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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 on the internal control standards. The depository ignores SEBI's written order within the specified period. Under 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 modifications it considers fit. This power arises when the depository fails or neglects to comply with SEBI's written direction within the specified period.

  1. AOnly impose a monetary penalty and wait for compliance
  2. BMake, amend or revoke the bye-laws itself, in the form in the order or with modifications it thinks fitCorrect
  3. CRefer the matter to the issuer companies for a vote
  4. DSeek approval of the Central Government before any action

Explanation

Under section 26(3) SEBI may by written order direct a depository to make, amend or revoke bye-laws within a specified period. Under section 26(4), if the depository fails or neglects to comply, SEBI may itself make, amend or revoke them, either as specified in the order or with modifications it thinks fit. Nothing in the text requires Central Government approval.

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