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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 its bye-laws, and orders it in writing to do so within a set period. The depository neglects to comply. What can SEBI do under the Depositories Act, 1996?

SEBI may itself make, amend or revoke the bye-laws, either in the form specified in its order or with such modifications as it thinks fit. Section 26(4) gives it this power when a depository fails to comply with a written direction within the stated period.

  1. AMake or amend the bye-laws itself, in the form specified or with modifications it thinks fitCorrect
  2. BOnly impose a fine and wait for compliance
  3. CAsk the participants to vote on the amendment
  4. DNothing, as bye-laws are solely the depository's domain

Explanation

Section 26(3) lets the Board direct a depository by written order to make, amend or revoke bye-laws. Under Section 26(4), if the depository fails to comply within the specified period, the Board may make, amend or revoke them itself, in the specified form or with modifications it thinks fit. Thus SEBI is not limited to waiting.

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