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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 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:- (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. 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. 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- (b) reject the application after giving the applicant an opportunity
of being heard.
3 Inserted by the Securities and Exchange Board of India (Depositories and Participants) Amendment Regulations, 1997 vide S.O. 91(E) dated 07.02.97. |
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