RIGHTS AND OBLIGATIONS OF DEPOSITORIES,
PARTICIPANTS, ISSUERS AND BENEFICIAL OWNERS
4. Agreement between depository and participant
depository shall enter into an agreement with one or more
participants as its agent.
(2) Every agreement under sub-section (1) shall be in
such form as may be specified by the bye-laws.
5. Services of depository
- Any person, through a participant,
may enter into an agreement, in such form as may be specified
by the bye-laws, with any depository for availing its
6. Surrender of certificate of security
(1) Any person who
has entered into an agreement under section 5 shall surrender
the certificate of security, for which he seeks to avail the
services of a depository, to the issuer in such manner as may
be specified by the regulations.
(2) The issuer, on receipt of certificate of security
under sub-section (1), shall cancel the certificate of
security and substitute in its records the name of the
depository as a registered owner in respect of that security
and inform the depository accordingly.
(3) A depository shall, on receipt of information under
sub-section (2), enter the name of the person referred in sub-
section (1) in its records, as the beneficial owner.
7. Registration of transfer of securities with depository
(1) Every depository shall, on receipt of intimation from a
participant, register the transfer of security in the name of
(2) If a beneficial owner or a transferee of any security
seeks to have custody of such security, the depository shall
inform the issuer accordingly.
8. Options to receive security certificate or hold securities
(1) Every person subscribing to securities
offered by an issuer shall have the option either to receive
the security certificates or hold securities with a
(2) Where a person opts to hold a security with a
depository, the issuer shall intimate such depository the
details of allotment of the security, and on receipt of such
information the depository shall enter in its records the name
of the allottee as the beneficial owner of that security.
9. Securities in depositories to be in fungible form
securities held by a depository shall be dematerialised and
shall be in a fungible form.
(2) Nothing contained in sections 153, 153A, 153B, 187B,
187C and 372 of the Companies Act, 1956 shall apply to the
securities held by a depository on behalf of the beneficial
10. Rights of depositories and beneficial owner
Notwithstanding anything contained in any other law for the
time being in force, a depository shall be deemed to be the
registered owner for the purposes of effecting transfer of
ownership of security on behalf of a beneficial owner.
(2) Save as otherwise provided in sub-section (1), the
depository as a registered owner shall not have any voting
rights or any other rights in respect of securities held by
(3) The beneficial owner shall be entitled to all the
rights and benefits and be subjected to all the liabilities in
respect of his securities held by a depository.
11. Register of beneficial owner Every depository shall
maintain a register and an index of beneficial owners in the
manner provided in sections 150, 151 and 152 of the Companies
12. Pledge or hypothecation of securities held in a depository
(1) Subject to such regulations and bye-laws, as may be made
in this behalf, a beneficial owner may with the previous
approval of the depository create a pledge or hypothecation in
respect of a security owned by him through a depository.
(2) Every beneficial owner shall give intimation of such
pledge or hypothecation to the depository and such depository
shall thereupon make entries in its records accordingly.
(3) Any entry in the records of a depository under sub-
section (2) shall be evidence of a pledge or hypothecation.
13. Furnishing of information and records by depository and
(1) Every depository shall furnish to the issuer
information about the transfer of securities in the name of
beneficial owners at such intervals and in such manner as may
be specified by the bye-laws.
(2) Every issuer shall make available to the depository
copies of the relevant records in respect of securities held
by such depository.
14. Option to opt out in respect of any security
(1) If a
beneficial owner seeks to opt out of a depository in respect
of any security he shall inform the depository accordingly.
(2) The depository shall on receipt of intimation under
sub-section (1) make appropriate entries in its records and
shall inform the issuer.
(3) Every issuer shall, within thirty days of the receipt
of intimation from the depository and on fulfilment of such
conditions and on payment of such fees as may be specified by
the regulations, issue the certificate of securities to the
beneficial owner or the transferee, as the case may be.
15. Act 18 of 1891 to apply to depositories
Books Evidence Act, 1891 shall apply in relation to a
depository as if it were a bank as defined in section 2 of
16. Depositories to indemnify loss in certain cases
Without prejudice to the provisions of any other law for the
time being in force, any loss caused to the beneficial owner
due to the negligence of the depository or the participant,
the depository shall indemnify such beneficial owner.
(2) Where the loss due to the negligence of the
participant under sub-section (1) is indemnified by the
depository, the depository shall have the right to recover the
same from such participant.
17. Rights and obligations of depositories, etc.
to the provisions of this Act, the rights and obligations of
the depositories, participants and the issuer whose securities
are dealt with by a depository shall be specified by the
(2) The eligibility criteria for admission of securities
into the depository shall be specified by the regulations.