Text read out of this file
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SECURITIES AND EXCHANGE BOARD OF INDIA
(DEPOSITORIES AND PARTICIPANTS)
REGULATIONS, 1996
CONTENTS
CHAPTER I
PRELIMINARY
1. Short title and commencement.
2. Definitions.
CHAPTER II
REGISTRATION OF DEPOSITORY
3. Application for grant of certificate of registration.
4. Application to conform to the requirements.
5. Furnishing of information, clarification and personal representation.
6. Consideration of application for grant of certificate of registration.
6A. Criteria for fit and proper person.
7. Grant of certificate of registration.
8. Payment of annual fee.
8A. Payment of annual charge.
9. Procedure where certificate of registration is not granted.
CHAPTER III
CERTIFICATE OF COMMENCEMENT OF BUSINESS
10. Application for grant of certificate of commencement of business.
11. Application to conform to the requirements.
12. Furnishing of information, clarification and personal representation.
13. Consideration of application for grant of certificate of commencement of business.
14. Grant of certificate of commencement of business.
15. Procedure where certificate of commencement of business is not granted.
CHAPTER IV
REGISTRATION OF PARTICIPANT
16. Application for grant of certificate of initial registration.
17. Application to conform to the requirements.
18. Furnishing information, clarification and personal representation.
19. Consideration of application for grant of certificate of initial registration.
20. Grant of certificate of [initial] registration.
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20A. Grant of certificate of permanent registration.
20AA. Participants to abide by code of conduct.
20AB. Acting as participant in more than one depository.
21-23-Omittitted.
24. Procedure where certificate of initial or permanent registration is not granted.
25. Effect of refusal to grant certificate of permanent registration.
CHAPTER V
RIGHTS AND OBLIGATIONS OF DEPOSITORIES, PARTICIPANTS, ISSUERS,
MANNER OF SURRENDER OF CERTIFICATE OF SECURITY AND CREATION OF
PLEDGE OR HYPOTHECATION
26. Rights and obligations of depositories, etc.
27. Depository to declare specific securities eligible.
28. Security eligible for dematerialization.
29. Agreement between depository and issuer.
30. Systems and procedures.
31. Connectivity.
32. Mechanism for investor protection.
33. Withdrawal by participant.
34. Internal monitoring, review and evaluation of systems and controls.
35. External monitoring, review and evaluation of systems and controls.
36. Insurance against risks.
37. Manner of keeping records.
38. Records to be maintained.
39. Co-operation with other entities.
40. Prohibition of assignment.
41. Agreement by participant.
42. Separate accounts.
43. Statement of accounts.
44. Transfer or withdrawal by beneficial owner.
45. Connectivity.
46. Monitoring, reviewing and evaluating internal systems and controls.
47. Reconciliation.
48. Returns.
49. Record of services.
50. Manner of keeping records.
51. Records to be maintained depository-wise.
52. Prohibition of assignment.
53. Agreement by issuer.
53A. Manner of handling share registry work.
53B. Redressal of investor grievances.
53C. Investor Protection Fund.
54. Manner of surrender of certificate of security.
55. Reconciliation.
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55A. Audit.
56. Connectivity.
57. Information.
58. Manner of creating pledge or hypothecation.
58A. Investment advice.
58B. Appointment of compliance officer.
CHAPTER VI
INSPECTION
59. Board‘s right to inspect.
60. Notice before inspection and investigation.
61. Obligations on inspection by the Board.
62. Submission of report to the Board.
63. Action on inspection or investigation report.
63A. Appointment of Auditor.
63B.Board to recover the expenses.
63C. Application of Chapter.
CHAPTER VII
PROCEDURE FOR ACTION IN CASE OF DEFAULT
64. Liability for action in case of default.
65 to 69- Omitted.
FIRST SCHEDULE
FORM A - Application for grant of certificate of registration as depository
FORM B - Certificate of registration as depository
FORM C - Application for grant of certificate of commencement of business as depository
FORM D - Certificate of commencement of business as depository
FORM E - Application for Grant of Certificate of Initial/ Permanent Registration as Participant
FORM-F - Certificate of Initial/ Permanent Registration as Participant
SECOND SCHEDULE
Part A- Application fees, registration fees and annual fees
Part B- Manner of payment of application, registration and annual fees
THIRD SCHEDULE
Code of conduct for participants
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SECURITIES AND EXCHANGE BOARD OF INDIA
(DEPOSITORIES AND PARTICIPANTS)
REGULATIONS, 1996
In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act,
1992 (15 of 1992) read with section 25 of the Depositories Ordinance, 1996 (17 of 1996), the Securities
and Exchange Board of India hereby makes the following regulations, namely:—
CHAPTER I
PRELIMINARY
Short title and commencement.
1. (1) These regulations may be called the Securities and Exchange Board of India (Depositories and
Participants) Regulations, 1996.
(2) They shall come into force on the date of their publication in the Official Gazette.
Definitions.
2. (1) [In these regulations, unless the context otherwise requires, the terms used in these regulations shall
bear the meanings assigned to them below, and their cognate expressions shall be construed accordingly,-
]1
(a) ―Act‖ means the Securities and Exchange Board of India Act, 1992 (15 of 1992);
2[(aa) "associate" shall have the same meaning as assigned to it under clause (b) of sub-regulation (1) of
regulation 2 of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations)
Regulations, 2012 or any modification thereof;]
3[4[(ab)] ―change in control‖ –
(i) in case of a body corporate –
(A) if its shares are listed on any recognised stock exchange, shall be construed with
reference to the definition of control in terms of regulations framed under clause (h) of
sub-section (2) of section 11 of the Act;
(B) in any other case, shall be construed as change in the controlling interest in the body
corporate;
Explanation: For the purpose of para (B) of this sub-clause, the expression ―controlling
interest‖ means an interest, whether direct or indirect, to the extent of at least fifty-one percent
of voting rights in the body corporate;
(ii) in a case other than that of a body corporate, shall be construed as any change in its legal
formation or ownership.]
1 Substituted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012. Prior to
substitution, it read as under:
―In these regulations, unless the context otherwise requires,—‖
2 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
3 Inserted by the SEBI (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2011, w.e.f.
19-4-2011.
4 Renumbered by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012
5
5[(ac) "control" shall have the same meaning as assigned to it under clause (e) of sub-regulation (1) of
regulation 2 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011 or any modification thereof;]
6[(b) ―Depositories Act‖ means the Depositories Act, 1996 (22 of 1996);]
(c) 7[***]
(d) ―Form‖ means any of the forms specified in the First Schedule;
8[(da) "governing board‖ means the board of directors of a depository;]
(e) ―inspecting officer‖ means any person authorised by the Board under regulation 59;
[(ea) "key management personnel" means a person serving as head of any department or in such senior
executive position that stands higher in hierarchy to the head(s) of department(s) in the depository or in
any other position as declared so by such depository;
(eb) "persons acting in concert" in the context of acquisition or holding of shares or voting rights or
control shall mutatis mutandis have the same meaning as assigned to it in clause (q) of sub-regulation (1)
of regulation 2 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011 or any modification thereof;
(ec) "public interest director" means an independent director, representing the interests of investors in
securities market and who is not having any association, directly or indirectly, which in the opinion of the
Board, is in conflict with his role;
(ed) "regulatory department" means a department of a depository which is entrusted with regulatory
powers and duties and includes such department as may be specified by the Board;"
(f) ―Schedule‖ means any of the Schedules annexed to these regulations;]9
10(fa) "shareholder director" means a director who represents the interest of shareholders, and elected or
nominated by such shareholders;
(g) ―sponsor‖ means any person or persons who, acting alone or in combination with another person
proposes to establish a depository and undertakes to perform the obligations of a sponsor under
these regulations.
11[Explanation.—Any person who acting alone or in combination with others holds not less than 51 per
cent of the share capital of the depository as a sponsor and undertakes to perform the obligation under
these regulations shall be deemed to be a sponsor for the purpose of these regulations.]
12[(2) Words and expressions used and not defined in these regulations but defined in the Act, the
Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996, the Companies Act,
1956 or any rules or regulations made thereunder shall have the same meanings respectively
5 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
6 Substituted by the SEBI (Depositories and Participants) (Amendment) Regulations, 1997, w.e.f. 7-2-1997.
7 Omitted by the SEBI(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, w.e.f. 27-9-
2002.
8 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
9 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
10 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
11 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2000, w.e.f. 26-12-2000.
12 Substituted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012. Prior to
substitution, it read as under:
―(2) Words and expressions used and not defined in these regulations but defined in the Act or in the Depositories Ordinance
shall have the meanings respectively assigned to them in the Act or the Depositories Ordinance.‖
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assigned to them in those Acts, rules or regulations made thereunder or any statutory
modification or re-enactment thereto, as the case may be.]
CHAPTER II
REGISTRATION OF DEPOSITORY
Application for grant of certificate of registration.
3. (1) An application for the grant of a certificate of registration as a depository shall be made to the
Board by the sponsor in Form A, shall be accompanied by the fee specified in Part A of the Second
Schedule and be paid in the manner specified in Part B thereof.
(2) The application shall be accompanied by draft bye-laws of the depository that is proposed to be set-up.
Application to conform to the requirements.
4. An application in Form A which is not complete in all respects and does not conform to the instructions
specified therein shall be rejected:
Provided that before rejecting any such application, the sponsor shall be given in writing an opportunity
to remove, within thirty days of the date of communication in this regard, the objections indicated by the
Board:
Provided further that the Board may, on being satisfied that it is necessary to extend the period specified
in the first proviso, extend such period by such further time as it thinks necessary in order to enable the
applicant to remove the objections indicated by the Board.
Furnishing of information, clarification and personal representation.
5. (1) The Board may require the sponsor to furnish such further information or clarification regarding
matters relevant to the activity of the depository for the purpose of consideration of the application.
(2) The sponsor or his authorised representative shall, if so required, appear before the Board for personal
representation, in connection with the grant of certificate of registration.
Consideration of application for grant of certificate of registration.
6.13(1) The Board shall not consider an application under regulation 3, unless the sponsor belongs to one
of the following categories, namely :—
(i) a public financial institution as defined in section 4A of the Companies Act, 1956 (1 of 1956);
(ii) a bank included for the time being in the Second Schedule to the Reserve Bank of India Act, 1934 (2
of 1934);
(iii) a foreign bank operating in India with the approval of the Reserve Bank of India;
(iv) a recognised stock exchange within the meaning of clause (j) of section 2 of the Securities Contracts
(Regulation) Act, 1956 (42 of 1956);
13 Renumbered by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012
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(v) a body corporate engaged in providing financial services where not less than seventy-five per cent of
the equity capital is held by any of the institutions mentioned in sub-clause (i), (ii), (iii) or (iv)
jointly or severally;
(vi) a body corporate constituted or recognised under any law for the time being in force in a foreign
country for providing custodial, clearing or settlement services in the securities market and approved
by the Central Government;
(vii) an institution engaged in providing financial services established outside India and approved by the
Central Government; or
(viii) 14[.]
15[(2) The Board shall not consider an application under regulation 3, unless the applicant/sponsor is a fit
and proper person.]
16[Requirement of fit and proper.
6A. (1) Every depository, its sponsor, shareholder and participant shall satisfy the fit and proper criteria at
all times.
(2) For the purpose of determining whether an applicant, depository, its sponsor, shareholder, director and
key management personnel or a participant, is a ‗fit and proper person‘ under these regulations, the Board
may take into consideration the criteria specified in Schedule II of the Securities and Exchange Board of
India (Intermediaries) Regulations, 2008.
(3) If any question arises as to whether a person is fit and proper, the Board‘s decision on such question
shall be final]
17[Eligibility for acquiring or holding shares in a depository.
6B. (1) No person shall, directly or indirectly, acquire or hold equity shares or voting rights of a
depository unless he is a fit and proper person.
(2) Any person who, directly or indirectly, either individually or together with persons acting in concert,
acquires equity shares such that his shareholding exceeds two percent. of the paid up equity share capital
of a depository, shall seek approval of the Board
within fifteen days of the acquisition.
(3) Any person holding more than two per cent. of the paid up equity share capital of the depository on
the date of commencement of the Securities and Exchange Board of India (Depositories and Participants)
14 Omitted, ibid. Prior to omission, clause as Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations,
1998, w.e.f. 5-1-1998,. read as under:
―(viii)
the applicant is a fit and proper person.‖
15 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
16Substituted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012. Prior to
substitution, Regulation 6A as inserted by the SEBI (Intermediaries) Regulations, 2008, w.e.f. 26-05-2008, read as under:
“Criteria for fit and proper person.
6A. For the purpose of determining whether an applicant or the depository and participant is a fit and proper person the Board
may take into account the criteria specified in Schedule II of the Securities and Exchange Board of India (Intermediaries)
Regulations, 2008.‖
17 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
8
(Amendment) Regulations, 2012, shall seek approval of the Board within a period of ninety days from the
date of such commencement.
(4) If approval under sub-regulation (2) or (3) is not granted by the Board to any person, such person shall
forthwith divest his excess shareholding.
(5) Any person holding more than two per cent. of the paid up equity share capital in a depository shall
file a declaration within fifteen days from the end of every financial year to the depository that he
complies with the fit and proper criteria.
(6) Save as otherwise provided in these regulations, the shareholding or voting rights of any person in a
depository shall not exceed the limits specified in these regulations at any point of time.
