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. 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);

(v) a body corporate engaged in providing financial services where not less than seventy five percent 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; or

(vii) an institution engaged in providing financial services established outside India and approved by the Central Government.

(viii) the applicant is a fit and proper person.²

Grant of certificate of registration

(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 Ordinance, 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;

(d) the sponsor shall, at all times, hold atleast 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;

(e) no participant shall at any time, hold more than five per cent of the equity capital of the depository;

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% 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% of its equity is held by persons who are not citizens of India.³

(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.

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.

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.