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

Which of the following is a matter on which depository bye-laws are specifically required to provide under the Depositories Act, 1996?

Depository bye-laws must provide for the manner of creating pledge or hypothecation of securities held with a depository. Section 26(2) lists this among required matters, whereas dividend rates, issue pricing and participant salaries are not matters the bye-laws are required to cover.

  1. AThe rate of dividend payable by issuers to equity shareholders
  2. BThe manner of creating pledge or hypothecation in respect of securities held with a depositoryCorrect
  3. CThe pricing of public issues made by issuers
  4. DThe salary structure of the participants' employees

Explanation

Section 26(2)(k) lists the manner of creating pledge or hypothecation of securities held with a depository among matters for bye-laws. Dividend rates, issue pricing and participants' salaries are not in the list; only the manner of distributing dividends received from the company among beneficial owners is, under clause (j).

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