(7) For determining the shareholding of any person in a depository as specified in these regulations, any
instrument held, owned or controlled, directly or indirectly, by him that entitles him the voting rights or
provides for entitlement to voting rights or equity shares or any other rights over equity shares at any
future date, shall also be included.]
Grant of certificate of registration.
7. After considering the application under regulation 3, with reference to the qualifications specified in
regulation 6, if the Board is satisfied that the company established by the sponsor is eligible to act as
depository, it may grant a certificate of registration in Form B to the depository subject to the following,
namely :—
(a) the depository shall pay the registration fee specified in Part A of the Second Schedule in the
manner specified in Part B thereof, within fifteen days of receipt of intimation from the Board;
(b) the depository shall comply with the provisions of the Act, the Depositories 18[Act], the bye-laws,
agreements and these regulations ;
(c) the depository shall not carry on any activity other than that of a depository unless the activity is
incidental to the activity of the depository:
19[Provided that a depository may carry out such activity not incidental to its activities as a depository, as
may be assigned to the depository by the Central Government or by a regulator in the financial
sector, through the establishment of Strategic Business Unit(s) specific to each activity with the
prior approval of the Board and subject to such conditions as may be prescribed by the Board,
including transfer of such activity to a separate company within such time as may be specified by
the Board, having regard to the matters which are relevant to the efficient and orderly function of the
Depository as mentioned in regulation 13.
Explanation: For the purposes of this clause, a Strategic Business Unit shall be an organizational
unit of a company with its own mission, objectives and business strategy that is given the
responsibility to serve the particular demands of one business area with appropriate technological,
financial and other segregations.]
18 Substituted for ―Ordinance‖ by the SEBI (Depositories and Participants) (Amendment) Regulations, 1997, w.e.f. 7-2-1997.
19 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2007, w.e.f. 10-10-2007.
9
20[(cc) the depository complies with the shareholding and governance structure requirements specified in
these regulations;]
21[(d) the sponsor shall, at all times, hold at least fifty-one per cent of the equity share capital of the
depository:]
22[Provided that a recognised stock exchange that is a sponsor of any depository shall not hold more than
twenty four per cent. of the paid up equity share capital of that depository:
Provided further that any such recognised stock exchange holding more than twenty four per cent. of the
paid up equity share capital in a depository as on the date of commencement of the Securities and
Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2012, shall reduce its
holding in the depository to twenty four per cent. within a period of three years from the date of such
commencement;]
(e) no participant shall at any time, hold more than five per cent of the equity capital of the depository;
23[***]
24[(ea) no person other than a sponsor, whether resident in India or not, shall at any time, either
individually or together with persons acting in concert, hold more than five per cent. of the equity
share capital in the depository;
Explanation: For the purposes of this clause, -
(i) the expression ―person resident in India‖ shall have the meaning assigned to it in clause (v) of
section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999);
(ii) the expression ―persons acting in concert‖ shall have the meaning derived from clause (e) of
sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 1997;
(eb) 25[Subject to the limits as otherwise prescribed by the Central Government from time to time,]
the combined holding of all persons resident outside India in the equity share capital of the
depository shall not exceed, at any time, forty-nine per cent. of its total equity share capital26[:]
27[***]
20 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
21 Substituted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2008, w.e.f. 17-3-2008. Prior to
substitution, it read as under:
―(d) the sponsor shall, at all times, hold at least fifty-one per cent of the equity capital of the depository and the balance of the
equity capital of the depository shall be held by its participants;‖
22 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
23 Omitted, ibid. Prior to omission, the proviso and explanation as amended by the SEBI(Depositories and Participants)
(Amendment) Regulations, 1997, w.e.f. 7-2-1997, read as under:
―Provided that for the purposes of clause (d) and clause (e) no foreign entity individually or collectively either as a sponsor or as
a participant or as a sponsor and participant together shall hold more than 20 per cent of the equity capital of a depository.
Explanation.—For the purpose of this regulation, a foreign entity shall mean a body corporate or an entity where more than 51
per cent of its equity is held by persons who are not citizens of India;‖
24 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2008, w.e.f. 17-3-2008.
25Inserted by the SEBI (Depositories and Participants) (Second Amendment) Regulations, 2016, w.e.f. 7-3-2016.
26Substituted for ―, subject further to the following:‖, ibid. Priorto substitution, sub-regulation (eb) as inserted by the SEBI
(Depositories and Participants) (Amendment) Regulations, 2008, w.e.f. 17-3-2008, read as under:
―(eb) the combined holding of all persons resident outside India in the equity share capital of the depository shall not exceed, at
any time, forty-nine per cent. of its total equity share capital, subject further to the following:-‖
27Omitted, ibid. Priorto omission, sub-sub-regulations (i) to (iii) of sub-regulation (eb) as inserted by the SEBI (Depositories and
Participants) (Amendment) Regulations, 2008, w.e.f. 17-3-2008, read as under:
―(i) the combined holdings of such persons acquired through the foreign direct investment route is not more than twenty six per
cent. of the total equity share capital, at any time;
10
Provided that no foreign portfolio investor acquires shares of the depository otherwise than through
the secondary market.
(ec) no foreign 28[portfolio]investor shall have any representation in the Board of Directors of the
depository;]
(f) if any information previously submitted by the depository or the sponsor to the Board is found to be
false or misleading in any material particular, or if there is any change in such information, the
depository shall forthwith inform the Board in writing;
(g) the depository shall redress the grievances of the participants and the beneficial owners within thirty
days of the date of receipt of any complaint from a participant or a beneficial owner and keep the
Board informed about the number and the nature of redressals;
(h) the depository shall make an application for commencement of business under regulation 14 within
one year from the date of grant of certificate of registration under this regulation; and
(i) the depository shall amend its bye-laws from time to time as may be directed by the Board;
29[(j) any other condition as the Board may deem fit in the interest of securities market.]
Payment of annual fee.
8. A depository who has been granted a certificate of registration under regulation 7, shall pay annual fee
specified in Part A of the Second Schedule in the manner specified in Part B thereof.
30[ Payment of annual charge.
8A. A depository shall pay to the Board, a percentage of the annual custody charges collected by it from
the issuers as specified in Part A of Second Schedule in the manner specified in Part B thereof.]
Procedure where certificate of registration is not granted.
9. (1) Where an application for the grant of certificate of registration under regulation 3 does not satisfy
the requirements specified in regulation 7, the Board shall reject the application after giving the applicant
an opportunity of being heard.
(2) The decision of the Board to reject the application shall be communicated to the applicant in writing
within thirty days of such decision, stating therein the grounds on which the application has been rejected.
CHAPTER IIA
GOVERNANCE OF DEPOSITORY
Governing board, disclosures and corporate governance.
9A(1) The governing board of every depository shall include:
(ii) the combined holdings of foreign institutional investors is not more than twenty three per cent. of the total equity share
capital, at any time;
(iii) no foreign institutional investor acquires shares of the depository otherwise than through the secondary market;‖
28Substituted for ―portfolio‖, ibid.
29 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
30 Inserted by the SEBI (Payment of Fees) (Amendment) Regulations, 2014, w.e.f. 23-5-2014.
11
(a) shareholder directors;
(b) public interest directors; and,
(c) managing director.
(2) Subject to prior approval of the Board, the chairperson shall be elected by the governing board from
amongst the public interest directors.
(3) The number of public interest directors shall not be less than the number of shareholder directors in a
depository.
(4) The managing director shall be an ex-officio director on the governing board and shall not be included
in either the category of public interest directors or shareholder directors.
(5) Any employee of a depository may be appointed on the governing board in addition to the managing
director, and such director shall be deemed to be a shareholder director.
(6) Atleast one public interest director shall be present in the meetings of the governing board to
constitute the quorum.
(7) The disclosure requirements and corporate governance norms as specified for listed companies shall
mutatis mutandis apply to a depository.
(8) Every existing depository shall comply with this regulation within a period of three months from the
date of commencement of Securities and Exchange Board of India (Depositories and Participants)
(Amendment) Regulations, 2012.
Conditions of appointment of directors.
9B. (1) The appointment and re-appointment of all shareholder directors on the governing board of every
depository shall be with the prior approval of the Board.
(2) The public interest directors on the governing board of a depository shall be nominated by the Board.
6
(3) Public interest directors shall be nominated for a term of three years, or for such extended period, as
may be approved by the Board:
Provided that such term shall be subject to retirement and reappointment.
(4) If any issue arises as to whether an assignment or position of a public interest director is in conflict
with his role, the Board‘s decision shall be final.
(5) Upon completion of a term of three years as per sub-regulation (3), a public interest director may be
renominated after a cooling-off period of one year or such period as the Board may deem fit in the interest
of the securities market.
(6) Public interest directors shall be paid only sitting fees as specified in the Companies Act, 1956.
Appointment of managing director.
9C. (1) The appointment, renewal of appointment and termination of service of the managing director of a
depository shall be subject to prior approval of the Board.
(2) Every depository shall, subject to the guidelines issued by the Boar from time to time, determine the
qualification, manner of appointment, terms and conditions of appointment and other procedural
formalities relating to the selection/ appointment of the managing director.
12
(3) The appointment of the managing director shall be for a tenure not less than three years and not
exceeding five years.
(4) The managing director of a depository shall not—
(a) be a shareholder or an associate of a shareholder of a depository or shareholder of an associate of a
depository;
(b) be a depository participant, or his associate and agent, or shareholder of a depository participant or
shareholder of an associate and agent of a depository participant; or
(c) hold any position concurrently in the subsidiary of a depository or in any other entity associated with a
depository:
Provided that the managing director of a depository may be appointed on the governing board, but not as
managing director, of the subsidiary or associate of a depository.
(5) The managing director shall be liable for removal or termination of services by the governing board of
the depository with the prior approval of the Board for failure to give effect to the directions, guidelines
and other orders issued by the Board, or the rules, instructions, the articles of association and bye-laws of
the depository.
(6) The Board may suomotu remove or terminate the appointment of the managing director if deemed fit
in the interest of securities market:
Provided that no managing director shall be removed unless he has been given a reasonable opportunity
of being heard.
Code of Conduct for directors and key management personnel.
9D. (1) Every director of a depository shall abide by the Code of Conduct specified under Part-A of
Fourth Schedule of these regulations.
(2) Every director and key management personnel of a depository shall abide by the Code of Ethics
specified under Part-B of Fourth Schedule of these regulations.
(3) Every director and key management personnel of a depository shall satisfy the fit and proper person
criteria at all times as per sub-regulation (2) of regulation 6A.
(4) The Board may, for any failure by the directors to abide by these regulations or the Code of Conduct
or Code of Ethics or in case of any conflict of interest, either upon a reference from the depository or
suomotu, take appropriate action including removal or termination of the appointment of any director,
after providing him a reasonable opportunity of being heard.
Compensation and tenure of key management personnel.
9E. (1) A depository shall constitute a compensation committee comprising a majority of public interest
directors and chaired by a public interest director.
(2)The compensation committee shall determine the compensation of key management personnel in terms
of a compensation policy.
(3) The compensation policy shall be in accordance with the norms specified by the Board.
13
(4) The compensation payable to the managing director shall be as approved by the Board and the terms
and conditions of the compensation of the managing director shall not be changed without prior approval
of the Board.
(5) The compensation given to the key management personnel shall be disclosed in the Report of the
depository under section 217 of the Companies Act, 1956.
(6) The tenure of a key management personnel, other than a director, in a department, shall be for a fixed
period, as may be decided by the compensation committee.
Segregation of regulatory departments.
9F. The depository shall segregate its regulatory departments from other departments
in the manner specified in Fifth Schedule of these regulations.]
CHAPTER III
CERTIFICATE OF COMMENCEMENT OF BUSINESS
Application for grant of certificate of commencement of business.
10. A depository which has been granted a certificate of registration under regulation 7, shall within one
year from the date of issue of such certificate make an application to the Board for commencement of
business in Form C.
Application to conform to the requirements.
11. Any application in Form C which is not complete in all respects and does not conform to instructions
specified therein shall be rejected :
Provided that before rejecting any such application, the applicant shall be given in writing an opportunity
to remove within thirty days of the date of communication in this regard, the objections indicated by the
Board :
Provided further that the Board may, on being satisfied that it is necessary to extend the period specified
in the first proviso, extend such period by such further time as it thinks necessary in order to enable the
applicant to remove the objections indicated by the Board.
Furnishing of information, clarification and personal representation.
12. (1) The Board may require the depository to furnish such further information or clarification regarding
matters relevant for the grant of certificate of commencement of business.
(2) The depository or its authorised representative, if so required, shall appear before the Board for
personal representation in connection with the grant of certificate of commencement of business.
Consideration of application for grant of certificate of commencement of business.
