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DEPOSITORY ACT, 1996

Brief report on Depository act, 1996

1. Definition: This gives a brief detail on the definition of


depository as stated by the act. This includes the different
terms used in reference to deposit.

2. Certificate of commencement of business: It is the


certificate which each and every firm/organisation should get
from the registrar of the companies. The certificate is issued
after the organisation gets registered according to the rules
and regulation of Companies Act, 1956.

3. Rights and obligations of depositories, participants,


issuers and beneficial owners: This provides us the
information about the rights and obligations of different parties
involved in the transaction of securities. This helps the investor,
owners, etc., to be safe for any purposes. The following are the
contents for the rights and obligations of the depositories:

1. Agreement between depository and participant.


2. Services of depository.
3. Surrender of transfer of securities with depository.
4. Registration of transfer of securities with
depositories.
5. Options to receive security certificate or hold
securities with depository.
6. Securities in depositories should be in fungible
form.
7. Rights of depositories and beneficial owner.
8. Register of the beneficial owner.
9. Pledge or hypothecation of securities held in a
depository.
10. Furnishing of information and records by
depository and issuer.
11. Option to opt out in respect of any security.
12. Act 18 of 1891to applies to depositories.
13. Depositories to indemnify loss in certain cases.
14. Rights and obligations of depositories, etc.
4. Enquiry and Inspection: The company/organisation on
any time (if necessary) can verify the securities on various
basis. The company can call for the proof of the investor. It can
be- voter id, residence address, PAN card, etc., to avoid the
allotment of securities on BOGUS names. The following are the
topics discussed in the enquiry and inspections:
1. Power of board to call for information and enquiry and
2. Power of board to give directions in certain cases.
5. Penalty: Whoever contravenes or attempts to contravene or
abets the contravention of the provisions of this Act or any
regulations or bye-laws made thereunder shall be punishable
with imprisonment for a term which may extend to five years,
or with fine, or with both. The company are penalised based on
the following two factors:
1. General Offences
2. Offences made by the companies.

6. Miscellaneous: The following constitute the miscellaneous


steps taken by the committee:
1. Cognizance’s of offences by courts.
2. Appeals.
3. Power of central governments to make rules.
4. Power of board to make regulations.
5. Power of depositories to make bye-laws.
6. Rules and regulations to be laid before parliament.
7. Application of other laws not barred.
8. Removal of difficulties.
9. Amendments to certain enactments.
10. Repeal and savings.

Presented by:

Anuj. S
Anto Roy Milton
Arthi duraisami
Aravind. E
Arulmani

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