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CMA Final · Corporate and Economic Laws · SEBI Laws and Regulations

SEBI considers it expedient that a depository amend a bye-law and issues a written order specifying a period. The depository neglects to comply within that period. Under Section 26 of the Depositories Act, 1996, what may SEBI do?

SEBI may itself make, amend or revoke the bye-laws, either in the form given in its order or with such modifications as it thinks fit. Section 26(4) gives this power on the depository's failure to comply, and the section does not provide for automatic cancellation.

  1. AOnly report the matter to the Central Government for action
  2. BMake, amend or revoke the bye-law itself, in the form in the order or with such modifications as it thinks fitCorrect
  3. COnly wait for the depository's next general meeting to take it up
  4. DCancel the depository's existence automatically under this section

Explanation

Section 26(3) lets the Board direct a depository by written order to make, amend or revoke bye-laws. Under 26(4), on failure to comply within the period, the Board may itself make, amend or revoke them in the ordered form or with modifications it thinks fit. The section does not provide automatic cancellation.

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