14
13. (1) The Board shall take into account for considering grant of certificate of commencement of
business, all matters which are relevant to the efficient and orderly functioning of the depository and in
particular, the following, namely, whether—
(a) the depository has a net worth of not less than rupees one hundred crores;
(b) the bye-laws of the depository have been approved by the Board;
(c) the automatic data processing systems of the depository have been protected against unauthorised
access, alteration, destruction, disclosure or dissemination of records and data;
(d) the network through which continuous electronic means of communications are established between
the depository, participants, issuers and issuers‘ agents is secure against unauthorised entry or
access;
(e) the depository has established standard transmission and encryption formats for electronic
communications of data between the depository, participants, issuers and issuers‘ agents;
(f) the physical or electronic access to the premises, facilities, automatic data processing systems, data
storage sites and facilities including back up sites and facilities and to the electronic data
communication network connecting the depository, participants, issuers and issuers‘ agents is
controlled, monitored and recorded;
(g) the depository has a detailed operations manual explaining all aspects of its functioning, including
the interface and method of transmission of information between the depository, issuers, issuers‘
agents, participants and beneficial owners;
(h) the depository has established adequate procedures and facilities to ensure that its records are
protected against loss or destruction and arrangements have been made for maintaining back up
facilities at a location different from that of the depository;
(i) the depository has made adequate arrangements including insurance for indemnifying the beneficial
owners for any loss that may be caused to such beneficial owners by the wrongful act, negligence or
default of the depository or its participants or of any employee of the depository or participant; and
(j) the grant of certificate of commencement of business is in the interest of investors in the securities
market.
(2) The Board shall, before granting a certificate of commencement of business under this Chapter make a
physical verification of the infrastructure facilities and systems established by the depository.
31[Networth certificate.
13A. (1) Every depository shall maintain networth as specified under regulation 13 at all times and
submit an audited networth certificate from the statutory auditor on a yearly basis by the thirtieth day of
September of every year for the preceding financial year.
Explanation. – For the purposes of this regulation, ‗networth of a depository‘ means the aggregate value
of paid up equity share capital plus free reserves (excluding statutory funds, benefit funds and reserves
created out of revaluation) reduced by the investments in businesses, whether related or unrelated,
aggregate value of accumulated losses and deferred expenditure not written off, including miscellaneous
expenses not written off.
31 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
15
(2) Every depository shall within one month of the date of the holding of its annual general meeting,
furnish to the Board a copy of its audited balance-sheet and profit and loss account for the preceding
financial year.]
Grant of certificate of commencement of business.
14. After considering the application under regulation 13 with reference to the matters specified in sub-
regulation (1) of regulation 13 and making physical verification under sub-regulation (2) of that
regulation, if the Board is satisfied that the depository is eligible to commence business as a depository,
shall grant a certificate of commencement of business in Form D.
32[Depository to abide by the Code of Conduct.
14A. The depository holding a certificate of commencement of business shall, at all times, abide by the
Code of Conduct as specified in the Sixth Schedule.]
Procedure where certificate of commencement of business is not granted.
15. (1) If the Board, after considering the matters specified in sub-regulation (1) of regulation 13 and
making physical verification under sub-regulation (2) of that regulation, is of the opinion that the
depository shall not be granted a certificate of commencement of business, it may either—
(a) direct the depository to conform to the matters specified in regulation 13; or
(b) reject the application after giving the applicant an opportunity of being heard.
(2) The decision of the Board to reject the application shall be communicated to the depository in writing
within thirty days of such decision, stating therein the grounds on which the application has been rejected.
CHAPTER IV
REGISTRATION OF PARTICIPANT
Application for grant of certificate of 33[initial] registration.
16. (1) An application for the grant of a certificate of 34[initial] registration as a participant shall be made
to the Board in Form E, through 35[the] depository in which the applicant proposes to act as a participant,
shall be accompanied by the fee specified in Part A of the Second Schedule and be paid in the manner
specified in Part B thereof.
(2) The depository shall forward to the Board the application in Form E as early as possible, but not later
than thirty days along with its recommendations and certifying that the participant complies with the
eligibility criteria including adequate infrastructure as provided for in these regulations and the bye-laws
of the depository.
32 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
33 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2011, w.e.f. 5-7-2011.
34ibid.
35 Substituted for "each" by the SEBI (Depositories and Participants) (Amendment) Regulations, 2014, w.e.f. 24-12-2014.
16
Application to conform to the requirements.
17. An application in Form E, which is not complete in all respects and does not conform to the
instructions specified therein, shall be rejected:
Provided that before rejecting any such application, the applicant shall be given in writing an opportunity
to remove within thirty days of the date of communication in this regard, the objections indicated by the
Board :
Provided further that the Board may, on being satisfied that it is necessary to extend the period specified
in the first proviso, extend such period by such further time as it thinks necessary in order to enable the
applicant to remove the objections indicated by the Board.
Furnishing information, clarification, and personal representation.
18. (1) The Board may require the applicant, or the depository to which the applicant is to be admitted as
a participant, to furnish such further information or clarification as may be considered necessary for the
grant of a certificate of 36[initial] registration to the applicant.
(2) The applicant or his authorised representative shall, if so required, appear before the Board for
personal representation in connection with the grant of a certificate of 37[initial] registration.
Consideration of application for grant of certificate of 38[initial] registration.
19. For the purpose of grant of certificate of 39[initial] registration, the Board shall take into account all
matters which are relevant to or relating to the efficient and orderly functioning of a participant and in
particular, whether the applicant complies with the following requirements, namely :—
(a) the applicant belongs to one of the following categories,—
(i) a public financial institution as defined in section 4A of the Companies Act, 1956 (1 of 1956);
(ii) a bank included for the time being in the Second Schedule to the Reserve Bank of India Act,
1934 (2 of 1934);
(iii) a foreign bank operating in India with the approval of the Reserve Bank of India;
(iv) a State Financial Corporation established under the provisions of section 3 of the State
Financial Corporations Act, 1951 (63 of 1951);
(v) an institution engaged in providing financial services, promoted by any of the institutions
mentioned in sub-clauses (i), (ii), (iii) and (iv), jointly or severally;
(vi) a custodian of securities who has been granted a certificate of registration by the Board under
sub-section (1A) of section 12 of the Act;
(vii) a clearing corporation 40[or a clearing house] of a stock exchange;
(viii) a stock broker who has been granted a certificate of registration by the Board under sub-
section (1) of section 12 of the Act :
36ibid.
37ibid.
38ibid.
39ibid.
40 Inserted by the by the SEBI (Depositories and Participants) (Amendment) Regulations, 1997, w.e.f. 7-2-1997.
17
41[Provided that the stock broker shall have a minimum net worth of rupees 50 lakhs and the
aggregate value of portfolio of securities of the beneficial owners held in dematerialised form
in a depository through him, shall not exceed 42[100 times of the net worth of the stock
broker]:
Provided further that if the stock broker seeks to act as a participant in more than one
depository, he shall comply with the criteria specified in the first proviso separately for each
such depository :
43[Provided further that where the stock broker has a minimum net worth of rupees ten crore,
the limits on the aggregate value of the portfolio of securities of the beneficial owners held in
dematerialized form in a depository through him shall not be applicable;]
(ix) a non-banking finance company, having a net worth of not less than rupees fifty lakhs :
Provided that such company shall act as a participant only on behalf of itself and not on behalf
of any other person :
44[Provided further that a non-banking finance company may act as a participant on behalf of
any other person, if it has a net worth of Rs. 50 crore in addition to the net worth specified by
any other authority;]
45[(x) a registrar to an issue or share transfer agent who has a minimum net worth of 46[rupees ten
crores] and who has been granted a certificate of registration by the Board under sub-section
(1) of section 12 of the Act;
47[***]]
(b) the applicant is eligible to be admitted as a participant of the depository through which it has made
the application to the Board;
(c) the applicant has adequate infrastructure, systems, safeguards and trained staff to carry on activity as
a participant;
48[(cc) the applicant is a fit and proper person; and]
(d) the grant of 49[initial] certificate of registration is in the interests of investors in the securities
market.
Grant of certificate of 50[initial] registration.
20. (1) After considering the application under regulation 16, with reference to the matters specified in
regulation 19, if the Board is satisfied that the applicant is eligible for grant of certificate of 51[initial]
registration, grant a certificate in Form F.
41 Substituted by the SEBI (Depositories and Participants) (Amendment) Regulations, 1999, w.e.f. 20-5-1999.
42 Substituted by the SEBI (Depositories and Participants) (Third Amendment) Regulations, 1999, w.e.f. 21-9-1999.
43 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2003, w.e.f. 16-6-2003.
44 Inserted by the by the SEBI (Depositories and Participants) (Amendment) Regulations, 1997, w.e.f. 7-2-1997.
45 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 1999, w.e.f. 20-5-1999.
46 Substituted for ―50 lakhs‖ by the SEBI (Depositories and Participants) (Amendment) Regulations, 2003, w.e.f. 16-6-2003.
47 Proviso omitted by SEBI (Depositories and Participants) (Third Amendment) Regulations, 1999, w.e.f. 21-9-1999.
48 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 1998, w.e.f. 5-1-1998.
49 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2011, w.e.f. 5-7-2011.
50ibid.
51ibid.
18
(2) The grant of certificate of 52[initial] registration in Form F shall be subject to the following, namely
:—
(a) the participant shall pay the registration fee specified in Part A of the Second Schedule in the
manner specified in Part B thereof, within fifteen days of the receipt of intimation from the Board;
(b) the participant shall comply with the provisions of the Act, Depositories 53[Act], the bye-laws,
agreements and these regulations;
(c) the depository through which an application for certificate of registration has been forwarded holds
a certificate of commencement of business under regulation 14;
54[(ca) where the participant proposes change in control, it shall obtain prior approval of the Board for
continuing to act as such after the change;]
(d) if any information previously submitted by the participant to the Board is found to be false or
misleading in any material particular, or if there is any change in such information, the participant
shall forthwith inform the Board in writing ;
(e) the participant shall redress the grievances of beneficial owners within thirty days of the date of the
receipt of the complaint and keep the depository informed about the number and the nature of
redressals; and
(f) the participant shall pay annual fees specified in Part A of the Second Schedule in the manner
specified in Part B thereof.
55[(3) The certificate of initial registration granted under sub-regulation (1) shall be valid for a period of
five years from the date of its issue to the applicant.]
56[Grant of certificate of permanent registration.
20A.(1) A participant who has been granted a certificate of initial registration may, three months before
the expiry of the period of certificate of initial registration, make an application for grant of a
certificate of permanent registration in Form E, through the depository in which it is a participant.
(2) The participant who has already been granted a certificate of registration or has obtained renewal of
certificate of registration, prior to the commencement of the Securities and Exchange Board of India
(Depositories and Participants) (Amendment) Regulations, 2011, may, three months before the
expiry of validity of certificate of registration or before, make an application for grant of a certificate
of permanent registration in Form E, through the depository in which it is a participant.
(3) The application under sub-regulation (1) or sub-regulation (2) shall be accompanied by the
application fees as specified in Part A of the Second Schedule and be paid in the manner specified in
Part B thereof.
(4) The application for grant of a certificate of permanent registration shall be accompanied by details of
the changes that have taken place in the information that was submitted to the Board while seeking
52ibid.
53 Substituted for ―Ordinance‖ by the SEBI (Depositories and Participants) (Amendment) Regulations, 1997, w.e.f. 7-2-1997.
54 Inserted by the SEBI (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2011, w.e.f.
19-4-2011.
55 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2011, w.e.f. 5-7-2011.
56 Substituted, ibid. Prior to substitution, regulation 20A as amended by the SEBI (Depositories and Participants) (Third
Amendment) Regulations, 2003, w.e.f. 1-10-2003, read as under:
―Participants to abide by Code of Conduct.
20A.The participant holding a certificate shall, at all times, abide by the Code of Conduct as specified in the Third Schedule.‖
19
initial registration or renewal, as the case may be, and a declaration stating that no changes other
than those as mentioned in such details have taken place.
(5) The application for permanent registration made under subregulation (1) or (2) shall be dealt with in
the same manner as if it were a fresh application for grant of a certificate of initial registration.
(6) The Board, on being satisfied that the applicant is eligible, shall grant a certificate of permanent
registration in Form F and shall send an intimation to the applicant.
(7) On the grant of a certificate of permanent registration the participant shall be liable to pay
registration fee as specified in the Second Schedule of these regulations, within a period of fifteen
days of receipt of intimation from the Board.
(8) The participant shall pay annual fee as specified in the Second Schedule of these regulations.]
57[(9) The participant, to keep the registration in force, shall pay registration fee as specified in Part A of
the Second Schedule for every five years from the sixth year of the date of grant of certificate of
permanent registration.
(10) The fee specified in sub-regulation (9) shall be paid three months prior to the expiry of the block for
which the fee has been paid.]
58[Participants to abide by code of conduct.
20AA. The participant holding a certificate of initial or permanent registration shall, at all times, abide by
the Code of Conduct as specified in Third Schedule.]
59[Acting as participant in more than one depository.
20AB. (1) A participant who has been granted a certificate of registration may act as a participant of
another depository without obtaining separate certificate of registration subject to approval by such other
depository.
(2) Such a participant who desires to act as a participant of another depository shall apply to such other
depository for approval in the manner as specified by the Board.
(3) On receipt of an application under sub-regulation (2), the depository shall, on being satisfied with the
compliance of the provisions of these regulations and other relevant eligibility requirements specified by
the Board, grant approval to act as its participant subject to payment of registration fees specified in Part
A of Second Schedule in the manner specified in Part B thereof, by the participant within 15 days of the
receipt of intimation from the depository.
(4) The depository shall inform the Board about the approval granted under subregulation (3).
(5) A participant who has been granted approval under sub-regulation (3) shall pay annual fees specified
in Part A of Second Schedule in the manner specified in Part B thereof, separately for each depository.
(6) To keep the registration in force, a participant who has been granted approval under sub-regulation (3)
shall pay registration fees specified in Part A of Second Schedule in the manner specified in Part B
thereof, for every five years from the sixth year of the date of grant of approval by the depository.]
