to the Central Government to amend the bye-law
  4. DCancel all agreements between the depository and its participants

Explanation

Section 26(3) lets the Board direct a depository by written order to make, amend or revoke bye-laws. Under Section 26(4), on failure to comply in time, the Board may itself make, amend or revoke them, in the form specified or with modifications. Referral to the Central Government is not provided.

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