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

Which of the following matters must the bye-laws of a depository provide for under Section 26(2) of the Depositories Act, 1996?

The bye-laws must provide for the manner of creating pledge or hypothecation in respect of securities held with a depository. This is listed in Section 26(2). Brokerage rates, public offer pricing and issuers' dividend rates are not matters the Act requires depository bye-laws to cover.

  1. AThe manner of creating pledge or hypothecation of securities held with the depositoryCorrect
  2. BThe rate of brokerage charged by stock brokers on delivery trades
  3. CThe price at which an issuer must make its public offer
  4. DThe dividend rate to be declared by issuers

Explanation

Section 26(2)(k) lists the manner of creating pledge or hypothecation of securities held with a depository among bye-law matters. Brokerage rates, offer pricing and dividend rates are not items in that list.

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