21 60[***]
57 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2013, w.e.f. 17-5-2013.
58 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2011, w.e.f. 5-7-2011.
59 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2014, w.e.f. 24-12-2014.
60 Omitted, ibid. Prior to omission, it read as under:
20
22. 61[***]
23 62[***]
Procedure where certificate of 63[initial or permanent] registration is not granted.
24. (1) Where an application for the grant of certificate of 64[initial registration under regulation 16 or of
permanent registration under regulation 20A] does not satisfy the requirements specified in regulation 19,
the Board shall reject the application after giving the applicant an opportunity of being heard.
(2) The decision of the Board to reject the application shall be communicated to the applicant in writing
within thirty days of such decision, stating therein the grounds on which the application has been rejected.
Effect of refusal to 65[grant certificate of permanent] registration.
25. Any participant whose application for a certificate of 66[permanent registration] has been rejected by
the Board under regulation 67[20A], shall from the date of expiry of the certificate of registration sought to
be renewed, cease to carry on any activity as a participant :
Provided that the Board may, in the interest of the investors in the securities market permit the participant
to carry on activities undertaken prior to the receipt of the intimation of refusal subject to such condition
as the Board may specify.
CHAPTER V
RIGHTS AND OBLIGATIONS OF DEPOSITORIES, PARTICIPANTS, ISSUERS,
MANNER OF SURRENDER OF CERTIFICATE OF SECURITY AND
CREATION OF PLEDGE OR HYPOTHECATION
Rights and obligations of depositories, etc.
“Period of validity of the certificate of registration.
21. The certificate of registration issued under regulation 20, or renewed under regulation 22 shall be valid for a period of five
years from the date of its issue or renewal, as the case may be.‖
61 Omitted, ibid. Prior to omission, it read as under:
“Renewal of certificate of registration.
22. (1) Three months before the expiry of the period of validity of a certificate of registration, the participant shall, if it so desires,
make an application for renewal in Form E through the depository in which it is a participant.
(2) The application for renewal under sub-regulation (1) shall accompany the fee specified for issue of certificate of registration
and shall be dealt with in the same manner as if it were a fresh application for grant of certificate of registration.‖
62 Omitted, ibid. Prior to omission, it read as under:
“Conditions of renewal of certificate of registration.
23. The Board may renew a certificate of registration granted to a participant subject to the conditions of certificate of registration
specified in regulation 22.‖
63 Inserted, ibid.
64 Substituted for the words and figures ―registration under regulation 16 or for its renewal under regulation 22‖, ibid.
65 Substituted for the words ―renew a certificate of‖, ibid.
66 Substituted for the words ―registration as a participant‖, ibid.
67 Substituted for “24”, ibid.
21
26. The depositories, participants, issuers, and issuers‘ agents, in addition to the rights and obligations
laid down in the Depositories 68[Act] and the bye-laws shall have the rights and obligations arising from
the agreements entered into by them.
Depository to declare specific securities eligible.
27. Every depository shall, in its bye-laws, state the specific securities which are eligible for being held in
dematerialised form in the depository.
Security eligible for dematerialisation.
28. The following securities shall be eligible for being held in dematerialised form in a depository :—
(a) shares, scrips, stocks, bonds, debentures, debenture stock69[, Indian Depository Receipts] or other
marketable securities of a like nature in or of any incorporated company or other body corporate;
(b) units of mutual funds, rights under collective investment schemes and venture capital funds,
commercial paper, certificates of deposit, securitised debt, money market instruments,
70[Government securities] and unlisted securities shall also be similarly eligible for being held in
dematerialised form in a depository;
71[(c) any other security as may be specified by the Board from time to time, by way of a notification in the
Official Gazette and subject to such conditions as it may deem fit to impose.]
Agreement between depository and issuer.
29.72[(1) Either on the issuer or on the investor exercising an option to hold his securities with a
depository in dematerialised form, the issuer shall enter into an agreement with the depository to enable
the investor to dematerialise the securities:]
73[Provided that no agreement shall be required to be entered into where the depository itself is an issuer
of securities :]
74[Provided further that no such agreement shall be required to be entered into where the State or the
Central Government is the issuer of Government securities.]
(2) Where the issuer has appointed a Registrar to the Issue or Share Transfer Agent, who has been granted
certificate of registration by the Board under sub-section (1) of section 12 of the Act, the depository shall
enter into a tripartite agreement with the issuer and the Registrar to the Issue or Share Transfer Agent, as
the case may be, in respect of the securities to be declared by the depository as eligible to be held in
dematerialised form.
Systems and procedures.
68 Substituted for ―Ordinance‖ by the SEBI (Depositories and Participants) (Amendment) Regulations, 1997, w.e.f. 7-2-1997.
69 Inserted by the SEBI (Facilitation of Issuance of Indian Depository Receipts) (Amdt.) Regulations, 2009, w.e.f. 19-6-2009.
70 Inserted by the SEBI (Depositories and Participants) (Second Amendment) Regulations, 1998, w.e.f. 21-1-1998.
71 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2004, w.e.f. 10-6-2004.
72 Substituted by the SEBI (Depositories and Participants) (Amendment) Regulations, 1997, w.e.f. 7-2-1997.
73 Inserted by the SEBI (Depositories and Participants) (Second Amendment) Regulations, 1997, w.e.f. 5-9-1997.
74 Inserted by the SEBI (Depositories and Participants) (Second Amendment) Regulations, 1998, w.e.f. 21-1-1998.
22
30. Every depository shall have systems and procedures which will enable it to co-ordinate with the issuer
or its agent, and the participants, to reconcile the records of ownership of securities with the issuer or its
agent, as the case may be, and with participants, on a daily basis.
Connectivity.
31. Every depository shall maintain continuous electronic means of communication with all its
participants, issuers or issuers‘ agents, as the case may be, clearing houses and clearing corporations of
the stock exchanges and with other depositories.
75[Mechanism for investor protection.
32. The depository shall satisfy the Board that it has a mechanism in place to ensure that the interests of
the persons buying and selling securities held in the depository are adequately protected.]
Withdrawal by participant.
33. Every depository shall allow any participant to withdraw, or transfer its account, if the request for
such withdrawal or transfer is in accordance with conditions stipulated therefor in the bye-laws of the
depository.
Internal monitoring, review and evaluation of systems and controls.
34. Every depository shall have adequate mechanisms for the purposes of reviewing, monitoring and
evaluating the depository‘s controls systems, procedures and safeguards.
External monitoring, review and evaluation of systems and controls.
35. Every depository shall cause an inspection of its controls, systems, procedures and safeguards to be
carried out annually and forward a copy of the report to the Board.
76[Business Continuity Plan.
35A. A depository shall have adequate Business Continuity Plan for data and electronic records to
prevent, prepare for, and recover from any disaster.]
77[Wind-down Plan.
35B. Every depository shall devise and maintain a wind-down plan in accordance with guidelines
specified by the Board.
75 Substituted by the SEBI (Depositories and Participants) (Second Amendment) Regulations, 2008, w.e.f. 8-8-2008. Prior to
substitution, it read as under:
“Transfer to be effected only after payment.
32. The depository shall satisfy the Board that it has a mechanism in place to ensure that the interest of the persons buying and
selling securities held in the depository are adequately protected and shall register the transfer of a security in the name of the
transferee only after the depository is satisfied that payment for such transfer has been made.‖
76 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
77Inserted by the SEBI (Depositories and Participants) (Third Amendment) Regulations, 2016 w.e.f. from 27-05-2016.
23
Explanation:- For the purpose of this regulation, 'wind-down plan' means a process or plan of action
employed, for transfer of the beneficial owner accounts and other 2 operational powers of the depository
to an alternative institution that would take over the operations of the depository in scenarios such as
erosion of net-worth of the depository or its insolvency or its inability to provide critical depository
operations or services.]
Insurance against risks.
36. Every depository shall take adequate measures including insurance to protect the interests of the
beneficial owners against risks likely to be incurred on account of its activities as a depository.
Manner of keeping records.
37. Where records are kept electronically by the depository, it shall ensure that the integrity of the
automatic data processing systems is maintained at all times and take all precautions necessary to ensure
that the records are not lost, destroyed or tampered with and in the event of loss or destruction, ensure that
sufficient back up of records is available at all times at a different place.
Records to be maintained.
38. (1) Every depository shall maintain the following records and documents, namely :—
(a) records of securities dematerialised and rematerialised;
(b) the names of the transferor, transferee, and the dates of transfer of securities;
(c) a register and an index of beneficial owners;
78[(cc) details of the holding of the securities of beneficial owners as at the end of each day;]
(d) records of instructions received from and sent to participants, issuers, issuers‘ agents and beneficial
owners;
(e) records of approval, notice, entry and cancellation of pledge or hypothecation, as the case may be;
(f) details of participants;
(g) details of securities declared to be eligible for dematerialisation in the depository; and
(h) such other records as may be specified by the Board for carrying on the activities as a depository.
(2) Every depository shall intimate the Board the place where the records and documents are maintained.
(3) Subject to the provisions of any other law the depository shall preserve records and documents for a
minimum period of five years.
Co-operation with other entities.
39. Every depository shall extend all such co-operation to the beneficial owners, issuers, issuers‘ agents,
custodians of securities, other depositories and clearing organizations as is necessary for the effective,
prompt and accurate clearance and settlement of securities transactions and conduct of business.
79[Consolidated account statement.
78 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 1997, w.e.f. 7-2-1997.
24
39A. In order to enable generation of a consolidated account statement for the use of a beneficial
owner in respect of all demat assets held by him, the depository shall enter into necessary
agreements for sharing of such information.]
Prohibition of assignment.
40. No depository shall assign or delegate to any other person its functions as a depository, without the
prior approval of the Board.
Agreement by participant.
41. Every participant shall enter into an agreement with a beneficial owner before acting as a participant
on his behalf, in a manner specified by the depository in its bye-laws.
Separate accounts.
42. (1) Separate accounts shall be opened by every participant in the name of each of the beneficial
owners and the securities of each beneficial owner shall be segregated, and shall not be mixed up with the
securities of other beneficial owners or with the participant‘s own securities.
(2) A participant shall register the transfer of securities to or from a beneficial owner‘s account only on
receipt of instructions from the beneficial owner and thereafter confirm the same to the beneficial owner
in a manner as specified by the depository in its bye-laws.
(3) Every entry in the beneficial owner‘s account shall be supported by electronic instructions or any
other mode of instruction received from the beneficial owner in accordance with the agreement with the
beneficial owner.
Statement of accounts.
43. Every participant shall provide statements of account to the beneficial owner in such form and in such
manner and at such time as provided in the agreement with the beneficial owner.
Transfer or withdrawal by beneficial owner.
44. Every participant shall allow a beneficial owner to withdraw or transfer from his account in such
manner as specified in the agreement with the beneficial owner.
Connectivity.
45. Every participant shall maintain continuous electronic means of communication with each depository
in which it is a participant.
Monitoring, reviewing and evaluating internal systems and controls.
46. Every participant shall have adequate mechanism for the purpose of reviewing, monitoring and
evaluating the participant‘s internal accounting controls and systems.
79 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2013, w.e.f. 17-5-2013.
25
Reconciliation.
47. Every participant shall reconcile his records with every depository in which it is a participant on a
daily basis.
Returns.
48. Every participant shall submit periodic returns to the Board and to every depository in which it is a
participant in the format specified by the Board or the bye-laws of the depository, as the case may be.
Record of services.
49. (1) Every participant shall maintain the following records and documents, namely :—
(a) records of all the transactions entered into with a depository and with a beneficial owner;
(b) details of securities dematerialised, rematerialised on behalf of beneficial owners with whom it has
entered into an agreement;
(c) records of instructions received from beneficial owners and statements of account provided to
beneficial owners; and
(d) records of approval, notice, entry and cancellation of pledge or hypothecation, as the case may be.
(2) Every participant shall make available for the inspection of the depository in which it is a participant
all records referred to in sub-regulation (1).
(3) Every participant shall allow persons authorised by the depository in which it is a participant to enter
its premises during normal office hours and inspect its records.
(4) Every participant shall intimate the Board the place where the records and documents are maintained.
(5) Subject to the provisions of any other law, the participant shall preserve records and documents for a
minimum period of five years.
Manner of keeping records.
50. Where records are kept electronically by the participant it shall ensure that the integrity of the data
processing systems is maintained at all times and take all precautions necessary to ensure that the records
are not lost, destroyed or tampered with and in the event of loss or destruction, ensure that sufficient back
up of records is available at all times at a different place.
Records to be maintained depository-wise.
51. If a participant enters into an agreement with more than one depository, it shall maintain the records
specified in regulation 49 separately in respect of each depository.
Prohibition of assignment.
52. No participant shall assign or delegate its functions as participant to any other person, without the
prior approval of the depository.
26
Agreement by issuer.
53. Every issuer whose securities have been declared as eligible to be held in dematerialised form in a
depository shall enter into an agreement with the depository in accordance with the provisions of
regulation 29:
80[Provided that no agreement shall be required to be entered into in case,—
(i) the depository is the issuer of securities; or
(ii) the State or the Central Government is the issuer of Government securities.]
81[Manner of handling share registry work.
53A. All matters relating to transfer of securities, maintenance of records of holders of securities,
handling of physical securities and establishing connectivity with the depositories shall be handled and
maintained at a single point i.e. either in-house by the issuer or by a Share Transfer Agent registered with
the Board.
Redressal of investor grievances.
