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

Under the Depositories Act, 1996, which statement correctly describes the obligation of a depository regarding information to an issuer?

A depository must give the issuer information about transfers of securities in the names of beneficial owners, at the intervals and in the manner specified by its bye-laws. The Act leaves the periodicity to bye-laws and does not itself fix it.

  1. AIt need not inform the issuer of transfers, since the depository is the registered owner
  2. BIt must furnish information about transfer of securities in the names of beneficial owners at intervals and in a manner specified by the bye-lawsCorrect
  3. CIt must furnish such information only when the issuer pays a fee under the Companies Act
  4. DIt must furnish such information daily as fixed by the Act itself

Explanation

The Act requires every depository to furnish to the issuer information about transfers in the names of beneficial owners at such intervals and in such manner as the bye-laws specify. The Act itself does not fix a daily interval, so the last option is wrong.

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