53B. Every issuer or its agent or any person who is registered as an intermediary under this Act, shall
redress the grievances of beneficial owners within thirty days of the date of receipt of the complaint and
keep the depository informed about the number and nature of grievances redressed by it and the number
of grievances pending before it.]
82[Investor Protection Fund.
53C.(1) Every depository shall establish and maintain an Investor Protection Fund for the protection of
interest of beneficial owners:
Provided that this Fund shall not be used by the depository for the purpose of indemnifying the beneficial
owner under section 16 of the Depositories Act, 1996.
83[(2) Every depository shall credit five per cent or such percentage as may be specified by the Board, of
its profits from depository operations every year to the Investor Protection Fund.]
(3) The contribution to and utilization of the Investor Protection Fund shall be in accordance with the
norms specified by the Board.]
Manner of surrender of certificate of security.
54. (1) Any beneficial owner, who has entered into an agreement with a participant, shall inform the
participant of the details of the certificate of security which is to be dematerialised, and shall surrender
such certificate to the participant :
Provided that where a beneficial owner has appointed a custodian of securities, then he may surrender the
certificates of security to the participant through his custodian of securities.
80 Inserted by the SEBI (Depositories and Participants) (Second Amendment) Regulations, 1998, w.e.f. 21-1-1998.
81 Inserted by the SEBI (Depositories and Participants) (Second Amendment) Regulations, 2003, w.e.f. 2-9-2003.
82 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
83 Substituted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2016 w.r.e.f. 11-09-2012. Prior to its
substitution, sub-regulation (2) read as under:
"(2) Every depository shall credit twenty five per cent. of its profits every year to the Investor Protection Fund."
27
(2) The participant shall, on receipt of information under sub-regulation (1), forward such details of the
certificate of security to the depository and shall confirm to the depository that an agreement has been
entered into between the participant and the beneficial owner.
(3) The participant shall maintain records indicating the names of beneficial owners of the securities
surrendered, the number of securities and other details of the certificate of security received.
84[(4) The participant shall, within seven days of the receipt of certificate of security referred to in sub-
regulation (1) furnish to the issuer details specified in sub-regulation (2) along with the certificate of
security.
(5) Within 15 days of receipt of the certificate of security from the participant the issuer shall confirm to
the depository that securities comprised in the said certificate have been listed on the stock exchange or
exchanges where the earlier issued securities are listed and shall also after due verification immediately
mutilate and cancel the certificate of security and substitute in its record the name of the depository as the
registered owner and shall send a certificate to this effect to the depository and to every stock exchange
where the security is listed :
Provided that in case of unlisted companies the condition of listing on all the stock exchanges where
earlier issued shares are listed, shall not be applicable.]
(6) Immediately upon receipt of information from the issuer under sub-regulation (5), the depository shall
enter in its records the name of the person who has surrendered the certificate of security as the beneficial
owner, as well as the name of the participant from whom it has received intimation under sub-regulation
(2), and shall send an intimation of the same to the participant.
(7) The issuer shall maintain a record of certificates of securities which have been dematerialised.
Reconciliation.
55. The issuer or its agent shall reconcile the records of dematerialised securities with all the securities
issued by the issuer, on a daily basis:
85[Provided that where the State or the Central Government is the issuer of Government securities, the
depository shall, on a daily basis, reconcile the records of the dematerialised securities.]
86[Audit.
55A. (1) Every issuer shall submit audit report on a quarterly basis, starting from September 30, 2003, to
the concerned stock exchanges audited by a qualified Chartered Accountant or a practicing Company
Secretary, for the purposes of reconciliation of the total issued capital, listed capital and capital held by
depositories in dematerialized form, the details of changes in share capital during the quarter and the in-
principle approval obtained by the issuer from all the stock exchanges where it is listed in respect of such
further issued capital.
(2) The audit report under sub-regulation (1) shall also give the updated status of the register of members
of the issuer and confirm that securities have been dematerialized as per requests within 21 days from the
84 Substituted, supra
85 Inserted by the SEBI (Depositories and Participants) (Second Amendment) Regulations, 1998, w.e.f. 21-1-1998.
86 Inserted by the SEBI (Depositories and Participants) (Second Amendment) Regulations, 2003, w.e.f. 2-9-2003.
28
date of receipt of requests by the issuer and where the dematerialization has not been effected within the
said stipulated period, the report shall disclose the reasons for such delay.
(3) The issuer shall immediately bring to the notice of the depositories and the stock exchanges, any
difference observed in its issued, listed, and the capital held by depositories in dematerialised form.]
Connectivity.
56. Every issuer or its agent shall establish continuous electronic means of communication with the
depository with which it has entered into an agreement.
Information.
57. Every issuer whose securities have been declared as eligible for dematerialisation in a depository shall
give information to the depository about book closures, record dates, dates for the payment of interest or
dividend, dates for annual general meetings and other meetings, dates for redemption of debentures, dates
for conversion of debentures and warrants, call money dates and such other information at the time and in
the manner as may be specified by the depository in its bye-laws or agreement:
87[Provided that no such information would be required to be given to the depository where the State or
the Central Government is the issuer of Government securities.]
Manner of creating pledge or hypothecation.
58.88[(1) If a beneficial owner intends to create a pledge on a security owned by him he shall make an
application to the depository through the participant who has his account in respect of such securities.
(2) The participant after satisfaction that the securities are available for pledge shall make a note in its
records of the notice of pledge and forward the application to the depository.
(3) The depository after confirmation from the pledgee that the securities are available for pledge with the
pledger shall within fifteen days of the receipt of the application create and record the pledge and send an
intimation of the same to the participants of the pledger and the pledgee.
(4) On receipt of the intimation under sub-regulation (3) the participants of both the pledger and the
pledgee shall inform the pledger and the pledgee respectively of the entry of creation of the pledge.
(5) If the depository does not create the pledge, it shall send along with the reasons an intimation to the
participants of the pledger and the pledgee.
(6) The entry of pledge made under sub-regulation (3) may be cancelled by the depository if pledger or
the pledgee makes an application to the depository through its participant:
Provided that no entry of pledge shall be cancelled by the depository without prior concurrence of the
pledgee.
(7) The depository on the cancellation of the entry of pledge shall inform the participant of the pledger.
87 Inserted by the SEBI (Depositories and Participants) (Second Amendment) Regulations, 1998, w.e.f. 21-1-1998.
88 Sub-regulations (1) to (11) substituted for sub-regulations (1) to (12) by the SEBI (Depositories and Participants) (Second
Amendment) Regulations, 1997, w.e.f. 5-9-1997. Earlier sub-regulation (3) was amended by the SEBI (Depositories and
Participants) (Amendment) Regulations, 1997, w.e.f. 7-2-1997.
29
(8) Subject to the provisions of the pledge document, the pledgee may invoke the pledge and on such
invocation, the depository shall register the pledgee as beneficial owner of such securities and amend its
records accordingly.
(9) After amending its records under sub-regulation (8) the depository shall immediately inform the
participants of the pledger and pledgee of the change who in turn shall make the necessary changes in
their records and inform the pledger and pledgee respectively.
(10)(a) If a beneficial owner intends to create a hypothecation on a security owned by him he may do so
in accordance with the provisions of sub-regulations (1) to (9).
(b) The provisions of sub-regulations (1) to (9) shall mutatis mutandis apply in such cases of
hypothecation:
Provided that the depository before registering the hypothecatee as a beneficial owner shall obtain the
prior concurrence of the hypothecator.
(11) No transfer of security in respect of which a notice or entry of pledge or hypothecation is in force
shall be effected by a participant without the concurrence of the pledgee or the hypothecatee, as the case
may be.]
89[Investment advice.
58A. (1) A depository or a participant or any of their employees shall not render, directly or indirectly,
any investment advice about any security in the publicly accessible media, whether real-time or non-real-
time, unless a disclosure of his interest including long or short position in the said security has been made,
while rendering such advice.
(2) In case an employee of the depository or the participant is rendering such advice, he shall also disclose
the interest of his dependent family members and the employer including their long or short position in
the said security, while rendering such advice.
Appointment of compliance officer.
58B. A depository and a participant shall appoint a compliance officer who shall be responsible for
monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions, etc.,
issued by the Board or the Central Government and for redressal of investors‘ grievances.
(2) The compliance officer shall immediately and independently report to the Board any non-compliance
observed by him.]
90[Equal, fair and transparent access.
58C. A depository shall ensure equal, unrestricted, transparent and fair access to all persons without any
bias towards its associates and related entities.]
91[CHAPTER VA
LISTING OF SECURITIES
Listing.
89Inserted by the SEBI (Investment Advice by Intermediaries) (Amendment) Regulations, 2001, w.e.f. 29-5-2001.
90 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
91 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
30
58D. (1) Subject to the provisions of applicable laws in force, a depository may apply for listing of its
securities on a recognised stock exchange if,─
(a) it is compliant with the provisions of these regulations particularly those relating to ownership and
governance;
(b) it has completed three years of continuous depository operations immediately preceding the date of
application of listing; and
(c) it has obtained approval of the Board.
(2) The Board may specify such conditions as it may deem fit in the interest of the securities market
including those in relation to transfer of shares held by any person.
(3) A depository or its associates shall not list its securities on a recognized stock exchange that is a
sponsor or associate of the depository]
CHAPTER VI
INSPECTION
Board’s right to inspect.
59. The Board may appoint one or more persons as inspecting officer to undertake inspection of the books
of account, records, documents and infrastructure, systems and procedures, or to investigate the affairs of
a depository, a participant, a beneficial owner an issuer or its agent for any of the following purposes,
namely:—
(a) to ensure that the books of account are being maintained by the depository, participant, issuer or its
agent in the manner specified in these regulations;
(b) to look into the complaints received from the depositories, participants, issuers, issuers‘ agents,
beneficial owners or any other person;
(c) to ascertain whether the provisions of the Act, the Depositories 92[Act], the bye-laws, agreements
and these regulations are being complied with by the depository, participant, beneficial owner,
issuer or its agent;
(d) to ascertain whether the systems, procedures and safeguards being followed by a depository,
participant, beneficial owner, issuer or its agent are adequate;
(e) to suomotu ensure that the affairs of a depository, participant, beneficial owner, issuer or its agent,
are being conducted in a manner which are in the interest of the investors or the securities market.
Notice before inspection and investigation.
60. (1) Before ordering an inspection or investigation under regulation 59, the Board shall give not less
than 10 days notice to the depository, participant, beneficial owner, issuer or its agent, as the case may be.
(2) Notwithstanding anything contained in sub-regulation (1), where the Board is satisfied that in the
interest of the investors no such notice should be given, it may, by an order in writing direct that such
inspection be taken up without such notice.
(3) During the course of an inspection or investigation, the depository, a participant, a beneficial owner,
an issuer or its agent against whom the inspection or investigation is being carried out shall be bound to
discharge his obligation as provided in regulation 61.
Obligations on inspection by the Board.
92 Substituted for ―Ordinance‖ by the SEBI (Depositories and Participants) (Amendment) Regulations, 1997, w.e.f. 7-2-1997.
31
61. (1) It shall be the duty of the depository, a participant, a beneficial owner, an issuer or its agent whose
affairs are being inspected or investigated, and of every director, officer and employee thereof, to produce
to the inspecting officer such books, securities, accounts, records and other documents in its custody or
control and furnish him with such statements and information relating to his activities as a depository, a
participant, a beneficial owner, an issuer or its agent, as the inspecting officer may require, within such
reasonable period as the inspecting officer may specify.
(2) The depository, a participant, a beneficial owner, an issuer or its agent also allow the inspecting
officer to have reasonable access to the premises occupied by him or by any other person on his behalf
and also extend reasonable facility for examining any books, records, documents and computer data in the
possession of the depository, a participant, a beneficial owner, an issuer or its agent or such other person
and also provide copies of documents or other materials which, in the opinion of the inspecting officer are
relevant for the purposes of the inspection.
(3) The inspecting officer, in the course of inspection or investigation, shall be entitled to examine or to
record the statements of any director, officer or employee of the depository, a participant, a beneficial
owner, an issuer or its agent.
(4) It shall be the duty of every director, officer or employee of the depository, a participant, a beneficial
owner, an issuer or its agent to give to the inspecting officer all assistance in connection with the
inspection, which the inspecting officer may reasonably require.
Submission of report to the Board.
62. The inspecting officer shall, as soon as possible, on completion of the inspection or investigation as
the case may be, submit a report to the Board:
Provided that if directed to do so by the Board, he may submit interim reports.
93[Action on inspection or investigation report.
63. The Board or the Chairman shall after consideration of inspection or investigation report take such
action as the Board or Chairman may deem fit and appropriate including action under 94[Chapter V of the
Securities and Exchange Board of India (Intermediaries) Regulations, 2008.]]
95[Appointment of Auditor.
63A. The Board shall have the power to appoint an auditor to inspect or investigate, into the books of
account, records, documents, infrastructures, systems and procedures or affairs of a depository, a
participant, a beneficial owner, an issuer or its agent :
Provided that the auditor so appointed shall have the same powers of the inspecting or investigating
officer as stated in regulations 59 and 60, and the obligation of the depository, participant, beneficial
owner, issuer or its agent and their respective directors, officers and employees, as the case may be, as
stated in regulation 61, shall be applicable to the inspection or investigation under this regulation.
Board to recover the expenses.
63B. The Board shall be entitled to recover from the depository, participant, beneficial owner, issuer or its
agent, as the case may be, such expenses including fees paid to the auditors as may be incurred by it for
93 Substituted by the SEBI(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, w.e.f.
27-9-2002. Earlier it was amended by the SEBI (Depositories and Participants) (Amendment) Regulations, 1997, w.e.f. 7-2-1997.
94 Substituted for ―the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing
Penalty) Regulations, 2002‖ by the SEBI(Intermediaries) Regulations, 2008, w.e.f. 26-5-2008.
95 Inserted by the SEBI (Depositories and Participants) (Second Amendment) Regulations, 1999, w.e.f. 7-7-1999.
32
the purposes of inspecting or investigating the books of account, records, documents, infrastructures,
system and procedures of the depository, participant, beneficial owner, issuer or its agent, as the case may
be.]
96[Application of Chapter.
63C. Nothing contained in this Chapter shall be applicable to the State or the Central Government where
it is the issuer of the Government securities.]
CHAPTER VII
PROCEDURE FOR ACTION IN CASE OF DEFAULT
97[Liability for action in case of default.
64. A depository or a participant who—
(a) contravenes any of the provisions of the Act, the Depositories Act, the bye-laws, agreements and
these regulations;
(b) fails to furnish any information relating to its activity as a depository or participant as required under
these regulations;
(c) does not furnish the information called for by the Board under clause (a) of sub-section (1) of
section 18 of the Depositories Act or furnishes information which is false or misleading in any
material particular;
(d) does not co-operate in any inspection or investigation or enquiry conducted by the Board;
(e) fails to comply with any direction of the Board issued under section 18 of the Depositories Act;
(f) fails to pay the annual fee referred to in regulation 8,
shall be dealt with in the manner provided under 98[ Chapter V of the Securities and Exchange Board of
India (Intermediaries) Regulations, 2008.]]
99[Liability for action in case of default by issuer or its agent.
64A. (1) If an issuer or its agent -
(a) contravenes any of the provisions of the Depositories Act, the byelaws,agreements, these regulations
and directions issued thereunder; (
b) fails to furnish any information relating to its activity as an issuer as required under these regulations;
(c) does not furnish the information called for by the Board under clause (a) of sub-section (1) of section
18 of the Depositories Act or furnishes information which is false or misleading in any material
particular;
(d) does not co-operate in any inspection or investigation or enquiry conducted by the Board;
(e) fails to comply with any direction of the Board issued under section 18 of the Depositories Act,
96 Inserted by the SEBI (Depositories and Participants) (Second Amendment) Regulations, 1998, w.e.f. 21-1-1998. Prior to 7-7-
1999, Regulation 63C was numbered as regulations 63A.
97 Substituted by the SEBI(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, w.e.f.
27-9-2002. Earlier it was amended by the SEBI (Depositories and Participants) (Amendment) Regulations, 1997, w.e.f. 7-2-1997.
98 Substituted for ―the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing
Penalty) Regulations, 2002‖ by the SEBI(Intermediaries) Regulations, 2008, w.e.f. 26-5-2008.
99 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2013, w.e.f. 17-5-2013.
33
the Board may, without prejudice to any other action which it may take under the Act, take any action
against such issuer or its agent under the Depositories Act.
(2) The depository shall conduct inspection of the records of the issuers or agents, as the case may be to
ensure that the records of dematerialised securities are reconciled with all the securities issued by the
issuer and submit its report to the Board if there is failure by the issuers or agents in such reconciliation of
records.]
65 to 69.100[***]
101[CHAPTER VIIA
MISCELLANEOUS
Power to call for information.
70. The Board may from time to time call for any information, documents or records from the depository
or its governing board or any shareholder or sponsor thereof and from depository participant.
Directions by the Board.
71. Without prejudice to exercise of its powers under the provisions of the Act, Depositories Act, 1996
and rules and regulations made thereunder, the Board may, either suomotu or on receipt of any
information or during pendency of any inspection, inquiry or investigation or on completion thereof, in
the interest of public or trade or investors or the securities market, issue such directions as it deems fit,
including but not limited to any or all of the following:─
(a) directing a person holding equity shares or rights over equity shares in a depository in contravention of
these regulations to divest his holding, in 10 such manner as may be specified in the direction;
(b) directing transfer of any proceeds or securities to the Investor Protection Fund of a depository;
(c) debarring any depository, any shareholder of such depository, or any associate and agent of such
shareholder, or any transferee of shares from such shareholder, or sponsor(s), director(s) and key
management personnel(s) of the depository from accessing the securities market and/or dealing in
securities for such period as may be determined by the Board.
Power to remove difficulties.
72. In order to remove any difficulties in the interpretation or application of the provisions of these
regulations, the Board shall have the power to issue directions through guidance notes or circulars.
Power to specify procedures, etc. and issue clarifications.
73. For the purposes of implementation of these regulations and matters incidental thereto, the Board may
specify norms, procedures, processes, manners or guidelines as specified in these regulations, by way of
circulars.
100 Omitted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, w.e.f. 27-
9-2002.
101 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
34
FIRST SCHEDULE
FORMS
FORM A
Securities and Exchange Board of India (Depositories and
Participants) Regulations, 1996
[See regulation 3]
Application for grant of certificate of registration as depository
Securities and Exchange Board of India, Mittal Court, ‗B‘ Wing, 1st Floor
Nariman Point, Mumbai 400021 - India
INSTRUCTIONS
i. This form is meant for use by each person acting as the sponsor of a depository.
ii. The applicant should complete this form, and submit it, along with all supporting documents to the
Board at its head office at Mumbai.
iii. This application form should be filled in accordance with the regulations.
iv. Application for grant of certificate of registration as depository, will be considered provided it is
complete in all respects.
v. All answers must be typed.
vi. Information which needs to be supplied in more detail may be given on separate sheets which
should be attached to the application form.
vii. The application must be signed and all signatures must be original.
viii. The application must be accompanied by an application fee as specified in the Second Schedule to
these regulations and by the draft bye-laws.
35
ix. Every page of the form and every additional sheet must be initialled by the authorised signatory of
the applicant.
x. All copies of documents should be attested as true by an authorised notary.
Items 1-6 pertain to an applicant acting as sponsor
1. Name, address of the registered office, address for correspondence, telephone number(s), fax
number(s), telex number(s) and the name of the contact person of the sponsor.
2. Please indicate the name of the depository which is to be sponsored by the applicant.
3. Please indicate the names of other depositories, if any, which have been sponsored by the applicant, or
in which the applicant is acting as participant.
4. Please indicate the category to which the sponsor belongs as per regulation 6.
5. Please provide the following details of each person acting as sponsor :
(a) Date of incorporation or establishment, and the statute, if any, under which established (enclose
certificate of incorporation, memorandum and articles of association or statutory provisions, if any).
(b) Objects of the applicant.
(c) Details of the nature of activities carried on by the applicant.
(d) Details of affiliates and subsidiaries, and activities carried on by them.
(e) Details of registration with the Securities and Exchange Board of India, the Reserve Bank of India
or with any foreign regulatory authority of the applicant, its affiliates and its subsidiaries (enclose
documents supporting such registration).
(f) Net worth of the applicant (enclose a copy of the latest audited financial statements).
(g) Percentage and amount of the paid up capital of the proposed depository which the applicant is to
hold.
6. Declaration statement (to be given as below) by each person acting as sponsor.
We hereby agree and declare that the information supplied in the application, including the attachment
sheets, is complete and true.
And we further agree that we will notify Securities and Exchange Board of India immediately any change
in the information provided in the application.
We further agree that we shall comply with, and be bound by the Securities and Exchange Board of India
Act, 1992, and Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996,
and such other guidelines/instructions which may be announced by the Securities and Exchange Board of
India from time to time.
We further agree that as a condition of registration, we shall abide by such operational
instructions/directives as may be issued by the Securities and Exchange Board of India from time to time.
For and on behalf of.............................................
(Name of the applicant)
Authorised signatory..................
..........................
(Name)
(Signature)
Date:
Place:
Items 7-14 pertain to the depository, and should be filled in accordingly
7. Name, address of the registered office, address for correspondence, telephone number(s), fax
number(s), telex number(s) and the name of the contact person of the applicant.
36
8. Date of incorporation of the depository (enclose certificate of incorporation and memorandum and
articles of association)
(a) Objects (main and ancillary) of the depository.
(b) Authorised, issued, subscribed and paid-up capital of the depository.
(c) Proposed net worth of the depository.
(d) Details of proposed shareholding of each person acting as sponsor.
9. The following details may be given for each director of the depository, and for its principal officer.
(a) Name, age, nationality.
(b) Details of educational and other qualifications.
(c) Details of experience.
(d) Details of other directorships held.
(e) Details of any litigation connected with the securities market which has an adverse bearing on the
business of the depository, involving the director or principal officer, and details of any conviction
of the director or principal officer for a crime involving moral turpitude or of any economic offence
for which the director or principal officer has been found guilty.
10. Please indicate the details of staff and organisation structure that is proposed to be set- up prior to
commencement of business.
11. Details of infrastructure such as premises and automatic data processing, storage and back up systems
and procedures, communication systems that are proposed to be set-up prior to commencement of
business.
12. Internal evaluation and monitoring systems that are proposed to be set-up prior to the commencement
of business.
13. Arrangements for indemnification of beneficial owners that are proposed to be put in place, including
details of insurance cover proposed to be taken prior to the commencement of business.
14. Declaration statement (to be given as below).
We hereby agree and declare that the information supplied in the application including the attachment
sheets, is complete and true.
And we further agree that, we will notify Securities and Exchange Board of India immediately any
change in the information provided in the application.
We further agree that we shall comply with, and be bound by the Securities and Exchange Board of India
Act, 1992, and Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996,
and such other guidelines/instructions which may be announced by the Securities and Exchange Board of
India from time to time.
We further agree that as a condition of registration, we shall abide by such operational
instructions/directives as may be issued by the Securities and Exchange Board of India from time to time.
For
and
on
behalf
of............................................................................................................................................
(Name of the applicant)
37
Authorised signatory..........................
...............................
(Name)
(Signature)
Date:
Place:
FORM B
Securities and Exchange Board of India (Depositories
and Participants) Regulations, 1996
[See regulation 7]
Certificate of registration as depository
I. In exercise of the powers conferred by sub-section (1A) of section 12 of the Securities and
Exchange Board of India Act, 1992 (15 of 1992) read with the regulations made thereunder and with
the Depositories 102[Act], 1996 (103[22] of 1996) the Board hereby grants a certificate of registration
to................................as a Depository subject to the conditions specified in the Act, the Depositories
104[Act] and the regulations made thereunder.
II. Registration Number for the Depository is IN/SD///
Date :
Place : Mumbai
Sd/-
For and on behalf of the
Securities and Exchange Board of India
FORM C
Securities and Exchange Board of India (Depositories
and Participants) Regulations, 1996
[See regulation 10]
Application for grant of certificate of commencement of business as depository
Securities and Exchange Board of India, Mittal Court, ‗B‘ Wing, 1st Floor
Nariman Point, Mumbai 400021 - India
INSTRUCTIONS
i. This form is meant for use by a depository granted a certificate of registration by the Securities and
Exchange Board of India.
ii. The applicant should complete this form, and submit it, along with all supporting documents to the
Board at its head office at Mumbai.
iii. This application form should be filled in accordance with the regulations.
102 Substituted for ―Ordinance‖ by the SEBI (Depositories and Participants) (Amendment) Regulations, 1997, w.e.f. 7-2-1997.
103 Substituted for ―17‖, ibid.
104 Substituted for ―Ordinance‖, ibid.
38
iv. Application for grant of certificate of commencement of business will be considered provided it is
complete in all respects.
v. All answers must be typed.
vi. Information which needs to be supplied in more detail may be given on separate sheets which
should be attached to the application form.
vii. The application must be signed and all signatures must be original.
viii. Every page of the form and every additional sheet must be initialledby the authorised signatory of
the applicant.
ix. All copies of documents should be attested as true by an authorised notary.
1. Name and registration number of the applicant.
2. Date of grant of certificate of registration to the applicant.
3. Please indicate whether bye-laws have been approved by SEBI.
4. Please indicate the details of staff and organisation structure that has been set-up.
5. Please indicate the background and experience of key personnel.
6. Internal evaluation and monitoring systems including details of background and experience of
personnel involved that have been set-up (enclose copies of risk management and operations
manuals).
7. Please provide the following details of the automatic data processing and communications systems :
(a) details of hardware, software and communications systems, their capability, function and
location;
(b) details of data storage and back up procedures and sites, their capability, function and location;
(c) details of disaster recovery systems and procedures.
8. Please indicate whether premises and automatic data processing and communications systems are
owned, leased or rented (enclose copies of title lease or rental agreements).
9. Please indicate arrangements that have been put in place in order to indemnify beneficial owners.
10. Please enclose copy of insurance cover that has been taken.
11. Please enclose a copy of the participation agreement to be entered into with different categories of
participants.
12. Please enclose a copy of the agreement to be entered into with the issuer, or with the issuer and his
registrar.
13. Please enclose a copy of the agreement to be entered into between the participant, as the
depository‘s agent, and the beneficial owners.
14. Declaration statement (to be given as below) :
We hereby agree and declare that the information supplied in the application, including the attachment
sheets, is complete and true.
And we further agree that, we will notify the Securities and Exchange Board of India immediately of any
change in the information provided in the application.
We further agree that we shall comply with, and be bound by the Securities and Exchange Board of India
Act, 1992, and the Securities and Exchange Board of India (Depositories and Participants) Regulations,
1996, and such other guidelines/instructions which may be announced by the Securities and Exchange
Board of India from time to time.
39
We further agree that as a condition of registration, we shall abide by such operational
instructions/directives as may be issued by the Securities and Exchange Board of India from time to time.
For
and
on
behalf
of............................................................................................................................................
(Name of the applicant)
Authorised signatory..........................
...............................
(Name)
(Signature)
Date:
Place:
FORM D
Securities and Exchange Board of India (Depositories
and Participants) Regulations, 1996
[See regulation 14]
Certificate of commencement of business as depository
In exercise of the powers conferred by section 3 of the Depositories 105[Act], 1996 ( 106[22] of 1996) read
with the regulations, the Board hereby grants a certificate of commencement of business
to..............................................................as a depository subject to the conditions specified in the Act, the
Depositories 107[Act] and the regulations made thereunder.
Date:
Place : Mumbai
By order
Sd/-
For and on behalf of the
Securities and Exchange Board of India
FORM E
Securities and Exchange Board of India (Depositories
and Participants) Regulations, 1996
[See108[Regulation 16/ Regulation 20A]]
109[Application for Grant of Certificate of Initial/
Permanent Registration as Participant]
Securities and Exchange Board of India, Mittal Court, ‗B‘ Wing,
1st Floor Nariman Point, Mumbai 400 021 - India
105 Substituted for ―Ordinance‖ by the SEBI (Depositories and Participants) (Amendment) Regulations, 1997, w.e.f. 7-2-1997.
106 Substituted for ―17‖, ibid.
107 Substituted for ―Ordinance‖, ibid.
108 Substituted for ―regulation 16‖ by the SEBI (Depositories and Participants) (Amendment) Regulations, 2011, w.e.f. 5-7-2011.
109 Substituted for the words ―Application for grant of certificate of registration as participant‖, ibid.
40
INSTRUCTIONS
i. This form is meant for use by an applicant for grant of registration as participant.
ii. The form should be filled in by the applicant and submitted to the depository in which it is acting as
participant, who shall forward it, along with all supporting documents to the Board at its head office
at Mumbai.
iii. This application form should be filled in accordance with the regulations.
iv. Application for grant of 110[certificate of initial or permanent] registration, as the case may be, will
be considered provided it is complete in all respects.
v. All answers must be typed.
vi. Information which needs to be supplied in more detail may be given on separate sheets which
should be attached to the application form.
vii. The application must be signed and all signatures must be original.
viii. The application must be accompanied by an application fee as specified in the Second Schedule to
these regulations.
ix. Every page of the form and every additional sheet must be initialled by the authorised signatory of
the applicant.
x. All copies of documents should be attested as true by an authorised notary.
1. Name, address of the registered office, address for correspondence, telephone number(s), fax
number(s), telex number(s) of the applicant and the name of the contact person.
2. Please indicate to which of the categories under sub-regulation (a) of regulation 19, the applicant
belongs.
3.
(a) Date and place of incorporation or establishment and date of commencement of business
(enclose certificate of incorporation, memorandum and articles of association or statutory
provisions, if any).
(b) Details of the activities carried on by the applicant, in India or overseas.
(c) Details of affiliates and subsidiaries of the applicant operating in India, and activities carried
on by them.
(d) Details of registration with the Securities and Exchange Board of India, the Reserve Bank of
India or with any regulatory authority overseas of the applicant, and of its affiliates and
subsidiaries operating in India.
(e) Date of commencement of business in India and overseas (please enclose copies of the Reserve
Bank of India‘s permission, and if applicable copies of approvals from the Central Government
to carry on activities mentioned above).
(f) Type and number of beneficial owners on whose behalf the applicant proposes to act as
participant (Financial Institutions, Mutual Funds, Foreign 111[Portfolio]Investors, Portfolio
Managers, Non-Banking Finance Companies, Stock Brokers, Corporates, Individuals, or for
own account).
110 Substituted for the words ―registration as participant or renewal of such‖, ibid.
111Substituted for ―Institutional‖ by the SEBI (Depositories and Participants) (Second Amendment) Regulations, 2016, w.e.f. 7-
3-2016.
41
4. Please give the name and SEBI registration number of the depository in which the applicant is to act
as participant.
5. 112[ *** ]
6. Please state whether the applicant, his partner, director or principal officer is involved in any
litigation connected with the securities market which has an adverse bearing on the business of the
applicant; or has at any time been convicted for any moral turpitude or at any time has been found
guilty of any economic offence.
7. Please also state whether there has been any instance of violation or non-adherence to the securities
laws, code of ethics/conduct, code of business rules, for which the applicant or its parent or holding
company or affiliate may have been subject to economic, or criminal liability, or suspended from
carrying out its operations, or the registration revoked temporarily.
8. Please indicate the net worth and paid-up capital in rupees crore as per the latest audited financial
statements of the applicant.
9. Please indicate services that the applicant is already providing to beneficial owners on whose behalf
the applicant proposes to act as participant, and services proposed to be provided to beneficial
owners.
10. Please provide the following details regarding staff involved in activities as participant:
(i) organisation structure;
(ii) experience and background of key personnel.
11. Please provide the following details regarding safekeeping and security systems and procedures :
(i) risk control and operations manuals;
(ii) give details of independent internal control mechanisms for monitoring evaluation and review
of accounting, and reporting systems and procedures.
12. Please provide the following details regarding automatic data processing systems and record
keeping :
(i) details of hardware, software and communications systems, their capability, function and
location;
(ii) details of data storage and back up procedures and sites, their capability, function and location;
(iii) details of disaster recovery systems and procedures.
13. Details of insurance cover to be taken up.
14. Please indicate the applicant‘s shareholding for each depository in which it has such shareholding
and whether any shareholding is proposed to be acquired in the depository through which this
application is being made.
15. Please enclose a copy of an undertaking from the depository in which the applicant is to act as
participant that :
(a) the applicant is eligible to act as participant in the depository through which this application is
being submitted to SEBI, and meets with the eligibility criteria for participants specified in
these regulations and in the depository‘s bye-laws;
112 Omitted by the SEBI (Depositories and Participants) (Amendment) Regulations 2014 w.e.f 24.12.2014. Prior to omission, it
read as under:
―5. Please indicate the names and SEBI registration numbers of all other depositories in which the applicant is acting as
participant and the applicant‘s SEBI registration number as participants in such depositories.‖
42
(b) the applicant has adequate automatic data processing systems, adequate and competent staff,
risk management systems, procedures and manuals, disaster recovery procedures, secure data
storage and off site back up facilities, adequate communications links and insurance; to enable
the applicant to fulfil its obligations as participants to the satisfaction of the depository; and
(c) the agreement to be entered into between the participant and beneficial owners has been
submitted to the depository is in accordance with the depository‘s bye-laws.
16. Declaration statement (to be given as below).
We hereby agree and declare that the information supplied in the application, including the attachment
sheets, is complete and true.
And we further agree that, we will notify Securities and Exchange Board of India immediately any
change in the information provided in the application.
We further agree that we shall comply with, and be bound by the Securities and Exchange Board of India
Act, 1992 and the Securities and Exchange Board of India (Depositories and Participants) Regulations,
1996, and such other guidelines/instructions which may be announced by the Securities and Exchange
Board of India from time to time.
We further agree that as a condition of registration, we shall abide by such operational
instructions/directives as may be issued by the Securities and Exchange Board of India from time to time.
For
and
on
behalf
of............................................................................................................................................
(Name of the applicant)
Authorised signatory..........................
...............................
(Name)
(Signature)
Date:
Place:
FORM F
Securities and Exchange Board of India (Depositories
and Participants) Regulations, 1996
[See113[Regulation 20/ Regulation 20A]]
114[Certificate of Initial/
Permanent Registration as Participant]
I. In exercise of the powers conferred by sub-section (1A) of section 12 of the Securities and
Exchange Board of India Act, 1992 (15 of 1992) read with the regulations made thereunder and with
113 Substituted for ―regulation 20‖ by the SEBI (Depositories and Participants) (Amendment) Regulations, 2011, w.e.f. 5-7-2011.
114 Substituted for ―Certificate of Registration as participant‖, ibid.
43
the Depositories 115[Act], 1996 (116[22] of 1996) the Board hereby grants a certificate of registration
to.................................................... ........................................... as a participant subject to the
conditions specified in the Act, the Depositories 117[Act] and the regulations made thereunder.
II. Registration Number for the participant is IN/DP/ / /
118[III. This certificate of registration shall be valid from ….. to …. / for permanent, unless
suspended or cancelled by the Board.]
Date :
Place: Mumbai
By order
Sd/-
For and on behalf of the
Securities and Exchange Board of India
SECOND SCHEDULE
119[see regulations 3, 7, 8, 8A 16, 20, 20A]
Securities and Exchange Board of India (Depositories
and Participants) Regulations, 1996
PART A
APPLICATION FEES, REGISTRATION FEES, 120[ANNUAL CHARGE] AND ANNUAL FEES
Application fees payable by sponsor
(Rs.)121[5,00,000]
Application fees payable by participant
(Rs.) 122[15,000]
Registration fees payable by depository
(Rs.)123[1,00,00,000]
Registration fees payable by participant
(Rs.)124[2,00,000]
Annual fees payable by depository
(Rs.)125[50,00,000]
Annual fees payable by participant
126[Annual charges payable by depository
(Rs.) 1,000
% of annual custody charges collected by depositories
from issuers]
115 Substituted for ―Ordinance‖ by the SEBI (Depositories and Participants) (Amendment) Regulations, 1997, w.e.f. 7-2-1997.
116 Substituted for ―17‖, ibid.
117 Substituted for ―Ordinance‖, ibid.
118 Substituted for ―III. Unless renewed, the certificate of registration is valid from......to.....‖ by the SEBI (Depositories and
Participants) (Amendment) Regulations, 2011, w.e.f. 5-7-2011.
119 Substituted for ―[See regulations 3, 7, 8, 16, 20]‖, ibid.
120 Inserted by the SEBI (Payment of Fees) (Amendment) Regulations, 2014, w.e.f. 23-5-2014.
121 Substituted for "50,000" by the SEBI (Payment of Fees) (Amendment) Regulations, 2014, w.e.f. 23-5-2014.
122 Substituted for "5,000" by the SEBI (Payment of Fees) (Amendment) Regulations, 2014, w.e.f. 23-5-2014.
123 Substituted for "25,00,000" by the SEBI (Payment of Fees) (Amendment) Regulations, 2014, w.e.f. 23-5-2014.
124 Substituted for "1,00,000" by the SEBI (Payment of Fees) (Amendment) Regulations, 2014, w.e.f. 23-5-2014.
125 Substituted for "10,00,000" by the SEBI (Payment of Fees) (Amendment) Regulations, 2014, w.e.f. 23-5-2014.
126 Inserted by the SEBI (Payment of Fees) (Amendment) Regulations, 2014, w.e.f. 23-5-2014.
44
PART B
MANNER OF PAYMENT OF APPLICATION, REGISTRATION, 127[ANNUAL CHARGE] AND
ANNUAL FEES
Fees to be paid by
Manner of payment
Sponsor or depository
A demand draft or bankers cheque payable to the ―Securities and Exchange
Board of India‖ at Mumbai.
Participant
Fees to be paid to the depository in which the payer is a Participant. The
Depository shall forward the fees collected from participants to the Board,
with a demand draft or bankers cheque payable to the ―Securities and
Exchange Board of India‖ at Mumbai.
128[THIRD SCHEDULE
Securities and Exchange Board of India (Depositories
and Participants) Regulations, 1996
[Regulation 129[20AA]]
CODE OF CONDUCT FOR PARTICIPANTS
1. A participant shall make all efforts to protect the interests of investors.
2. A participant shall always endeavour to—
(a) render the best possible advice to the clients having regard to the clients needs and the environments
and his own professional skills;
(b) ensure that all professional dealings are effected in a prompt, effective and efficient manner;
(c) inquiries from investors are adequately dealt with;
(d) grievances of investors are redressed without any delay.
3. A participant shall maintain high standards of integrity in all its dealings with its clients and other
intermediaries, in the conduct of its business.
4. A participant shall be prompt and diligent in opening of a beneficial owner account, dispatch of the
dematerialisation request form, rematerialisation request form and execution of debit instruction slip and
in all the other activities undertaken by him on behalf of the beneficial owners.
5. A participant shall endeavour to resolve all the complaints against it or in respect of the activities
carried out by it as quickly as possible, and not later than one month of receipt.
6. A participant shall not increase charges/fees for the services rendered without proper advance notice to
the beneficial owners.
127 Inserted by the SEBI (Payment of Fees) (Amendment) Regulations, 2014, w.e.f. 23-5-2014.
128 Inserted by the SEBI (Depositories and Participants) (Third Amendment) Regulations, 2003, w.e.f. 1-10-2003.
129 Substituted for ―20A‖ by the SEBI (Depositories and Participants) (Amendment) Regulations, 2011, w.e.f. 5-7-2011.
45
7. A participant shall not indulge in any unfair competition, which is likely to harm the interests of other
participants or investors or is likely to place such other participants in a disadvantageous position while
competing for or executing any assignment.
8. A participant shall not make any exaggerated statement whether oral or written to the clients either
about its qualifications or capability to render certain services or about its achievements in regard to
services rendered to other clients.
9. A participant shall not divulge to other clients, press or any other person any information about its
clients which has come to its knowledge except with the approval/authorisation of the clients or when it is
required to disclose the information under the requirements of any Act, Rules or Regulations.
10. A participant shall co-operate with the Board as and when required.
11. A participant shall maintain the required level of knowledge and competency and abide by the
provisions of the Act, Rules, Regulations and circulars and directions issued by the Board. The participant
shall also comply with the award of the Ombudsman passed under the Securities and Exchange Board of
India (Ombudsman) Regulations, 2003.
12. A participant shall not make any untrue statement or suppress any material fact in any documents,
reports, papers or information furnished to the Board.
13. A participant shall not neglect or fail or refuse to submit to the Board or other agencies with which it
is registered, such books, documents, correspondence, and papers or any part thereof as may be
demanded/requested from time to time.
14. A participant shall ensure that the Board is promptly informed about any action, legal proceedings,
etc., initiated against it in respect of material breach or non-compliance by it, of any law, Rules,
regulations, directions of the Board or of any other regulatory body.
15. A participant shall maintain proper inward system for all types of mail received in all forms.
16. A participant shall follow the maker—Checker concept in all of its activities to ensure the accuracy of
the data and as a mechanism to check unauthorised transaction.
17. A participant shall take adequate and necessary steps to ensure that continuity in data and record
keeping is maintained and that the data or records are not lost or destroyed. It shall also ensure that for
electronic records and data, up-to-date back up is always available with it.
18. A participant shall provide adequate freedom and powers to its compliance officer for the effective
discharge of his duties.
19. A participant shall ensure that it has satisfactory internal control procedures in place as well as
adequate financial and operational capabilities which can be reasonably expected to take care of any
losses arising due to theft, fraud and other dishonest acts, professional misconduct or omissions.
20. A participant shall be responsible for the acts or omissions of its employees and agents in respect of
the conduct of its business.
21. A participant shall ensure that the senior management, particularly decision makers have access to all
relevant information about the business on a timely basis.
22. A participant shall ensure that good corporate policies and corporate governance are in place.]
130[FOURTH SCHEDULE
SECURITIES AND EXCHANGE BOARD OF INDIA (DEPOSITORIES
AND PARTICIPANTS) REGULATIONS, 1996
[See regulation 9D]
130 Inserted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2012, w.e.f. 11-9-2012.
46
Part-A
CODE OF CONDUCT FOR DIRECTORS
i. Meetings and minutes.
Every director of the depository shall:
a) not participate in discussions on any subject matter in which any conflict of interest exists or arises,
whether pecuniary or otherwise, and in such cases the same shall be disclosed and recorded in the
minutes of the meeting;
b) not encourage the circulation of agenda papers during the meeting, unless circumstances so require;
c) offer their comments on the draft minutes and ensure that the same are incorporated in the final
minutes;
d) insist on the minutes of the previous meeting being placed for approval in subsequent meeting;
e) endeavour to have the date of next meeting fixed at each governing board meeting in consultation with
other members of the governing board;
f) endeavour that in case all the items of the agenda of a meeting were not covered for want of time, the
next meeting is held within fifteen days for considering the remaining items.
ii. Code of Conduct for the public interest directors.
a) In addition to the conditions stated in Para (i) above, public interest directors of the depository shall,
endeavour to attend all the governing board meetings and they shall be liable to vacate office if they
remain absent for three consecutive meetings of the governing board or do not attend seventy five per
cent. of the total meetings of the governing board in a calendar year.
b) Public interest directors shall meet separately, at least once in six months to exchange views on critical
issues.
iii. Strategic planning.
Every director of the depository shall:
a) participate in the formulation and execution of strategies in the best interest of the depository and
contribute towards pro-active decision making at the governing board level;
b) give benefit of their experience and expertise to the depository and provide assistance in strategic
planning and execution of decisions.
iv. Regulatory compliances.
Every director of the depository shall:
47
a) endeavour to ensure that the depository abides by all the provisions of the Securities and Exchange
Board of India Act, 1992, Depositories Act, 1996, rules and regulations framed thereunder and the
circulars, directions issued by the Board from time to time;
b) endeavour compliance at all levels so that the regulatory system does not suffer any breaches;
c) endeavour to ensure that the depository takes commensurate steps to honour the time limit prescribed
by Board for corrective action;
d) not support any decision in the meeting of the governing board which may adversely affect the interest
of investors and shall report forthwith any such decision to the Board.
v. General responsibility.
Every director of the depository shall:
a) place priority for redressing investor grievances;
b) endeavour to analyze and administer the depository issues with professional competence, fairness,
impartiality, efficiency and effectiveness;
c) submit the necessary disclosures/statement of holdings/dealings in securities as required by the
depository from time to time as per their bye-laws or Articles of Association;
d) unless otherwise required by law, maintain confidentiality and shall not divulge/disclose any
information obtained in the discharge of their duty and no such information shall be used for personal
gains;
e) maintain the highest standards of personal integrity, truthfulness, honesty and fortitude in discharge of
their duties in order to inspire public confidence and shall not engage in acts discreditable to their
responsibilities;
f) perform their duties in an independent and objective manner and avoid activities that may impair, or
may appear to impair, their independence or objectivity or official duties;
g) perform their duties with a positive attitude and constructively support open communication, creativity,
dedication, and compassion;
h) not engage in any act involving moral turpitude, dishonesty, fraud, deceit, or misrepresentation or any
other act prejudicial to the administration of the depository.
Part-B
CODE OF ETHICS FOR DIRECTORS AND KEY MANAGEMENT PERSONNEL
The ‗Code of Ethics‘ for directors and key management personnel of the depository, is aimed at
improving the professional and ethical standards in the functioning of depository thereby creating better
investor confidence in the integrity of the market.
i. Objectives and underlying principles.
The Code of Ethics for directors and key management personnel of the depository seeks to establish a
minimum level of business/ professional ethics to be followed by these directors and key management
personnel, towards establishing a fair and transparent marketplace. The Code of Ethics is based on the
following fundamental principles:
Fairness and transparency in dealing with matters relating to the depository and the investors.
Compliance with all laws/rules/regulations laid down by regulatory agencies/depositories.
Exercising due diligence in the performance of duties.
48
Avoidance of conflict of interest between self interest of directors/ key management personnel
and interests of depository and investors.
ii. Ethics committee.
For overseeing implementation of this Code, an ethics committee shall be constituted by
every depository under the governing board.
iii. General standards.
a) Directors and key management personnel shall endeavour to promote greater awareness and
understanding of ethical responsibilities.
b) Directors and key management personnel, in the conduct of their business shall observe high standards
of commercial honour and just and equitable principles of trade.
c) The conduct of directors and key management personnel in business life should be exemplary.
d) Directors and key management personnel shall not use their position to give/get favours to/from the
executive or administrative staff of the depository, suppliers of the depository, or any issuer company
admitted to the depository.
e) Directors and key management personnel shall not commit any act which will put the reputation of the
depository, in jeopardy.
f) Directors, committee members and key management personnel of the depository, should comply with
all rules and regulations applicable to the securities market.
iv. Disclosure of dealings in securities by key management personnel of the depository.
a) Key management personnel of the depository shall disclose on a periodic basis as determined by the
depository (which could be monthly), all their dealings in securities, directly or indirectly, to the
governing board/ethics committee/ Compliance Officer.
b) The dealings in securities shall also be subject to trading restrictions for securities about which key
management personnel in the depository may have non-public price sensitive information. Requirement
laid down under Securities and Exchange Board of India(Prohibition of Insider Trading) Regulations,
1992 may be referred in this regard.
c) All transactions must be of an investment nature and not speculative in nature. Towards this end, all
securities purchased must be held for a minimum period of 60 days before they are sold. However, in
specific/exceptional circumstances, sale can be effected anytime by obtaining pre-clearance from the
Compliance Officer to waive this condition after recording in writing his satisfaction in this regard.
Explanation. -‗securities‘ for the purpose of this Code shall not include units of mutual fund.
v. Disclosure of dealings in securities by directors of the depository.
a) All transactions in securities by the directors and their family shall be disclosed to the governing board
of the depository.
b) All directors shall also disclose the trading conducted by firms/corporate entities in which they hold
twenty per cent. or more beneficial interest or hold a controlling interest, to the Ethics Committee.
c) Directors who are Govt. of India nominees or nominees of Govt. of India statutory bodies or financial
institutions and are governed by their own codes shall be exempt from this requirement.
vi. Avoidance of conflict of interest.
49
a) No director of the governing board or member of any committee of the depository shall participate in
any decision making/adjudication in respect of any person /matter in which he is in any way, directly or
indirectly, concerned or interested.
b) Whether there is any conflict of interest or not in a matter, should be decided by the governing board.
vii. Disclosures of beneficial interest.
All directors and key management personnel shall disclose to the governing board, upon assuming office
and during their tenure in office, whenever the following arises:-
a) any fiduciary relationship of self and family members and directorship/partnership of self and family
members in any depository participant or registrar and transfer agent;
b) shareholding, in cases where the shareholding of the director, directly or through his family exceeds
five per cent. in any listed company or in other entities related to the securities markets;
c) any other business interests.
viii. Role of the Chairman and directors in the day to day functioning of the depository.
a) The Chairman and directors shall not interfere in the day to day functioning of the depository and shall
limit their role to decision making on policy issues and to issues as the governing board may decide.
b) The Chairman and directors shall abstain from influencing the employees of the depository in
conducting their day to day activities.
c) The Chairman and directors shall not be directly involved in the function of appointment and
promotion of employees unless specifically so decided by the governing board.
ix. Access to information.
a) Directors shall call for information only as part of specific committees or as may be authorised by the
governing board.
b) There shall be prescribed channels through which information shall move and further there shall be
audit trail of the same. Any retrieval of confidential documents/ information shall be properly recorded.
c) All such information, especially which is non-public and price sensitive, shall be kept confidential and
not be used for any personal consideration/ gain.
d) Any information relating to the business/operations of the depository, which may come to the
knowledge of directors/ key management personnel during performance of their duties shall be held in
strict confidence, shall not be divulged to any third party and shall not be used in any manner except for
the performance of their duties.
x. Misuse of position.
Directors/committee members shall not use their position to obtain business or any pecuniary benefit in
the organization for themselves or family members.
xi. Ethics committee to lay down procedures.
a) The ethics committee shall lay down procedures for the implementation of the Code and prescribe
reporting formats for the disclosures required under the Code.
b) The Compliance Officer shall execute the requirements laid down by the ethics committee.
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While the objective of this Code is to enhance the level of market integrity and investor confidence, it is
emphasized that a written Code of ethics may not completely guarantee adherence to high ethical
standards. This can be accomplished only if directors and key management personnel of the depository
commit themselves to the task of enhancing the fairness and integrity of the system in letter and spirit.
FIFTH SCHEDULE
SECURITIES AND EXCHANGE BOARD OF INDIA (DEPOSITORIES
AND PARTICIPANTS) REGULATIONS, 1996
[See regulation 9F]
MEASUSRES TO ENSURE AUTONOMY OF REGULATORY DEPARTMENTS
In order to ensure the segregation of regulatory departments, every depository shall adopt a "Chinese
Wall" policy which separates the regulatory departments of the depository from the other departments.
The employees in the regulatory departments shall not communicate any information concerning
regulatory activity to any one in other departments. The employees in regulatory areas may be physically
segregated from employees in other departments including with respect to access controls. In exceptional
circumstances employees from other departments may be given confidential information on "need to
know" basis, under intimation to the Compliance Officer.
For the purposes of the above, "regulatory areas" shall mean those departments of a depository which are
mandated by law or those entrusted with regulatory powers and duties, and may include departments
performing the following functions:
(i) risk management;
(ii) surveillance;
(iii) participant registration;
(iv) Issuer/ securities admission;
(v) compliance;
(vi) inspection;
(vii) enforcement;
(viii) arbitration;
(ix) investor protection;
(x) investor services.
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SIXTH SCHEDULE
SECURITIES AND EXCHANGE BOARD OF INDIA (DEPOSITORIES
AND PARTICIPANTS) REGULATIONS, 1996
[See regulation 14A]
CODE OF CONDUCT FOR DEPOSITORIES
1. A depository shall always abide by the provisions of the Act, Depositories Act, 1996, Rules,
Regulations, circulars, guidelines and any other directions issued by the Board.
2. A depository shall take appropriate measures towards investor protection and education of investors.
3. A depository shall treat all its applicants/participants in a fair and transparent manner.
4. A depository shall promptly inform the Board of violations of the provisions of the Act, Depositories
Act, the rules, the regulations, circulars, guidelines or any other directions by any of its participants,
issuer or issuer‘s agent.
5. A depository shall take a proactive and responsible attitude towards safeguarding the interests of
investors, integrity of the depository system and the securities market.
6. A depository shall make endeavors for introduction of best business practices amongst itself and its
participants.
7. A depository shall act in utmost good faith and shall avoid conflict of interest in the conduct of its
functions.
8. A depository shall not indulge in unfair competition, which is likely to harm the interests of any other
depository, participants or investors or is likely to place them in a disadvantageous position while
competing for or executing any assignment.
9. A depository shall be responsible for the acts or omissions of its employees in respect of the
conduct of its business.
10. A depository shall monitor the compliance of the rules and regulations by the participants
and shall further ensure that their conduct is in a manner that will safeguard the interest of
investors and the securities market.]